The Hindu Business Line : Textiles outsourcing, US' new bugbear

THERE could be a new twist to the outsourcing debate in the US, with the textiles sector now taking over from the ITES (IT-enabled services) sector as the bugbear of the American industry.

With a host of large US textile companies, including Pillowtex, WestPoint Stevens, Burlington Industries, Malden Mills and Fruit of the Loom, going belly-up under pricing pressures, the US textile manufacturers are furiously training their guns on Indian and other low-cost suppliers.

The Indian exporting fraternity is, consequently, expecting some sort of reverses in the form of policy directions from the US Government to protect the home industry as the quota regime in global textile trade runs into its last leg. This could be either by way of increased tariff barriers or non-tariff safeguards such as sanitary and phyto-sanitary measures, environmental norms and labour issues, industry players said.

"The next round of outsourcing debate in the US is likely to be centred around the textile business. The US industry has already voiced its concern over the quota phase-out schedule, lobbying as it were for an extension beyond January 1, 2005," an analyst tracking the sector said. The first step could already have been taken in this regard, with a two-day emergency meeting of the World Trade Organisation's Council for Trade in Goods (CTG) set to consider requests from certain member nations for an extension of quota phase-out deadline by as much as three years.

Even though the meeting, scheduled for October 1 and 2, has been called following requests from countries such as Bangladesh, Nepal, Mauritius and a handful of African Least Developed Countries (LDCs) for postponing the deadline, industry sources said the US textile industry has a hand in raising the issue. "Since the WTO is a body of governments, the US industry seems to have pushed its case through some of the LDCs to be raised at the CTG since they would not be able to make a case for themselves," an industry body member said.

The WTO-negotiated Agreement on Textiles and Clothing, under which the quotas are being phased out, would allow producers to export as much as they can sell. The major worry for the US industry is that sourcing from countries such as India and China could become a prerequisite for retailers to survive the cut-throat pricing war being waged in the US retail segment once the quotas are phased out. While China is on top in the apparel sector, India is emerging as the most competitive in the home textile business.

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