The Hindu Business Line : Competition in textile trade gets tougher with dismantling of quotas

THE impact of the dismantling of the textile and apparel quotas has led to toughening of competition among developing and the least developed countries (LCDs) with the latter proposing a vulnerability index to identify products including textiles that are liable to preference erosion.

Official sources told Business Line here that at a recent submission to the WTO, on the issue of market access for non-agriculture products, the African, Caribbean and Pacific countries have outlined a vulnerability index for the historical tariff preferences they had been enjoying in the the European Union market which seem to be under siege in the tariff reduction exercise.

However, developing countries such as India, with comparative advantages in textile and apparel exports and which was also taken out of the Generalised System of Trade Preferences (GSTP) of both the United States and the EU for textile products, do not countenance the continued preferential market access to select LDCs particularly when the quota system is nolonger in place and countries have to compete in terms of price, quality and delivery schedule.

Even as this controversial proposal propounding protection for tariff preferences or concern over preference erosion is being debated, another leading textile exporter, Turkey, in a paper to the Council for Trade in Goods (CTG) in the WTO, has complained that many of the textiles and apparel exporting countries are facing the risk of being swept away from their traditional export markets. Making a foray into new markets has become difficult due to the dramatic transformation of global production and sourcing patterns in the shape of a sharp consolidation of production into a few suppliers, Turkey contended.

It has argued, citing some estimates, that China's share of the EU market is likely to rise to over one third and the respective figure is appropriately 50 per cent of the United States market. "This situation would come at the expense of other developing countries," it said adding that as a result, China, already holding about one-fifth of the global market in this sector, might have a 150 per cent increase in its overall textile and clothing exports or nearly 50 per cent of the world's market in a short span of time.

The sources said available figures for the first eight months of the calendar year show that US imports from China of textile products went up from $9,599.86 million during January-August 2004 to $15,558.98 million during January-August 2005, clocking up a hefty growth of 62.08 per cent, while that India went up from $2,643.12 million to $3,343.33 million during this period, registering a growth of 26 per cent.

Turkey has asked the CTG to establish a " work programme" for a full and periodic review of global textile and apparel production, export and market circumstances so as to evolve right remedies within the multilateral trading system.

Industry sources are of the view that in order to enable exporters realise higher value for their goods, India should align itself with like-minded developing countries in the negotiations for evolving modalities of non-agriculture market access in the WTO so as to secure the best gains for the indigenous textile and clothing industry as it fights not only developing countries but also preference-enjoying LDCs in the global market.

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