China To Get Lions Share In Textile Exports Post-quota Era

Written by Malcolm Subhan | Brussels, May 7: | Updated: May 8 2003, 05:30am hrs
And the winner is...China! Runners-up include, India, Pakistan and, perhaps, Bangladesh. Sri Lanka is among those unlikely to make it. These, in other words, are the winners and losers in the race that will start on January 1, 2005, with the disappearance of the quotas that have restricted the textile and clothing exports of developing countries for over 40 years.

The list had emerged by the end of the first day of the two-day conference on the future of world trade in textiles and clothing after 2005, when the 10-year Agreement on Textiles and Clothing finally runs out. The conference, being attended by some 600 participants from 70 countries, has been organised by the European Unions chief trade negotiator, Pascal Lamy.

Economists agreed that the elimination of quotas will mean increased exports of textiles and clothing, although their estimates of the size of the increase vary from $6.5 billion to $324 billion! The participants at the two-day conference were in broad agreement that China would account for the lions share of the increase. For D M K Nair, director, Indian Cotton Mills Federation, three countries will benefit most from the disappearance of quotas.

They are China, India and Pakistan. They are the only three developing countries that produce the complete range from fibre to fashion, according to Mr Nair. Bangladesh is trying to do the same but has a long way to go.

For Mr Nair, a country that can manage the entire chain from fibre to fashion has a strong advantage over its competitors, in view of the current focus on reducing lead times. A similar argument was advanced by Pakistans trade minister Humayan Akhtar Khan. He thought that in the post-2005 era, importers will select countries on the basis of local indigenisation.

Thus Pakistan is a major cotton producer which is also encouraging the domestic production of man-made fibres, in order to achieve a high level of indigenisation. It is also investing large sums - $2 billion in the last two years - in integrated factory mode of production. The notion that Chinas success as an exporter is due to its possession of the complete chain from fibre to fashion was challenged by the president of the American Textile Manufacturers Ins-titute (ATMI), Parks D Shackleford. In a talk entitled China: How big a threat he made it clear that China is already making substantial inroads into the American market for a wide range of items. For certain products China currently accounts for 90 per cent and more of US imports.

Mr Shackleford listed three reasons why China is unbeatable. Its currency is undervalued by some 40 per cent, while 50 per cent of the countrys textile sector and 25 per cent of its clothing sector are state-owned. At the same time China has unlimited supplies of labour. For the ATMI president, China must be required to float its currency, while importing countries must make use of the WTO safeguards as needed.

There were three notable absentees at the 2-day conference. Chinas minister of foreign trade and Hong Kongs secretary for commerce were unable to make it, presumably because of SARS. Indias commerce minister also stayed away, having been in Paris for an OECD meeting the week before.