Phasing out of the Agreement on Textiles and Clothing (ATC) have had different degrees of impact on the South Asian countries depending on their level of competitiveness, factor endowment and marketing calibre. Based on the data available for the first two years after the phasing out of quotas, it can be inferred that temporary safeguards imposed on China have provided some breathing space for the relatively less competitive countries in the region. However, the entire landscape of the Textiles and Clothing (T&C) sector in the region will change after the elimination of these safeguards in 2008. This article argues that despite several constraints, the South Asia region has a potential to develop itself as a global T&C hub. Therefore, concerted efforts need to be made at three levels to realize this potential. First, to form a common position at the international negotiations forum to overcome protectionist market access barriers. This should be done in tandem with the use of the regional cooperation platform to remove barriers to trade, investment and technology transfer within the region. Second, to make investments in addressing supply side constraints in order to enhance the competitiveness of the South Asian T&C sector in a phased manner. Third, to adopt strategies used successfully by countries within and outside the region to ward off competitive pressures, which are likely to ensue when the T&C trade becomes free from all restrictions.

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