WTO report says China will lead in textiles in 2005

WTO report says China will lead in textiles in 2005    China and to a lesser extent India will quickly dominate world trade in textiles and apparel following the end of quotas on Jan. 1, according to a new report from the World Trade Organization (WTO).
   The report, entitled 'The Global Textile and Clothing Industry post the Agreement on Textiles and Clothing,' by Hildegunn Kyvik Nordas, estimated market shares for China alone at 50 percent or more of the $400 billion global market in clothing.
   However, 'time to market is important and increasingly so, particularly in the fashion clothing sector. Therefore, countries close to the major markets are likely to be less affected by competition from India and China than has been anticipated in previous studies,' the WTO report said.
   As a result, Mexico, the Caribbean, Eastern Europe and North Africa are likely to remain important exporters to the United States and the European Union, and possibly maintain their market shares, according to the report. 'This is even more likely given the preferential access they have to the markets through regional trade agreements,' the survey explained.
   Countries most likely to lose market share 'are those located far from the major markets and which have had either tariff and quota-free access to the U.S. and EU markets, or which have had non-binding quotas. These countries will undoubtedly face adjustment challenges,' the WTO report said.
   Worse yet, local textile producers in the United States, Canada and the European Union are likely to lose significant market share. 'These producers have enjoyed more than 40 years of 'temporary' protection, but nevertheless face a long-term structural decline,' the report said.
   However China and India's expected surge in market strength 'may be less than anticipated,' as tariffs are increasingly restraining trade due to the fact that products cross borders several times. 'Furthermore, other developing countries are catching up to China in terms of unit labor costs in the textile and clothing sector, and China has of yet not shown competitive strength in the design and fashion segments of the markets,' the WTO report concluded.
   The survey noted that textiles and clothing are closely related both technologically and in terms of trade policy. The two sectors are increasingly integrated through vertical supply chains that also involve distribution and sales activities.
   'Indeed, the retailers in the clothing sector increasingly manage the supply chain of the clothing and textiles sectors,' the report said. 'This development probably started with the establishment of shopping malls such as Wal-Mart in the U.S. in the 1970s.'