[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 4 September, 2003, 22:03 GMT 23:03 UK
Ripping up the trade rulebook
By Clare Matheson
BBC News Online business reporter

Nike clothing  factory
Will the end of textile quotas mean boom or bust for the industry?
As attention turns to the forthcoming World Trade Organisation talks in Mexico, controversy is still raging over the largest manufacturing export from developing countries - textiles and clothing - and the looming deadline which will finally end protective quotas by 2005.

Since 1995, that trade has been regulated under the Agreement on Textiles and Clothing which aimed to help developing countries get a bigger share of the world market.

But many in the North fear liberalisation will mean job cuts and factory closures.

The US is already battling an ongoing "crisis" which has seen 6,000 jobs go at the start of the year, while financial results for the last three months of 2002 revealed the industry had dropped back into the red to the tune of around $200m.

Robert DuPree of the American Textile Manufacturers Institute (ATMI) says the US government is "moving slowly, if at all" to protect the industry.

Job fears

The ATMI has warned hundreds of factories will close and hundreds of thousands of jobs will go when quotas end.

TRADE AND GLOBALISATION
Key issues at the trade talks

In the UK, the British Apparel and Textile Confederation (BATC) seems to be taking the looming change in its stride.

But its chief, John Wilson, says the most important thing about the shake-up is that the phasing out of quotas is "inextricably linked" to opening up markets - something he says developing countries have "singularly failed" to do.

He adds that tariffs and other barriers in countries like India - which is a rich market for exports - can add up to 100% onto the price of an item, leaving it unable to compete.

"If the US pressures to take up protectionist measures ... that will restrict low cost imports.

"We don't want to see that sort of situation develop as it will cause significant problems."

Intense competition

Meanwhile, industry analyst Textiles Intelligence believes the end of quotas will mean "falling prices and margins" and leave high cost producers struggling to compete.

Asian textile worker
Chinese exports soared after it joined the WTO
One country expected to do very well after quotas end is China.

According to Textiles Intelligence, the volume of US imports from the country jumped 125% after China joined the World Trade Organisation (WTO) in 2001.

A European Union report also warned it would have the "most extreme" market impact - possibly increasing its overall textile and clothing output by 150%.

The BATC's John Wilson agrees China is a "grave concern" as its ability, population size and economic growth could enable it to serve the whole world as a textile supplier.

Already the ATMI is urging the White House to use the only weapon left in its armoury after the system is abolished - tariffs under emergency measures to halt dumping - to halt a wave of Chinese imports.

US TEXTILE INDUSTRY
Number of people employed - 432,000
Number of firms in sector - 5,117 *
Manufacturing sales worth - $47.2bn
Export sales worth - $15.8bn
American Textile Manufacturers Institute figures for 2001 (*ATMI figures for 1997)
Robert DuPree said: "We fully expect China to go wild when quotas end in 2005."

The ATMI claims that China's refusal to revalue its currency is also having a devastating effect.

It says that in the EU and Canada "textiles remain one of the most highly protected sectors in the world trading community", while the WTO has noted that tariff and non-tariff barriers imposed by developing countries against textile imports are among the highest in the world.

Mr DuPree said: "We would like to keep in place some measures to enable us to compete on a level playing field."

Shake-up losers

Meanwhile, Textile Intelligence says the main losers will be companies in developing countries that have built up market share through quotas or quota-free access.

UK TEXTILE INDUSTRY
Number of people employed - 89,800
Number of firms in sector - 3,650
Manufacturing sales worth - 7.26bn
Export sales worth - 1.35bn
Department of Trade and Industry figures (2001)
These countries could fall by the wayside as China forges ahead, claims Neil Kearney, head of the International Textile, Garment and Leather Workers' Federation.

He said: "Unless something is done urgently countries such as Bangladesh, Indonesia and Sri Lanka may be waving goodbye to sectors that provide a vast number of industrial jobs."

In Bangladesh, textiles account for almost 85% of the country's exports and the industry employs around 1.5 million people.

Mr Kearney went on: "Bangladesh alone faces the loss of perhaps one million jobs. Indonesia a similar number. Sri Lanka, tens of thousands."




RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific