Global : Textile Industry Likely to See Revolution in 2005

The businessmen and officials at a two-day conference on the textile trade in Brussels hosted by the European Commission is expecting a revolution in the textile industry all over the world when rich countries scrap all import quotas on clothing in 2005.

Textiles are one of the developing world's biggest industries and have been subject to strict import limits since the 1960s. For the past decade, though, rich nations have been reducing these barriers and they are due to be abolished in a final Big Bang in 18 months.

The changes to the $350 billion world industry already have been painful and promise to cause more upheaval among tee-shirt makers in Delhi to haute couture houses in Paris.

Consumers will benefit. Lower price retailers such as Carrefour SA are clapping their hands in anticipation. Clothing prices could drop between 5 percent and 10 percent, according to some estimates.

"We'll be able to better balance our product sourcing from Asia, the Mediterranean countries and Eastern Europe,"said Daniel Bernard, chief executive of French retailing giant Carrefour.

European and American textile industries already have lost hundreds of thousands of jobs and fear losing more. In Europe, specialty clothing markers are particularly mad. While developed countries are lowering barriers against imported textiles - the EU's average textile tariffs is 9 percent - they complain about facing high tariffs in developing markets. Pakistan and Thailand, for instance, charge between 20 percent to 25 percent. India's rate is 39 percent.

"We want access to their markets. Indian consumers should be able to buy a Hugo Boss suit," Filiep Libeert, president of the EU Textiles and Clothing Industry Association or Euratex.

Not all developing countries will benefit equally. China - with its low-paid workforce and huge factories - looks like the big winner, while smaller countries like Bangladesh fear being squeezed.

Textiles represent three quarters of Bangladesh's exports and directly employ 1.8 million people, and 10 million indirectly, mostly women.

The EU has no limits on imports of textiles from the world's poorest countries, including Bangladesh. Bangladesh is the EU's fifth largest supplier of textiles and clothing. In contrast, quotas remain on Chinese imports.

"If we don't get preferential treatment our industry will get seriously hurt," said Annisul Huq, director of the Bangladesh Garment Manufactures and Exporters Association.

China has been building its industry into a powerhouse in recent years, investing in new technology and factories to become the No 1 supplier to the EU, said Liu Youhou, economic and commercial counselor at the Chinese mission to the EU Chinese clothing exports to Europe were worth EUR10.4 billion in 2001.

EU Trade Chief Pascal Lamy is sensitive to the problem and his solution is to give a special break on trade rules to countries like Bangladesh. Strict regulations govern how much local fabric must be used in clothing for the product to be considered an export from Bangladesh. Since Bangladesh doesn't weave most of its fabric, those rules could be softened, Mr Lamy said at the conference.