GENEVA — The end of quotas on textiles and clothing in 2005 is likely to bring a surge in business for Chinese and Indian apparel makers, according to a recently released U.N. study. The report predicted that China’s apparel consumption would surge along with the nation’s growth in exports.
This story first appeared in the July 22, 2003 issue of WWD. Subscribe Today.
The study predicted that there will be much shifting in trading patterns over the remaining 17 months till the quotas are dropped by World Trade Organization nations. That move will liberalize the world apparel trade, which the study valued at $344 billion in 2001, and shift production centers.
“The lion’s share of these benefits will accrue to India and China,” said the World Commodity Study 2003-2004, which was compiled by the U.N. Conference on Trade and Development.
In 2001, Chinese exports of clothing reached $36.6 billion and accounted for an 18.8 percent share of world clothing exports, sharply up compared with a 4 percent share in 1980 and an 8.9 percent share in 1990, according to WTO estimates.
“Post-2005 will be a very competitive situation,” said Chiedu Osakwe, WTO director of textiles. “Market-access opportunities will be significantly improved for textile and clothing exporters and consumers.”
But Osakwe also?stressed that the opportunity of market access would bring “considerable challenges for small-scale exporters, largely beneficiaries of preferential market access.”
Industry experts have said it’s likely that some small nations, particularly those without vertical industries, are likely to lose most of their apparel businesses when the quotas are lifted.
Still, Osakwe contended the Agreement on Textiles and Clothing, which set the 10-year quota phaseout in motion, will enhance the credibility of global rules and solve “one of the one of the greatest anomalies of the past 40 years in global trade.”
The UNCTAD study, which draws on research and analysis by a range of academic research institutions and industry associations, predicted that China’s clothing market, which it said was worth $48 billion in 1999, could be worth $78 billion in 2005 and $101 billion in 2010.
However, a former top Chinese official, who declined to be identified, said he considered the projections “too conservative.”
India, with a population of 1.05 billion,?and a well-heeled middle class is also seen as a market with “tremendous market potential.”
The snag, however, is India’s high tariffs which on average are nearly four times higher then the applied U.S. textiles tariffs of around 17 percent.
On China’s export front, UNCTAD said “the biggest market for Chinese exports of textiles and clothing might not be, as one might expect, the U.S., but rather Japan with over $10 billion in textile sales.”
Looking at the?global picture post-2005, one official from the International Textiles and Clothing Bureau, a Geneva-based organization of developing nations that pushes for market access, said he believed traditional Japanese and Italian textiles and clothing makers with profitable businesses in high-value-added lines face no immediate threat from Asia. The official asked not to be identified. China and India, along with 22 other developing and developed nations, belong to the ITCB.
The cutthroat competition to retain market share, the same?official said,?is likely to focus on low-priced and moderately priced products, market sectors where countries such as China and India are highly competitive.