KARACHI, May 14: Pakistan may lose market share to China once the Agreement on Textiles and Clothing (ATC) expires on January 1, 2005, abolishing all quotas to restrict textile and clothing exports from developing countries.

However, the situation could be compensated through shares taken from smaller (supplier) countries but this would only be possible if Pakistan undertakes domestic structural reforms to make its textile industry viable and its exports competitive ahead of phasing out of quotas.

These observations were made in the studies and reports undertaken by international organizations like the World Bank, the IMF and the UN on the occasion of conference organized by the European Commission (EC) on “The Future of Textiles and Clothing After 2005” held on May 5 and 6, in Brussles.

All studies carried out on the impact of textiles quotas elimination indicate that Asia will experience the greatest changes in the distribution of production. The quota system has provided protected market shares for higher cost producers, so when the quota system is fully eliminated in 2005 it would result in a much more market driven system.

These reports predict that China will have highest growth during the quota free era because it has a very cheap labour force, along with indigenous textile industry which could benefit from Hong Kong’s well established financial and marketing expertise.

The most extreme impact, the study foresees that China, which currently holds about one-fifth of the global apparel market, might have a 150 per cent increase in their overall textile and clothing exports or nearly 50 per cent of the world market after quotas are phased out. These assumptions are based both on the very high utilization of many quotas by China and China’s very important production capacities.

Nevertheless, the general assumption is that once quotas will cease to restrict textile and clothing exports from developing countries there will be an improvement of those countries’ trade, confirming the already existing trend which sees the increase in the movement of the clothing industry from developed to developing countries.

In fact, the majority of studies find that the MFA phase-out would increase global welfare as well as world trade of textile and clothing and developing countries as a whole will further gain market share in world total exports but not evenly at the level of individual developing country.

Despite such a gloomy picture it is ironic to note that Pakistan was poorly represented at such an important conference where about 700 participants from about 70 countries air dashed to have first hand information about the future of textile and clothing after 2005.

The country was thinly represented at official as well as private sector. The only silver line was in the shape of commerce minister Humayun Akhtar Khan’s speech read out by him on the occasion when he expressed his fears about the West (developed countries) using non-tariff barriers in the post-quota regime.

The minister said that “already there is a greater use by the developed countries of anti-dumping duties to halt exports of textile and clothing from developing countries.” The points raised by Humayun Akhtar Khan in his speech were well taken and praised by all the representatives from the developing countries.

Only five private sector participants were there to attend a conference, which was to unfold future trends of country’s 65 per cent exports i.e. textiles and clothing. There was no representative from APTMA or any other textile trade body. Barring chairman Pakistan Bedwear Exporters Association (PBEA) Aziz L Jamal and its former chairman Shabir Ahmed no other trade body sent its members to attend the conference.

Three other participants — Bashir Ali Mohammad, S M Obaid and Naseem Anwar — attended the conference in their individual capacity. Similarly, there were no officials from such important decision making bodies like ministry of finance, EPB, State Bank as well as Quota Supervisory Council (QSC).

The apex trade body, FPCCI who circulated the notice of EC conference to its member trade bodies was also conspicuous by its absence and all this indicates that how seriously such important matter was taken at official and private sector.

On the other hand countries like India, China and even Bangladesh were fully represented at official and private sector level.