What is the global
situation of ceramic tile production, consumption,
trade and its future developments ?What is the
actual position of Iranian ceramic tile industry
in terms of exportation and presence in the world's markets? What is the role of the WTO in
this regard? What would be the effects of lifting
the importation bans of this product on Iranian
ceramic tile industry? What would be the
consequences on this product through the joining
of Iran to this organization and how could we
investigate this joining and forecast as far as
possible the future events.
Under present condition, such issues preoccupy
every conscious Iranian industrialist or producer.
But the emphasis is on the last question above
namely, application of method or methods to
analyze the processes & events and present
them in the form of quantitative documentation.
Therefore, this article focuses on the
significance of scientific studies on the subject
of Iran joining WTO rather than effects of such an
event on the Iranian ceramic tile industry.
First, it is better to have a brief review over
production and exports statistics of the main
producers of ceramic tile in 1999.
Based on the report published in the last issue
(sept.2000) of Ceramic World Review magazine, of
the world's total production of ceramic tile
(4764million square meter) during 1999, 1035
million square meters was exported by producing
countries, making up 24.5% of the world's total consumption (4224
million Sq. m). The 26 main
producing countries enjoyed 93.7% of the whole
production in the word by producing 4436 million m2
of ceramic tiles, with China being on top with
1600, Turkey ranking the 5th with 150, Iran and
UAE the 15th and the 23rd
with 55 & 30 million m2 production
respectively. 94% of the world's total exports(942
million. M2 ) belong to 14 leading countries,
Including Italy as number one with 417, Turkey
with 50 the 3rd , UAE & the Czech Republic
with 15 & 8 million m2 occupying the 12th
and the 14th ranks. Iran is absent in this
14 - country
list. A few of the most outstanding points
mentioned in this report are as follows:
Firstly,
despite China ranking the 9th (exporting 19
million m2 ), with respect to its enormous
production potentiality and steps taken towards
successful presence in the international market,
having overcome obstacles in joining the WTO
during the current year, in near future it can
reverse the exiting balance in the global market
of this product.
Secondly,
Turkey, as a neighbor country
of Iran, occupies the 3rd
position in this chart while it has no
specific advantage over Iran, regarding necessary
sources of energy used in ceramic tile industry,
or transportation costs which are both decisive
factors in fixing cost price. In the case of the
UAE, as well, some similarly important points
can be witnessed.
After this
introductory review, it is time to contemplate
over the aforesaid questions and the significance
involved in seeking proper answers and accurate
methods to deal with them.
In order to get a clear
picture of the possible effects on this
industry, should Iran join the WTO, and take
preparatory measures in this regard, abstract
article (thesis) made efforts, analyzing available
statistics, to provide data for future steps in a
scientific approach. The principle applied in this
research model is "Armington Pauls"
under the title: "The Geographic Pattern of
Trade & the Effects of Price Changes'', which
is formulated based on the" theory of demand
for products distinguished by place of
production." This is considered as a well
known world trade model which have been used to
calculate the price
changes by GATT.
This model offers how to use the trade structure's
data to estimate the price changes which is made
on the basis of market capacity &
opportunities chart. Theoretically, it is possible
to study & evaluate the effects of changes in
trade policies on resource allocations.
The multinational general balance model, based on
Armington Pauls can analyze such changes, taking
into account parameters such as position &
importance of customs unions, business and trade
negotiation within the framework of GATT,
north - south trade issues, etc.
By means of the aforesaid model, the consequences
or Iran's membership (a given country) in the WTO
and its effects on ceramic tile industry can be assessed.
The following is the result of preliminary studies
conducted in familiarizing with the WTO &
GATT, mining & industry sectors in the second
development plan, industrial production and trade
of ceramic tile in Iran and in the world, GATT, s
regulation concerning this industry, and problems
caused by tariffs in Iran.
1- Since the
beginning of the 21st century, to facilitate
trade, international countries have found it
inevitable to join, adopt & comply with
regulations prescribed by the WTO, nevertheless,
certain privileges in certain areas can be gained
in the process of obtaining this membership &
mutual negotiations, due to countries, and
specific conditions.
2- The
general content of the second & third
development plans, in legislators, view,
emphasizes a more active role for mining &
industry sectors in the global economy, which is
not in contrast with general rules &
regulation of GATT & the WTO.
3- Iranian
ceramic tile industry expanding its domain &
horizons, enjoys suitable potentialities in supplying for the domestic market, as well as, a
successful presence in the international ones.
4- With
respect to the world's rising rate of ceramic
& tile production, consumption & trade
during the recent years, such a trend seems likely
to continue through the forthcoming years. Care
should be taken that the leading countries in this
study are either members of the WTO or have
applied for it.
5- Since the
basis for fixing or decreasing tariff rates is the
average rate of 1988-90, Iran can start negotiations by adopting the rate of 100%, while
it has to lift import bans, in case the membership
is finalized.
6- In
this case, Iran must not only smooth importations
of this product but it also has to eliminate all
privileges & discriminations between domestic
& foreign products, including supportive
subsidies or duties & direct taxes imposed.
The
above mentioned results were used as a basis for a
survey, conducted on the effects of price
fluctuations in Iranian ceramic tile trade. In
applying Armington Pauls simulating for Iran's
conditions, price fluctuations have been imaged
under the following two scenarios:
First, variation of imagined, tariff rates.
Second, devaluation of Iranian Rial and US dollar.
By
using the available statistical data concerning
production and trade of ceramic
tile in Iran and in the world over a 5-
year period (1991-95), the international trade
matrix was designed, indicating entire domestic
& international business transactions of the
selected countries during 1995. Model calculations
and results, based on the presented matrix, are as
follows:
Since tariff reduction is one of the WTO's (GATT)
main issues became basis, in the model to study
its effects on this industry. The result of this
scenario can be used in two conditions of ceiling
& bottom rates (maximum & minimum ). The
second scenario was designed, assuming a 25%
devaluation of Rial against US dollar. The
quantitative outcome of the former revealed that
in case of Iran's membership in the WTO, under the most pessimistic
& improbable conditions, Iran's trade balance
will face a US dollar 13 million deficit, should
it decide to lift importation bans & eliminate
the 50% tariff rate in that year (the bottom line
scenario). It is evident that such a case is
neither advisable nor practical as the WTO
members, all impose tariffs on their imported
ceramic & tile.
Therefore, tariff elimination is neither logical
nor required by the
WTO.
But under the most favorable conditions (the
ceiling scenario ), Iran will enjoy a US dollar
9.7 million increase in its trade balance if importation
bans are lifted, provided that is
maintains its 1998-89 rates of 100% as base rate
for negotiations . Achieving this, is not quite
impossible. Considering the 1988-89 tariffs, Iran
can enter negotiations
with its contracting parties. It is worth
mentioning that joining the WTO dose not require
an unconditional omission of all tariffs. Besides,
under certain conditions and for certain products,
privileges can be gained for concessions granted.
According to the result of the second scenario, a
25% decline in the value of Rial can result in a
US dollar 11.4 million rise in export revenue.
Thus, the conclusive figures, with respect to the
above mentioned scenarios in applying the model,
indicate that under ordinary conditions, by
obtaining WTO's membership, proper tariffs can be
determined and on the other hand, an increase in
ceramic tile
export level can be expected.
Care should be taken that the said conclusions,
were drawn, taking into account the certain
assumptions & conditions, qualitative
restrictions, concerning given fields of
operation.
Finally, the following recommendations could be of
benefit to macro & micro management levels in
applying the model for research accurately.
From the macro management & policy making
angle, implementation of scientific means and
methods & reliance on technical expertise, and
being of analyzing situation & direction
correctly are of vital necessity. Ruling out
generalization of issues and non- technical
comments which bring about a monotonous and day-
to- day planning are also of the same importance.
In the micro management level of enterprises &
corporations, managers of this industry should
consider joining the WTO or minimum compliance
with its international regulation, as a must,
under which circumstances there are no, or limited
grounds to benefit from supportive subsidies.
Therefore, the higher and the better quality of
products, the higher the chances of a successful
presence in the world's market. Although the
findings of this research promise a rise in the
domestic production & export of ceramic tile,
provided that suitable policies are made in this
respect; this dose not mean that the path to
prosperity is smooth , as there will be new rivals
among newly-industrialized countries and others,
planning to gain more profits.
As
to the model, the main objective of using it has
been to study the quantitative effects of joining
the WTO with respect to parameters of changing
tariff rates and Rial devaluation while there are
other factors involved, which must to considered,
such as price changes caused by changes in wage
levels, energy, row materials & transportation
costs which, in turn, can affect the cost price of
ceramic tile production and exportation. Secondly,
ceramic tile industry in Iran is subject to
changes & development taking place in other
economic sectors of the country, thus, by applying
the model for each sector & expanding the
research area, a comprehensive analysis will be
within reach. This clearly, is beyond abilities of
single individuals, and requires efforts of
specialized team work.
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