Phasing out of the Agreement on Textiles and Clothing (ATC)have had different degrees of impact on the South Asian countries depending ontheir level of competitiveness, factor endowment and marketing calibre. Basedon 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 inthe region. However, the entire landscape of the Textiles and Clothing(T&C) sector in the region will change after the elimination of thesesafeguards 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, concertedefforts need to be made at three levels to realize this potential. First, toform 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 regionalcooperation platform to remove barriers to trade, investment and technologytransfer within the region. Second, to make investments in addressing supplyside constraints in order to enhance the competitiveness of the South AsianT&C sector in a phased manner. Third, to adopt strategies used successfullyby 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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