GENEVA, March 28: Prices of textile products are likely to scale down in the major textile exporting countries, including Pakistan, following the elimination of quotas and quota price premium by the end of December 2004.

Official sources in the textile section of WTO secretariat on condition of anonymity told Dawn on Friday that the proposed trade liberalization, to be effective from January 1, 2005, might result in price decline of commodities for making it competitive with products of other countries in the international markets.

With this the importing country’s industry would continue to find ways for raising protectionist walls and the price decline might give them a chance to initiate dumping complaints.

The officials proposed that the necessity was that Pakistani textile exporters should not engage in domestic cutthroat competition so that they did not give an opportunity to the industry in the importing country for making such complaints, which would result in losing markets for their products.

Officials statistics made available to Dawn showed that textile and clothing are the biggest manufacturing industries in Pakistan, accounting for about 20 per cent of the value-added in manufacturing and employing 24 per cent of the industrial labour force. Pakistan produces 8.9 per cent of the world’s raw cotton and it has yet an access only to 2.4 per cent of global textile trade.

Textile yarn and fabrics are exported mostly to the non- quota countries and there will be no difficulty in exporting these products once the quota are removed, the officials said and added moreover, it would be the category of madeups and clothing where Pakistan was expected to face severe competition with the elimination of quotas from other countries.

Currently, both textiles and clothing, which account for 77.8 per cent of total exports, are expected to increase to 82.6 per cent of total exports. Similarly, the quota countries, which account for 52 per cent of Pakistani textiles and clothing exports are expected to absorb 59 per cent of textiles and clothing exports after January 2005.

According to the WTO agreement on textiles and clothing specifically states in article 9 that there will be no extension of this Agreement, which called for elimination of all quotas in the textile sector. What Pakistani exporters have to see is how to maintain and increase their market share in the post-quota free era, the officials said.

Currently Pakistani exporters are supplying cotton based products for spring and summer and majority of their shipments reached the major markets by end December every year.

The officials said that the implication of such a situation was that the importers were carrying inventories till they could place these articles on the shelves in the beginning of spring and summer seasons.

This situation is mainly because of the fact that presently the importers are also constrained to source their requirements from countries of their choice as the quotas limit this option, the officials remarked.

The situation would be entirely different from January 1, 2005, and Pakistani exporters will have to make arrangements either for quick turnaround and shorter lead time or make warehousing arrangement for themselves in the importing countries, the officials informed.

According to the officials, another factor, which would be very important in the post-quota free period will be value addition in the textile products, quality control and price competitiveness without actually lowering their prices.