The United States and the European Union last week triggered processes to limit textiles imports from China, sparking an angry response from the rising Asian giant that it would not be pushed around on the issue. .
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Elsewhere in Asia, countries that had long enjoyed the benefits of the trade quotas, such as Bangladesh, Cambodia, Sri Lanka and Vietnam, have warned their textile industries and the people they employ are fast losing out to China. .
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However the end of the quota system has not been all bad news, with more competitive and better prepared industries in the Philippines, Indonesia and India reporting they are weathering the China storm.The event that threw the 400-billion-dollar-a-year global textile industry into turmoil was the end of the 1974 Multifibre Arrangement on January 1 this year, which lifted quotas and restrictions on exports. .
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China, already the world largest exporter of clothing at the beginning of this year with a 28 percent share of the market, has enjoyed a phenomenal boom following the end of the quotas. .
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The US government took its first step toward curbing Chinese textile imports on Monday last week by announcing a review to determine whether the recent surge in Chinese imports had disrupted the US market. .
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US officials said Chinese imports of cotton knit shirts and blouses, cotton trousers and man-made-fiber underwear had surged by about 1,250 percent, 1,500 percent and 300 percent respectively, following the end of the quotas. .
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The US government review move could lead to Washington limiting growth in Chinese imports to 7.5 percent through 2008, under a clause China agreed to upon entering the World Trade Organisation. .
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The European Union adopted a similar measure on Wednesday when it unveiled “alert levels” at which it would consider limiting Chinese clothing imports, but resisted pressure from Europe textile industry for more drastic action. .
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In response, Chinese commerce ministry spokesman Chong Quan on Thursday warned the actions of the EU and the United States violated free trade principles and could jeopardise global textile trade.The actions of all three parties have sparked concerns that tit-for-tat responses could lead to a trade war. .
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“The danger is that the textile issue becomes the straw that breaks the camel back,” Ernest Bower, a partner with Washington-based consultancy BrooksBowerAsia, told AFP. .
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“Having said that, if both sides work to manage the issue and step back from the sabre-rattling we have seen in the last several days, a longer term confrontation can be avoided. It is in no one interest to see a trade war develop.” .
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Bower, a former president of the US-ASEAN Business Council, said the EU and the United States “should not impose new measures on China” if they were genuine in their free trade principles. .
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“If the US and Europe favor free trade, they must be consistent and not fight rear-guard actions like those being proposed by protectionist groups,” he said. .
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“Protectionist measures are like putting a finger in a dam — they postpone the inevitable and divert resources and the market from finding niches that can be sustained and complement global trends.” .
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Elsewhere around the globe, nations with a far less powerful presence on the global stage than the United States and Europe are struggling to cope with the massive changes without the ability to influence China. .
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Bangladesh garments exports fell 21 percent in January in an ominous signal for the industry that employs an estimated 1.8 million people, mostly women earning around 35-50 US dollars a month. “We are concerned. It was a big drop, especially as we have not done well in the United States, our single biggest market,” said Anisul Haq, president of the Bangladesh Garments Manufacturers and Exporters Association. .
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Haq predicted 40 percent of all garments manufacturers would close before the end of the year. .
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Sri Lanka is also worried about its 2.5-billion-dollar-a-year textile industry, after orders slowed in March. .
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“March is going to be bad export-wise… large factories are not seeing orders in March and April like the year before,” textile industry spokesman Ashroff Omar. .
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Cambodia, where the garment sector is one of the linchpins of the war-recovering economy, has lost up to 20,000 jobs in the industry, according to government and industry figures. .
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In contrast, the Philippines and India said they had benefitted from the removal of textile quotas by being well prepared. .
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Serafin Juliana, executive director of the government-run Philippines Garments and Textiles Export Board, said both garments and textile exports rose on-year in January and the growth was expected to continue. .
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“The lifting of the quota has created an environment of entrepreneurial competitiveness where the Philippines has the opportunity to excel,” Juliana said. .
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The Philippines, where garments and textiles are the second largest export, is targetting niche markets and offering “the whole portfolio”, from designing the product to delivering them to the store, he said. .
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B.K. Patodia, chairman of India Cotton Textiles Export Promotion Council, said New Delhi was coordinating with Beijing so they would not undercut each other. .
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World Trade Organisation calculations show India share of the global textile market should quadruple to 15 percent from four percent, while that of China is likely to triple to at least 50 percent from 17 percent in 2003. “Business is booming and there is enough room for both of us to flourish in the new competitive environment that has emerged,” Patodia said. .
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Chatib Basri, an economist with the University of Indonesia, also said he thought Indonesian producers were shifting to high-end products so the lifting of the quota would have a limited impact. .
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Source: channelnewsasia.com
Date:4/10/2005
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