Debate Over Phase-out Of Textile Quotas

Import quotas on textiles and apparels are due to become non-existent as from 1 January 2005 pursuant to the WTO's Agreement on Textiles and Clothing. 

Pro-Extension Coalition 

The Global Alliance for Fair Textile Trade (GAFTT) is an alliance of textile and apparel groups from around the world united under the Brussels Communiques, the successor to the "Istanbul Declaration". The Alliance is planning a worldwide campaign to raise the awareness of the world community about the consequences of the end of the quota-phase-out.  As of 17 June 2004, 91 trade groups in 49 countries have joined the alliance.  

According to the coalition, the expiration of worldwide textile and apparel quotas represent a crisis of unprecedented worldwide proportions. 30 million textile and clothing manufacturing workers will lose their jobs and US$200 billion in world market share will be lost if one or two countries monopolize the world’s textile and clothing market.

A few countries are believed to be well positioned to monopolize the world market. For example, Japan and Australia are developed countries with no quotas on textile and apparel imports. China now controls more than 75% market share in those countries. In the United States, in apparel categories released from quotas on January 1, 2002, China jumped from 9 %  market share in 2001 to 65% market share as of March 2004.

Asian Endorsements

Pledges of support from the Bangladesh Textile Mills Association (BTMA), Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA), The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and the Confederation of Garments Exporters of the Philippines are the first Asian endorsements of the Istanbul Declaration.

Seek Government Support

Mauritius has become the first country to publicly call for a special World Trade Organization (WTO) meeting to examine the impact of the pending elimination of all remaining textile and apparel quotas among WTO members. Mauritius will seek to persuade other African countries to follow its lead. The GAFTT also urged its members to step up their efforts to persuade their home governments to support the WTO meeting.

The Mauritius announcement came one week after the Summit on Fair Trade in Textiles and Clothing in Brussels, which the GAFTT said marked a shift in its efforts. Whereas previously the group had concentrated on gaining trade association members, at the summit it moved into a phase of actively seeking government support. Only a WTO member government can request the emergency meeting.

India Oppose Extension of Textile Quota Regime

According to World Bank studies, China, India and Pakistan are expected to do better than the existing exporters from the developing world in a more competitive environment.

The Union Commerce Ministry has been watching the development. Appropriate steps would be taken if it reaches a stage when a meeting of WTO is called on the issue." India will oppose any move to modify or repeal the agreement on quota phase-out.

The Secretary General of the Indian Cotton Mills' Federation (ICMF) described the so-called Istanbul Declaration logic, that accession of China to WTO happened after the Agreement on Textiles and Clothing was reached and therefore the new entrant should not have the benefit of the quota phase-out, as false.

"Everybody knew in 1993-94, when the agreement was being drafted and finalised that China will join WTO sooner or later", he argued. Mr Nair pointed out that the US manufacturers were not asking the quota regime extension for China alone. This they could have asked under the special provision of the accession for China. The blanket extension demand raises the suspicion that they may want the current quota regime to continue to protect their interests.

The regional trade pacts and preferential trade agreements have made a mockery of the quota regime. Imports from those countries, which enjoy preferential trade agreements into the US, do not have to follow the quota restrictions. Thus, quota regime is used by the US manufacturers as a restrictive trade practice and a sort of non-tariff barrier against free competition.

Rejected by Bush Administration

On June 9, over 100 Republican and Democratic members of Congress ask President Bush to persuade WTO to delay the phase-out of the textile quota system. The Administration at once rejected the request. A spokesman for the office of USTR said that US woull abide by its international obligations that were negotiated over a decade ago. Adding that the Administration had been helping the American industry through bilateral and regional trade agreements which required nations to use American yarns and fabrics if they want the benefit of duty-free access to the US market.

Group 18 Coalitions

A coalition of American, Canadian and European retailing, importing and consumer associations, called the group of 18, is campaigning against any extension of the quota and against a special global trading session. “The end of the quotas was an essential concession by the developed countries to the developing countries, requiring the developing countries to accept new international rules and disciplines. Efforts now to disregard this grand bargain raise grave concerns about the future of the international trading system.”

  Back to Index of July 2004