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WTO: China, India to dominate textiles
Updated: 2004-08-12 13:43

China and India are expected to dominate world trade in textiles and clothing starting next year when the United States and other industrial countries have to remove restrictions on imports, according to a World Trade Organization report released Thursday.

The WTO predicted that China alone will account for more than half of the global textile market following the end to the quota system that has governed international trade in textiles since the 1960s. The WTO-negotiated agreement will allow producers to export as much as they can sell - and the report contends that will be a lot more than many developing countries are selling now.

Indian and Chinese industries will become significantly more competitive, as the United States, the European Union and Canada - by the far the world's biggest importers of textiles - open their markets, the WTO said.

China had 30 percent of 2002 global market share in clothing and a 22 percent share in textiles. Other major exporters include Germany, South Korea and Turkey.

But the expected surge in Chinese and Indian competitiveness might be limited by the time it takes for its products to reach consumer markets. The WTO said the lag should help to insulate countries close to the main markets from increased competition.

"Mexico, the Caribbean, Eastern Europe and North Africa are therefore likely to remain important exporters to the United States and EU respectively, and possibly retain their market shares," the report stated.

Those countries will have an added advantage because they have regional trade agreements with those major markets, giving them preferential access, the report found.

Increasing competition from other countries is also another threat to China's dominance.

"Other developing countries are catching up with China in terms of unit labor costs in the textile and clothing sector and China has not yet shown competitive strength in the design and fashion segments of the markets," the report added.

The most likely exporters to lose market share are those located further away from North America and Western Europe and which currently have either quota or tariff free access to U.S. and EU markets, for example sub-Saharan African countries, the report found.

Local producers in the United States and EU will also stand to lose out because of pricing pressure, among other factors.

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