The Hindu Business Line : EU, US may clamp down on Chinese textile exports

EVENTS scheduled to happen halfway across the globe during the course of the week could have a big bearing on the business prospects of Indian textile exporters.

A crucial meeting of the European Commission, the European Union's executive body, is scheduled on Wednesday to discuss emergency restrictions on Chinese textile imports, while the US government's Committee for the Implementation of Textile Agreements is shortly expected to take a first step towards imposing "safeguard quotas" on certain textile and apparel products from China.

Even though quantitative restrictions on the global textile trade were done away from January 1, under China's Accession Agreement to the World Trade Organisation, member-countries can impose quantitative restrictions in the form of "safeguard quotas" on Chinese imports till the year 2008 if they can prove that imports from the country are getting "market disruptive" in nature. The restrictive clause applies only to China because of its late entry into the WTO.

According to industry players, even if the EU and the US clamp down on Chinese suppliers on a selective basis, Indian exporters could be among the biggest beneficiaries.

"It remains to be seen how seriously the US and the EU initiate safeguard measures on Chinese textile imports and which items are ultimately subject to restrictions. Even if the US and the EU pursue restrictions selectively against Chinese home textiles or garment imports, Indian suppliers could turn out to be the biggest gainers," an industry player said.

The US and the EU are India's biggest market for textile exports, and Indian exporters have been smarting under severe competition from Chinese suppliers on most product categories since the opening up of the global textile trade. Exporters admit that during the last few weeks, there has been an increase in enquiries from European and US retailers who are at present sourcing from the country.

"Many of the buyers have big exposures in China and if a clampdown on imports from that country is effected, they would have to fall back on countries such as India for getting the bigger orders processed at prices comparable to those quoted by China," an exporter said.

Already, countries such as Turkey have initiated quantitative restrictions against certain garment categories supplied by China. The US has also initiated anti-dumping investigations on certain Chinese textile products. If the US or the EU impose "safeguard quotas," it would limit increases in import volumes of various categories of Chinese garments to only 7.5 per cent every year.

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