Knitwear Industry in wake of WTO scenario

Abstract

The present Global Scenario of Textile Industry with particular reference to the position of Pakistan in the International Textile Market is given here for the interest of our readers. The demand for textiles in the world is around $18 trillion, which is likely to be increased by 6.5% in 2005. China is the leading Textile exporter of the world's total exports of US$ 400 billion in 2002. Country wise major market shares of the textile exporting countries are: China:$55 billion, Hong Kong:$38billion, Korea:$35billion,Taiwan:$16billion,Indonesia:$9billion.Thoughpakistan has emerged as one of the major cotton textile product suppliers in the world market with a share of world yarn trade of about 30% and cotton fabric about 8%, having total export of $ 7.4 billion which accounts for only 1.2% of the over all share. Out of this Cotton fabric is 0.02%, Made-ups is 0.18% and Garments is 0.15%. This is mainly due to the laxity towards the promotion of value added sector. Pakistan should learn a lesson from Bangladesh, which, by importing yarn and fabrics from Pakistan and other countries, has increased the export volume of Textiles made ups. If we desire to achieve the target of Textile Exports as envisaged in Textile Vision 2005, we will have to promote Value added sector in Textiles. Textile products are a basic human requirement next only to food. This industrial sector in Pakistan has been playing a pivotal role in the national economy. Its share in the economy, in terms of GDP, exports, employment, foreign exchange earnings, investment and contribution to the value added industry; make it the single largest determinant of the growth in manufacturing sector. Textile share of over all manufacturing activity is 46%, export earning is 68%, value addition is 9% of GDP and as a provider of employment 38%. 7 In spite of the government's efforts to diversify exports as well as industrial base, the textile sector remains the backbone of industrial activity in the country.Textile Vision-2005 has been directed towards an open, market-driven, innovative and dynamic textile sector, which is internationally integrated, globally competitive and fully equipped to exploit the opportunities created by the Multi Fibre Arrangement (MFA). Pakistan, at present, holds 8th position in textile exports in Asia. Pakistan can achieve the 5th position in Asia in the textile exports as has been targeted in the Textile Vision-2005.After nearly four decades of derogation in GATT and imposition of quotas, unilaterally, bilaterally, multilaterally and voluntarily, the trade in textiles will be integrated into GATT on 1/1/2005 , meaning there will be no quota restraints on textile products, except possibly in some categories for China's exports to the USA and EU as a result of China's terms of accession to the WTO.Pakistan's exports being accounted for by textiles and clothing valued at $7.4 billion for 2002-2003, having only 30% share for clothing. Yarn and cotton and MMF fabric alone accounted for 34% .The major players, vis-a vis quota are EU and the USA. How will Pakistan and other competing countries fare post-quota regime depends on the attitude, mainly of USA and the EU.The 15 EU member states are to take in additional 10 members on 1st May 2004. These countries are also relatively cheap textile manufacturers where the EU companies have traditionally sub-contracted or relocated their units. While the EU 15 accounts for 20% of world's import (second only to USA at 24% ) it is also the world's second largest textile and clothing exporter accounting for 11% and second only to China. Another potential threat to Pakistani exporters in 2006 or earlier if the EU looses its case in the WTO is the withdrawal of 0% duty presently granted under the EU's GSP Scheme. In the USA around one million people are employed in 5117 textile companies and 6134 textile plants. The Southern States, particularly North and South Carolina, 8 Georgia, Virginia and Alabama are strongly lobbying for protection of textile sector in USA. Since the Asian crisis and WTO's ATC, over 250 textile plants shut down and the USA lost around 200,000 jobs with 30,000 jobs lost since January 2002, mainly in the 5 states mentioned above. Thus one can not expect easy ride into the USA after 2005 without resistance. The major likely trend for USA for 2004 can be summed as following: Net yarn exports and imports may be approximately $1.3 and $1.7 billion respectively; in fabric imports may be $8 billion with exports less than $6 billion; in made-up articles, $9.5 billion may be imported, with less than $2 billion exports and in apparel, $7 billion of exports against more than $63 billion of imports. Like the EU, the USA will also concentrate on high tech textile products like non-woven, particularly hygiene products like diapers, wipes, feminine hygiene and adult incontinence and high end fashion, particularly for women's wear. There is every likelihood that quotas on safeguard categories will be in force beyond 2005 for China and Vietnam. This will provide a breathing space to exporters in other developing countries as well. For Pakistan, the competitor will not only be China and Vietnam but also countries whom USA has given preferential treatment like NAFTA, CBI, AGOA, etc. The USA has signed TIFA with Pakistan but it will not translate into preferential duties for Pakistani textiles in the near future. 9 The USA and the EU will, on the one hand, demand better market access for their textiles and also the implementation of WTO bindings, particularly in tariffs and intellectual property rights and enforce strict rules of origin, while on the other hand the buyers will make more demands for compliances. Pakistani exporters will have to be ready particularly on account of chemicals and dyes, labor and environment compliance issues. Pakistan's export of textile and clothing is expected to cross the $8 billion mark in 2003-2004 from previous year's nearly $7.5 billion exports, If the Pakistan government and the private sector cooperate, the net balance is in favor of Pakistan. Supply of yarn and fabric to exporters, both within and outside the purview of DTRE should be treated as deemed exports for all purposes, production of MMF/Synthetic should be encouraged, private sector be encouraged to stock-pile and have buffer stock of cotton. The govt on the other hand should agree in the WTO to lowering of duties as it is difficult for Pakistan to have FTAs/RTAs with any relevant countries and blocs. Pakistan will also have to concentrate on lowering of its cost of doing business for which the Ministry of Commerce and the State Bank has reportedly undertaken studies. Finally, the three weakest links in Pakistan's textile chain, viz, ginning and dyeing and marketing initiatives will have to be improved to take maximum advantage of it's potentials.