European textile players need to be flexible to changing demand
Eric Heymann, Senior Economist, Deutsche Bank Research
Agreement on Textiles and Clothing (ATC) expired at the end of 2004. This means that standard GATT and WTO rules now apply to the textile and clothing trades. Previously international trade in textiles and clothing was regulated via a complicated system of import restrictions. The industrial countries did this to protect their domestic industries from cheap foreign competition over the last forty years.
The end of quotas will work in favour of a small number of countries that manufacture textiles and clothing. China is the foremost example. The country, whose exports of textiles and clothing have hitherto been kept artificially low by quotas, can massively increase its output and exports virtually right away. India, and possibly Pakistan, should also benefit from the end of the ATC.
In this connection fibre2fashion speaks to Eric Heymann, Senior Economist at Deutsche Bank Research in Frankfurt/Germany.
Q. Can you anlyse the change or no in the the situation in the global textile & clothing industry pre and post quotas era?
A. After the ATC had expired, EU's imports in textiles and clothing from China and India increased dramatically. Imports from almost all other suppliers went down. In the middle of 2005 new quotas for imports from China were introduced due to pressure by some South-European countries. Thereafter imports "normailsed" with China being a temporary loser. From 2008 all quotas will be abandoned. China and India will be the countries which will benefit the most from market liberalisation.
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