Bilateral Fiber and Textile Trade: Documentation

This documentation for the bilateral fiber and textile trade database contains information on the source and availability of global trade data, product categories, and countries and regions. Also included is a discussion of inconsistencies in reported imports and exports and the methodology for reconciling bilateral trade flows.

Source and Availability of Global Trade Data
Product Categories in the Database
Product Coverage
Countries and Regions in the Database
Inconsistencies in Reported Imports and Exports
Reconciling Bilateral Trade Flows

Information on How to Use the Database is also available.

Source and Availability of Global Trade Data

The source of data used in the bilateral fiber and textile trade database is the United Nations (U.N.) Commodity Trade Statistics Database (UN Comtrade) assembled by the U.N. Statistics Division (UNSD). Comtrade compiles commodity trade statistics from national custom areas reporting to the United Nations. It contains the longest and most complete bilateral time-series trade data in terms of country and commodity coverage available from any other source. (UNSD uses “commodity” to describe trade of goods, both agricultural and nonagricultural. The bilateral fiber and textile trade database uses “product” to describe aggregates of textile and clothing goods.) The U.N. converts country-reported data expressed in local currency to nominal U.S. dollars.

Country availability of data depends on when data are reported by countries to UNSD and in what classification. Comtrade currently contains three commodity classifications for the international Harmonized System (HS) of trade codes, including HS-1988/92, HS-1996, and HS-2002. Prior to 1988, data were classified based on the Standard International Trade Classification (SITC), which was used by all countries in the U.N. system. The bilateral fiber and textile trade database is based on the HS-1988/92 classification because it provides the most detail for the longest period of time.

Comtrade has all reported data in their original classification and data converted from the original HS classification to other HS classifications. For example, South Africa reported its trade in 2002 using the HS-2002 classification. UNSD converted the data to both the HS-1996 classification and the HS-1988/92 classification. Thus, South African trade data are available for the full time-series starting in 1992. However, not all countries started reporting on the HS system at the same time. Russia, for example, did not start reporting trade on the HS system until 1996. Vietnam still reports trade using the SITC system and has yet to implement the HS classification.

There are 224 trading partners in Comtrade for 2002. They include both official countries and statistical trading territories. Of these trading partners, there were 132 reporting partners using the HS classification and 92 non-reporting partners. For example, South Africa was one of the reporting partners, while Vietnam was one of the non-reporting partners.

Textiles and clothing are frequently shipped from one producing country to another country for redistribution to final destination countries. This is generally referred to as "re-export" activity. At the global level, re-exports can result in the double-counting of traded goods. In this database, exports do not include re-exports from other countries and imports are "retained imports" for home use.

There are two types of reporting systems in Comtrade: the "general trade system" and the "special trade system." Under the U.N.’s general system of reporting, re-exports are reported separately from national exports. Hong Kong, for example, reports its trade under the general system where the level of re-exports to it partners is reported separately from its bilateral national exports. Under the special trade system, countries do not report re-exports or imports destined for re-exports. As examples, Singapore and the Netherlands report under the special system where their re-exports are not reported in Comtrade. Although the level of re-exports is not known from Comtrade, their reported exports are mainly reported as national exports.

Product Categories in the Database

The bilateral fiber and textile trade database is focused on the fiber-based content of traded textile-related products. Various textile and clothing aggregates differentiate among products produced from cotton, other natural fibers, manmade fibers, and natural-synthetic blends. These aggregates, created from Comtrade data using HS trade codes at the 6-digit level, include textiles and clothing, clothing, textiles, yarn, fabric for clothing, home furnishings, and industrial products. The database also contains information about trade in fibers (cotton, other natural fibers, and synthetics) and in capital inputs used to produce textile and clothing products (textile yarn machinery, weaving and knitting equipment, and auxiliary textile machinery). In addition, a merchandise trade total is included, enabling analysts to compare trade in textiles and/or clothing with overall trade. In total, data on 43 product aggregates are included in the database: total merchandise trade and 42 product categories.

The product categories are derived from 870 6-digit HS codes. The following tables identify the product content of each of the 42 categories by HS code and product description:

• Concordance table 1: Clothing and textiles, raw fibers, and textile machinery
• Concordance table 2: Fiber content of clothing and textiles
• Concordance table 3: Fiber content of yarn, fabric for clothing, home furnishings, and industrial products
• Concordance table 4: Types of fiber and textile machinery

Product Coverage

Aggregate trade statistics from the bilateral fiber and textile trade database are not the same as those used by other organizations even though Comtrade is a common data source. One reason is that this database makes a clear distinction between traded inputs, namely fibers and machinery, used in the production of intermediate and final textile and clothing products. Typically, man-made fibers (but not natural fibers such as cotton, silk, or wool) are included in textile and/or clothing aggregates.

Another reason the bilateral fiber and textile trade database differs is that it is all-inclusive in its product coverage. This database includes all fibers, both natural and synthetic, as well as all textile and clothing products. Other studies, including publications issued by the World Trade Organization (WTO), the Central Intelligence Agency (CIA), and the Global Trade Analysis Project (GTAP), have less comprehensive product coverage for their textile and clothing sectors. The WTO report, The Global Textile and Clothing Industry Post the Agreement on Textiles and Clothing, Discussion Papers No. 5 (ISBN 92-870-1244-x), uses the WTO composition of textile and apparel trade, which consists of 795 HS 6-digit codes. In a March 2004 report published by the U.S. Central Intelligence Agency, Textile and Apparel Exports: A Trade Profile (OTI FP 2004-001), 811 HS 6-digit codes were used to define trade in the sector. The GTAP database defines textiles and apparel using International Standard Industrial Classification (ISIC) codes. ISIC codes are linked to 801 HS codes via a production-trade concordance.

Countries and Regions in the Database

This database contains bilateral trade data for the principal regions and countries that export and import textiles and clothing. The 42 country/regional classifications in the database provide users with data on total world trade; individual countries and country groupings that add up to regional and world totals; and other country groupings, such as importers with Multi-Fiber Arrangement (MFA) quotas.

World totals. Two world totals are identified in the database, one including and the other excluding intra-European Union (EU) trade. Although total world trade, including intra-EU trade, is widely used in the popular press, analysts often prefer to remove trade taking place among EU member countries because of their common border policies. For this reason, the trade share calculations for the Industrialized-Countries and the Importers-with-MFA-quotas aggregates do not include intra-EU trade.

Country and Regional Aggregates. Trade data are available for an Industrialized Country and a Developing Country aggregate. In the Industrialized Country aggregate, a complete picture of partner trade is available for three countries (the United States, Canada, and Japan) and two regions (the EU-15 and All Other Industrialized Countries). Within the Developing Countries aggregate, a comprehensive set of partner data are available for five geographical areas:

• Africa and Middle East
• Asia
• Eastern Europe
• Former Soviet Union
• Latin America

More detailed information about partner trade exists for country/regions in some of the five geographical areas. In the Africa and Middle East, a comprehensive set of partner trade data are available for Turkey and the following three regions: North Africa and All Other Middle East, Africa Growth and Opportunity Act (AGOA) eligible countries, and All Other Sub-Saharan Africa. The AGOA was signed into U.S. law on May 18, 2000. Under this Act, "AGOA-eligible" countries are allowed to sell to the United States duty-free textile products made of fabrics manufactured in the United States of U.S. yarn. Under a special provision, "Lesser Developed Beneficiary Countries" (those with a per capita Gross National Product under $1,500 in 1998) have been allowed duty-free access for apparel made from fabric originating anywhere in the world. This special provision, which was set to expire on September 30, 2004, was granted a 3-year extension with the signing of the AGOA Acceleration Act on July 13, 2004.

In Asia, a comprehensive set of partner data exist for China, Hong Kong, Macau, South Korea, Taiwan, and three additional geographical breakdowns: South Asia, Southeast Asia, and All Other North Asia. Within the South Asia and Southeast Asia areas, a complete set of partner data are available for Bangladesh, India, Pakistan, Indonesia, Thailand and an All-Other-South-Asia aggregate, as well as an All-Other-Southeast-Asia aggregate.

In Latin America, a complete set of partner data exist for Mexico and three country groupings: the Caribbean Trade Partnership Basin eligible countries, the Andean Trade Preference Act countries, and an All-Other-Latin-America-and-Caribbean aggregate. The U.S. Caribbean Basin Trade Partnership Act of 2000 provides duty- and quota-free treatment for apparel made in the beneficiary countries from fabrics manufactured in the United States of U.S. yarn. The U.S. Andean Trade Preference Act of 2002 also exempts member countries from U.S. duties and import quotas for designated textile and apparel articles, provided that they are made from fabrics manufactured in the United States of U.S. yarn.

This set of country/regions contains no data overlaps. Thus, the data for any country/region can be summed to arrive at regional and world totals. For example, the data for Bangladesh, India, Pakistan, and All Other South Asia sum to that for South Asia. Data for China, Hong Kong, Macau, South Korea, Taiwan, South Asia, Southeast Asia, and All Other North Asia sum to the total for Asia. Data for Africa and Middle East, Asia, Eastern Europe, Former Soviet Union, and Latin America sum to the Developing Countries total. Data for Developing Countries and Industrialized Countries sum to the totals for the World, including and excluding intra-EU trade.

Other Areas. In addition to the comprehensive, non-overlapping set of country/regional breakdowns in the table above, the database also contains data for some countries and country groupings of interest to users, such as the EU Accession States. The "other areas" for which the database contains data are:

• Central American Free Trade Agreement (CAFTA): Central American countries that are members of CAFTA
• Asian Newly Industrialized Countries (NICs)
• EU Accession States: 15 countries from the Eastern-Europe and the Former-Soviet-Union regional aggregates that joined the EU in 2004 or are scheduled to join in the future
• Importers with MFA Quotas: importers that have quota agreements in 2004 with individual exporting countries for specific textile and clothing items
• Non-WTO Exporters of Textiles and Apparel: countries that export textiles and apparel, but are not members of the World Trade Organization (WTO)

Inconsistencies in Reported Imports and Exports

Discrepancies between reported exports and reported imports exist at the global level and for individual bilateral trade flows. Differences in trade flows are commonly found with all trading partners in both industrialized and developing regions. Reasons for these discrepancies include misidentified partners, misclassification of goods, under- or over-invoicing of goods, and differences in the valuation of goods by individual countries.

In 2002, reported imports of textiles and clothing were $372 billion, exceeding reported exports by $42 billion. Importers reported a higher level of global trade than exporters, except for within the European Union (EU), where reported exports were higher than reported imports. For trade outside the EU, exporters reported a lower value than what importers reported.

Reconciling Bilateral Trade Flows

In order to construct an analytical database of bilateral trade flows (such as this database), a country's total imports should be the same as its partners' total exports. When this condition is met for all countries, global imports equal global exports. Trade shares can be consistently generated from the database once these conditions are satisfied.

For each bilateral trade flow in this database, either the reported imports or the reported exports is used to represent the actual trade flow between two trading partners. Two basic cases present themselves: 1) one country reports but its partner fails to report, and 2) both countries report but each reports a different value for the same transaction. In the first case, we use the reported value, either from the importer or the exporter.

In the second case, we construct reliability indexes to reconcile differences in bilateral trade flows. For each transaction containing a discrepancy, it is assumed that there was an error in reporting made by one of the reporting countries. Errors in reporting are detected and quantified statistically. Usually, the existence of a single error indicates similar errors made with other trading partners. The more frequent the error occurs, the less reliable the reporter becomes. For example, when a reporter misidentifies partners or misclassifies goods, they are deemed “less reliable” than a reporter that accurately reports a greater share of its trade flows with its partners. For a given transaction, reconciled data is used from the reporter deemed "more reliable."

Reliability index:
Reliability of importer (RIM) = imports accurately reported with partner / total reported imports
Reliability of exporter (RIX) = exports accurately reported with partner / total reported exports

Conditions for reconciling:
if RIM > RIX then reconciled trade value is the reported import value
if RIM < RIX then reconciled trade value is the reported export value

The procedure is implemented at the most disaggregated commodity level possible for all reporting importers and exporters. Calculations are made for all HS 6-digit commodities for generating reliability indices for a country as an exporter and as an importer. In all instances, the more reliable reporter is chosen for each bilateral trade flow. For the product aggregates in this database, a given trade flow will comprise trade that was reported by both the importer and the exporter. For example, clothing and textiles from Taiwan to Japan is reported by Taiwan as an exporter for some HS commodities but also reported by Japan as an importer for other HS commodities. This is because Taiwan is deemed to be the more reliable reporter for some commodities, while Japan is considered to be a more reliable reporter for others.

Using "reconciled" data means that the trade flows found in the bilateral fiber and textile trade database cannot be viewed as "imports" or "exports" but as reported trade flows deemed most reliable. The only case where a given trade flow might be reported solely by the exporter or the importer is when either the importer or the exporter fails to report, or when the exporter or importer is deemed a more reliable reporter for all transactions.

The value of trade for product and regional totals in the bilateral fiber and textile trade database tend to be larger than those reported by other sources, in part because partner data is used to fill in for unreported trade at the most disaggregated (HS-6 digit) level. This database is unique in that exports equal imports for any given product aggregate and country/region.