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Around the World AUSTRALIA COTTON INDUSTRY TARGETS CHINESE MARKET Australia's cotton industry, attempting to boost market share in fast-growing China, has joined its main competitor the United States in accusing the Asian giant of erecting a trade barrier with its planned new quality tests for imports. Already under criticism for failing to live up to its (WTO),
commitments to allow more imports, China, the world's largest cotton consumer, is to raise
the quality bar in October for both domestic and imported cotton. China's quarantine authorities have been working on the tests to measure short fibre content and the number of "neps", or little knots in cotton fibres that hamper spinning and dyeing. The US cotton industry has also lashed out at the plan for the tests, which it says is harder to pass for countries which machine harvest their crops. EXPORT COTTON TO CHINA PLANNED Australia planned to export cotton to China this year despite a drought that has shrivelled its 2002-2003 crop by nearly two thirds. "We have a drought in Australia. Our production has been cut back significantly. But we intend to do some business in China", said Dorcen Walters, Chairman of Australian Cotton Shippers Association. "I would not be surprised if some business has already been conducted to China from Australia". His remark came as the Australian Bureau of Agricultural and Resource Economics (ABARE) cut its forecast of 2002-2003 April-March summer crops to the worst in 20 years because of severe drought. It predicted the cotton crop would shrink to a mere 262,000 tonnes this year - a fraction of the 693,000 tonnes of cotton lint produced in 2001-2002. BANGLADESH EXPORT SURGED IN CATEGORY 4 Until now benefiting from a quota-free regime, Bangladeshi exporters may be confronted with a sharp decline in shipments after 2004, although they already took a large share of EU's T-shirt market. This because China is now pushing hard in highly sensitive EU category 4 (T-shirts and polos). After declining by 8.7% in 2001 as a result of lower demand from EU's market, Bangladeshi shipments rose nearly 9% in 2002. In the past ten years, EU's imports from Bangladesh surged in category 4 (mainly T-shirts), rising from 231 million pieces in 1997 up to 453 million pieces in 2002. EU's buyers took advantage from Bangladeshi quota-free status while nearly all other Asian imports are subject to limits. BRAZIL TEXTILE SECTOR BOOST EXPORTS TO U.S.A The Brazilian textile sector has been trying to increase exports to North America in order to balance the poor results obtained in the external market after the crisis in Argentina (main Brazilian importer), which reduced orders at 60% in 2002. The US increased imports from Brazil at 37,02% while Mexico and Canada demanded 45,08% and 9,97%, respectively. The US absorbed US$374.3 million or 31,5% of the Brazilian exports, which amounted to US$1.18 billion in 2002 - 9.23% fall compared to the US$1.3 billion shipped in 2001. Meanwhile, the modernization process of Cedro Cachoeira, demanded investments of US$60 million and started in 1998 through the erection of the Fabrica Santo Antonio (Pirapora - Minas Gerais). The plant uses the rope dye system and increased the indigo production at 42% in two years. Sao Jose also sited in Minas Gerais State injected R $7 million in its first indigo line. The textile currently represents 20% of the company' total production and the expectation is for a production of 750,000 meters per month this year. CHINA SHIPMENTS TO THE EU WILL SURGE IN 2005 China continued saturating a large series of EU quotas in 2002 as a clear sign that China's shipments to the European Union would surge in 2005. EU's imports from China were far from surging last year in categories still subject to quotas. This is no surprise, since China fully used its quotas in a large part of EU categories in the past years. As a result of China's WTO accession, quantitative barriers were removed for several categories, effective from 1 January 2002. At the same time, China benefited from acceleration in its annual quota growth rate, like all other WTO members. Since annual increases accepted by the European Union were already very low, the acceleration had no significant impact on the level in quotas allocated to China. In 2001, quota increase mainly ranged from 0.1% up to 2% for the largest part of EU categories. In 2002, quota growth was raised to between 0.31% and 2.6%, which also made no dramatic difference. As a result, the rise in shipments was limited to an average 4% to 5%, more than the growth in initial quotas as several categories benefited from an adjustment in EU's limits. EUROPEN UNION Quotas could be replaced by anti-dumping duties Anti-dumping duties could partly replace textile quotas after quantitative limits will have been removed, a large series of low-cost countries warned in a report sent to the WTO. The way investigations are initiated should be changed. After quotas, anti-dumping duties? As recently explained by a Work Bank's study, importing countries could turn to other forms of protection after the sudden phase-out in textile quotas, by the end of 2004. According to a 10-page report released by the WTO, anti-dumping investigations have a dramatic impact on imports from targeted countries, even if investigators finally renounce in imposing additional duties. Largest textile and clothing exporters signed the study, including China, Hong Kong, Bangladesh, India, Korea, Pakistan, Thailand, Vietnam, etc. Anti-dumping investigations The European Union did not wait for quotas' removal before launching anti-dumping investigations on imported textile products. In order to support their conclusions, exporting countries selected various anti-dumping investigations by the EU, related to synthetic fabrics, cotton fabrics and bed linen. Regarding bed linen, for instance, EU's first investigation was initiated in 1993 by EU's Commission after receiving a complaint by industry association Eurocoton. Following a two-year investigation, EU's officials did not, however, impose definitive duties. Eurocoton immediately filed a new complaint, with a new investigation launched by EU's Commission as a result. Duties were finally imposed in 1997. On its turn, India filed a complaint before the WTO, leading to a condemnation of EU's decision by the appellate body, three years later. After changing the way duties are calculated, the European Union launched new anti-dumping investigations a few weeks ago on imports from India and Pakistan. ASIAN EXPORTERS TO GAIN EU's pullover market (Category 5) is expected being deeply changed after the removal in quantitative limits, as a large series of Asian countries saturated their quotas in the past years. Suppliers of pullovers, jerseys and cardigans from Turkey, Romania, Morocco and Tunisia will soon be confronted with surging competition from Asian exporters, effective from 1st January 2005. Still limited by EU's quotas, imports from a series of Asian countries steadily increased in the past two years, in volume terms. Due to acceleration in quota growth as planned by WTO's agreements, shipments from Indonesia and India were even up 13.30% and 19% in volume terms in 2002. As a consequence of the high level in limits granted by the EU, Indonesia and India are the two leading suppliers among countries subject to quotas. India's quota fill rate in category 5 even reached 113% of initial quota in 2002 and 100% of adjusted level, finally. Average unit value of Indian products was down from US$3.63 to US$3.43 at the same time. HONG KONG PRESERVING ITS SHARE OF GLOBAL APPARELS Although apparel shipments through Hong Kong dramatically fell in 2002 in volume terms, sales did not decrease due to a surge in unit prices. Hong Kong tries maintaining its first rank as an apparel-trading hub between Asian low-cost countries and consumption markets. Although direct sourcing from mainland China flourished in 2002, Hong Kong's apparel sales were only down 0.6% at US$14 billion. In volume terms, however, they fell 38% as a clear sign that low-cost production could now avoid using the Hong Kong's channel. A large series of trading houses originated in Hong Kong are shifting to Shanghai. In addition, the withdrawal in US and EU's textile quotas in 22 months will eliminate Hong Kong's main advantage, at the same time. Sales to importing countries benefited from a rebound in demand in 2002, however, added to a decisive improvement in product mix as reflected by the surge in average unit values. Sales to Japan fell 19% in value terms, nevertheless, at US$1.6 billion, while re-exports to the US rose 9.7% at US$4.43 billion. A large series of quantitative limits imposed on China were still saturated in 2002 and shipments were again sent through Hong Kong in order to benefit from substantial quotas granted to the former British colony. The US by far remains the first destination of apparel using Hong Kong's hub with a 31.5% share in total re-exports in value terms, limited to 15.8% in volume terms. However, shipments to the UK less rapidly decreased in 2002 than re-exports to many other countries. As a result, UK's share in total shipments slightly rose last year. INDIA $50 BILLION EXPORT TARGET BY 2010 The Indian government has announced 100% assistance to the textile centres infrastructure development scheme (TCID) to achieve $50 billion export target by 2010. The scheme will benefit 24 textile development centres in the country. A report, published in the Economic Times of Mumbai, said that the Indian Federal Textile Ministry had issued orders to all state governments to provide assistance to the textile centres under the scheme, aimed at plugging critical infrastructure gaps in traditional textile and apparel clusters. The report said that the assistance under the scheme was earlier restricted to 50% of the project to a maximum of Rs 200 million for each area. Under the revised scheme, central assistance would be available to the extent of 100% of the project's critical components. The grant for other components would be 75% with the balance of 25% expected to come from the concerned state or agency. The report further said that the assistance was aimed at removing bottlenecks in the exports to achieve the target of $50 billion envisaged in the national textile policy. COTTON PRICES UP AS SUPPLY WANES Cotton prices in India, the world's third-largest producer, are expected to inch up in coming weeks due to a seasonal drop in supply and quality, but prices could tumble if war erupts in Iraq, traders said. Cotton supply from the new crop, sown in June-July, had fallen by about 22% from two weeks ago to 70,000 bales (of 170 kg each) a day, traders said. The new crop that arrives in the market in December and January is of good quality, coming from the first two pickings. Farmers normally pick four to five times a year, with the quality of
the cotton deteriorating in each round. Demand for Indian yarn and textiles could fall in the world market if there was a war, traders said, adding there could also be problems in shipping besides cancellations of export orders.
RS 17 CRORE TO BE INVESTED IN NAGPUR APPAREL PARK Mr. Mohapatra, secretary, ministry of textiles, announced that the government is keen to provide a Rs 17 crore package for setting up an apparel park at Nagpur. The proposed park will be operated as a special purpose vehicle (SPV) and will be run independently by entrepreneurs. Mohapatra said out of the Rs 17 crore earmarked for the apparel park at Nagpur, Rs 10 crore will be spent on infrastructure development, Rs 5 crore on pollution control equipment and Rs 2 crore on training of entrepreneurs. The park would come up over 50 acre of land and will house around 100 export oriented units (EOUs). INDONESIA TEXTILE AND CLOTHING EXPORTS AGAIN DECLINING Indonesia's textile and clothing exports again declined in 2002 as a result of various difficulties met by domestic exporters. Shipments could further decrease this year. According to domestic sources, Indonesian exports fell from US$8.2 billion in 2000 to US$7.6 billion in 2001, further decreasing to US$6.9 billion in 2002. Indonesian exporters are actually losing substantial shares on EU and US markets to the benefit of China and Vietnam. Exports of woven apparel were down 12.23% at US$2.24 billion while shipments of knitted apparel declined 17.37% at US$1.29 billion, according to official data. As a result, Indonesia's saturation in quotas decreased in 2002. EU's limits were only reached in categories 5 and 6 in 2002. Indonesian textile and clothing producers denounced the huge level in illegal imports. As a result, Jakarta decided restricting textile imports, which deeply irritating EU's trade officials. The archipelago's textile and apparel groups did not fully recover from Asia's financial crisis, followed by political turmoil and subsequent increases in labor costs. According to domestic rumours, foreign investors would try relocating factories in the coming months. In addition to other difficulties, Indonesian textile exporters also fear a planned reduction in tariffs within the ASEAN. They urgently requested a delay in implementation of AFTA (ASEAN's free trade area). Far from accepting a removal in barriers, Indonesia's trade ministry plans dramatically raising textile and apparel import tariffs to 40%, the limit accepted under WTO rules. Indonesian exporters also fear the negative impact of a possible war between the US and Iraq. Sales to the Middle East surged in the past years but could dramatically fall as a result of the conflict. COUNTRY NOT EXPECTED TO REACH TEXTILE EXPORT TARGET Textile and garment makers said they could not meet the export target of US$7 billion this year, without stimulus in the forms of a tax cut or abolition and other facilities. Chairman of the Indonesian Textile Association (API) Benny Soetrisno said the government has to curb imports to strengthen the domestic industry, otherwise, many more workers will lose their jobs this year. Benny said the government should address the problem faced by the industry after being weakened in the past several years with the flood of cheap imports. He said the year 2003 would bring the heaviest challenges for the industry as while the market is flooded with imported products, the government has raised the fuel price and electricity and telephone tariffs. He said 300,000-textile workers face losing their jobs this year. In 2002, 64 textile companies already laid off around 19,040 workers. SRI LANKA US EXPERT TELLS INDUSTRY TO STOP MAKING EXCUSES A leading clothing industry expert has told the Sri Lankan apparel industry that even though it cannot compete with India and Pakistan in the production of commodity products, manufacturers should understand their customers and brands, build up their performance record and focus on productivity. The American Chamber of Commerce in Sri Lanka, industrialist Martin Trust warned that the removal of quotas in 2005 could easily see US exports from the "China region" (China, Hong Kong, Taiwan and Macau) increase from $11 billion to $20 billion. Trust, the founder of Mast Industries and a senior advisor to Limited Brands, said China and its regions are capable of producing the very merchandise presently manufactured in Sri Lanka. SOUTH KOREA WTO MEMBERS CALLED FOR MARKET ACCESS Textile and clothing industry leaders from South Korea and the EU have called on WTO members to remove tariff peaks and high tariffs in order to open up new markets for their products. They also appealed for removal of non-tariff barriers to trade in textile and clothing products. The consensus was reached at a meeting between a delegation from the South Korean Textile and Clothing Federation (KOFOTI) led by its Vice-Chairman, Mr Young-Kie Ahn, and the European Apparel and Textile Organisation (Euratex) led by its President, Filiep Libeert. Filiep Libeert said that South Korea is a major trading partner for the EU textile and clothing industry, and, in addition to the multilateral WTO matters which we have debated, the KOFOTI visit has also provided us with the opportunity to discuss bilateral relations too. The South Korean and European industries have agreed that they will remain in close contact during the course of the Doha Round negotiations and seek to achieve genuine market access for their products on hitherto closed markets. TURKEY COTTON PRICES STABLE Turkish cotton prices held steady on February 20, with volume rising ahead of a one-week religious holiday and amid concern about the impact a possible war in Iraq might have on trading. The price of benchmark Standard-1 Guaranteed cotton was 2,050,000 lira per kg (some $1,233 per tonne) in cash deals, unchanged from the previous week, but maturities were raised to 13 days from seven due to the holiday period. U.K. CLOTHING INDUSTRY PAYS LOWEST WEEKLY WAGES Dressmaking is the lowest paid industry in Great Britain according to 'New Earnings Survey 2002. Women in this area earn on average £212.40 per week, and men £257.50. The highest paid industry is brokerage, where men have an average weekly income of £1018.80. Comparatively, women in this sector earn half that of their male colleagues, £516.40 though this sector still provides the second highest weekly wages for women. Information technology jobs top the female chart paying on average £557.50 per week. U.S.A IMPORT OF LOW-PRICED CHINESE TEXTILE GOODS US and Caribbean textile producers said they feared competition from a flood of low-priced Chinese goods once the United States fully phases out import quotas in a little less than two years. In testimony before the US International Trade Commission, the American Textile Manufacturers Institute said US textile companies were already facing "extreme price pressures" from China, whose exports to the United States have surged since joining the World Trade Organisation a year ago. That problem will only increase after January 1, 2005. The United States pledged to phase out its textile and apparel import quotas under the 1994 Uruguay Round world trade agreement. It currently has quotas on 46 developing countries that together accounted for 83% of the total value of US textile and apparel imports in 2001. However, even after the quotas are eliminated, the United States will be allowed to maintain tariffs averaging 24% on textile products and 9% on apparel products -- at least until a new world trade deal is struck. China, South Korea, Taiwan and other big suppliers face US quotas on the largest number of products. Other countries, such as Nepal, may have limits on only one or two textile goods they ship to the United States. TEXTILE INDUSTRY CALLS FOR STRONGER PROTECTION The US textile industry reiterated its call for tougher action against illegal imports, putting pressure on the US administration and the US Congress. The American Textile Manufacturers Institute (ATMI) proposed an 8-point plan, one of the two major lobbying associations of the US textile industry. The plan includes an intensified fight against illegal imports. In a statement the ATMI's Chairman Van May denounced "the massive smuggling of Asian textile products using the in-bond system to gain duty-free access to the US market." The US administration is currently investigating a single instance of smuggling that involved 5,000 containers of textile goods from Asia worth US$500 million through the port of Los Angeles/Long Beach. The ATMI also wants the US administration imposing new quotas on certain products from China, which benefited from a removal in US limits from 1 January 2002. Following the surge in imports from China in these categories, the US administration should make use of the new textile safeguard included in the agreement over China's WTO accession. The ATMI wants also low-cost countries reducing their own import tariffs to the US level, before any further cut in US textile and apparel tariffs is negotiated within the Doha round. Bilateral free trade agreements with other nations should also exclude the use of textile materials from other countries when granting duty-free status to apparel imports.
VIETNAM US TO OPEN TALKS ON TEXTILE QUOTAS SOON Vietnam and the United States will begin negotiations in February on quotas for Vietnamese textile producers eager to tap the lucrative US market. A delegation from Washington will travel to Hanoi for the talks scheduled to begin on February 19. The talks will be chaired by the Trade Minister of Vietnam with the participation of representatives from the Ministries of Industry, Planning and Investment, Foreign Affairs, and the Vietnam Textile and Garment Corporation. The two sides will appraise Vietnam's textile production and export potential, particularly exports to the United States as a basis for the signing of an agreement between the two countries. According to the Vietnam Textile and Garment Corporation, Vietnam's textile exports hit $2.7 billion US in 2002, a 31.6% rise compared with the previous year, with the US market counting for around US $900 million of the total figure. However, the amount was less than 1% of the market share in the United States, lower than the level to apply quotas. Many Vietnamese textile businesses have signed contracts to export their products to the United States in 2003. The textile sector is trying to expand outlets to obtain an export value of US $ 3.15 billion this year. |
