Released on = June 2, 2007, 12:16 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = On December 31, 2004, quotas were eliminated under the
Agreement of Textiles and Clothing (ATC) and trade in textiles and clothing was thus
reintegrated into the world trade system. When the ATC was conceived in 1994, the
gains from quota elimination were expected

Press Release Body = Outlook for Asian Textile and Clothing Trade in the Post-Quota Era

On December 31, 2004, quotas were eliminated under the Agreement of Textiles and
Clothing (ATC) and trade in textiles and clothing was thus reintegrated into the
world trade system. When the ATC was conceived in 1994, the gains from quota
elimination were expected to go to low wage and populous Asian countries such as
India, Indonesia, Pakistan, the Philippines and Thailand The losers were predicted
to be small and marginal exporters, former large quota holders in East Asia, and
firms in the EU and the USA. But the outlook for Asian suppliers other than China
has been changed by China's entry to the World Trade Organisation (WTO) in late 2001
and its growing dominance of Western markets. Asian suppliers will also be impacted
by preferential trade agreements (PTAs) giving non- Asian partners duty-free access
to the EU and the USA. The proliferation of PTAs has cast doubt on whether Asian
suppliers other than China will achieve the gains they were promised.

The USA, the EU and a few other WTO members have used safeguard quotas to protect
their markets in the post-quota era. In the first few months of 2005 China made
strong inroads into EU and US markets-at the expense of preferential suppliers and
former large quota holders in East Asia. In contrast, Asian suppliers such as India,
Indonesia, Bangladesh, Pakistan and Sri Lanka maintained or slightly improved their
positions in the US market. Some are moving into higher quality products as they
adjust to low cost competition from China. Meanwhile, in the post-quota era,
efficient Asian production networks continue to be undermined by EU and US
preferential trade deals, enforced by restrictive rules of origin. Such a situation
could be avoided if negotiators at the WTO Doha Round were to prove successful in
reducing EU and US textile and clothing import tariffs.


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