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Last Updated: Thursday, 30 December, 2004, 23:53 GMT
New look for global clothing industry
By Andrew Walker
BBC economics correspondent

Chinese made fabrics
The end of textile quotas could lead to greater Chinese exports

Some momentous changes are coming in the global textile and clothing industry.

At the end of 2004, a system of quotas that regulates trade between rich and poor countries comes to an end.

The changes are the final stage in a ten year phasing out of long standing restrictions in the textiles trade.

But there are many companies in both rich and poor countries which believe the result will be a free for all, with China making huge inroads into their business.

Some of those inroads can best be seen at the retail end of the sector.

Price matters

At the Cha Cha clothing outlet in London's Southall, owner MS Chadha says 50% of his stock is currently produced in China, while just 20% comes from the UK.

He expects even more of his stock to come from China once the quota restrictions are ended.

Mauritius would be a prime example of a country which has thrived under the quota regime but now faces some problems
Mark Duckenfield, London School of Economics

"In my area, the only thing that matters is price," he says.

The textile quotas were originally introduced by major industrialised countries to protect their textiles and clothing sectors from cheap competition from the developing world.

"While you had free trade relatively in automobiles, steel and coal, you didn't have that for textiles and clothing," says Mark Duckenfield, an expert on trade policy at the London School of Economics.

However, by giving quotas to individual developing nations, it also gave them a guaranteed share of the rich countries' markets.

Winners and losers

That guarantee will disappear with the quota system, and many fear that China and India will take their market share.

"China and India would be more competitive because they are able to produce larger quantities at lower cost than some of these other countries," says Mr Duckenfield.

"Mauritius would be a prime example of a country which has thrived under the quota regime but now faces some problems."

And what about the rich countries, whose workers and companies the quotas were originally supposed to protect?

Elizabeth Fox, of the British Apparel and Textile Confederation, says the industry she represents has moved up market, away from the mass produced clothing that China sells.

Job fears

Increasingly, members of the UK's 195,000-strong textiles workforce are finding jobs in companies at the top end of the market "where there are larger margins and much smaller quantities needed of each particular style or size", Ms Fox says.

But she acknowledges that there are some businesses in Britain that feel uneasy about the prospect of an unleashed Chinese clothing industry.

Peter Booth, of the Transport and General Workers Union, is even more worried about the prospects in the UK and in some of those developing countries that fear Chinese competition.

"We've seen hundreds of thousands of jobs shed here in the UK as the retailers have moved systematically to the lowest cost producing areas. Our concern was for the terms and conditions of workers worldwide because this was a process of global exploitation in the guise of free trade," he says.

Whether you call it exploitation or not, it is clear that there will be people who lose from the changes sweeping the textile and clothing world.

But some will gain - businesses in China and India and, perhaps, shoppers in Western cities such as London. Freer trade probably means they will pay less for their clothes.

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