06 September 2004	Monday	20 Rajab 1425

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Although the phased implementation of the agreed framework under the World Trade Orgzanization (WTO) regime started as early as 1995, its real effect will be felt from January 1, 2005 , when most trade barriers will either be removed or significantly reduced.

Among these an important and much talked about non-tariff barrier critical to Pakistan's exports that will be withdrawn relates to textile quotas. While this will represent a big step in making global trade freer, the eventuality of this act is being viewed cautiously by a circumspect set of developing countries with a large textile manufacturing and export sector.

Consumers are looking forward to the gains that will accrue from the freer movement of textiles, while some producer countries are awaiting 2005 with a sense of uncertainty for the fierce competitive environment that may result from the dismantling of the quota regime. Pakistan, with textiles contributing 67 per cent of total exports and 46 per cent of its total manufacturing sector, is one such country.

There is an urgent need to assess the fate of Pakistan's textiles once the shift to a non-quota regime has been made. The intense competition that will be generated as a result will require both producers and governments to realign and reorient their policies and strategies.

Obviously, only the most efficient, dependable, quality conscious and cost-competitive manufacturers and exporters will be in a position to reap the benefits of free trade.

In acquiring these gains the government of Pakistan will have a key role in complementing the efforts of producers by facilitating access to raw materials and in exporting finished goods.

This will call for a policy framework in partnership with the private sector on WTO related matters. A detailed policy paper is, therefore, required to set out the contours of such a partnership.

A key factor from our perspective would, of course, be the strategies being adopted by other exporting countries to adjust to the changed environment. Along with efforts of manufacturers to enhance their production and marketing efficiencies, what sort of policy measures are being initiated by these governments to facilitate their exporters in competing globally?

How can we compete with China and India and how can we increase, or even sustain, our present share of 20 to 25 per cent in world trade in textiles? What steps can Pakistan take to ensure that it does not lose out in a world in which quotas will no longer be a factor in determining where buyers purchase textile products and/or where investors set up production capacities?

Since these are the worries and challenges facing our textile entrepreneur today, both the government and the private sector need to get their act together and identify, based on their present level of preparedness, the additional work needed and the timeframe available to them to turn this lowering of trade barriers to our advantage.

Other areas that need to be tackled simultaneously are the concerns about hidden barriers and operational difficulties. The hidden barriers include:

(i) social compliance;

(ii) environment friendliness;

(iii) quality certifications;

(iv) lack of adequate local market support; and

(v) transparency laws, etc.

While operational difficulties refer to

(a) economies of scale;

(b) requirements of vertical and horizontal integration;

(c) increased documentation;

(d) accuracy in collection of statistics;

(e) national image coupled with domestic political-cum-security situation; and

(f) communication, logistics, etc.

Another critical aspect relates to the legislative requirements of a regulatory framework pertaining to trade and investment.

A sound legal and environmental framework will safeguard and support the domestic textile industry while a well-defined policy will not only bring predictability and transparency but also ensure that local industry complies with World Trade Organization rules and regulations to gain the trust of global players.

A reference here to Chinese leadership is important for they took up this matter much before China even joined the World Trade Organization. How best to prepare the nation in general and the textile industry in particular to not only survive but also to take advantage of this development is a subject of foremost interest to policymakers and private sector stakeholders.

The real challenge facing these countries is in their ability to bring the government and the private sector together in such a way that they work in tandem and, jointly, bring in the right and timely, changes in policies affecting investment and management to ensure the competitive edge of industry in the new scenario.