It is reported by APP that Asia's most vulnerable garment sectors have survived-even flourished-and proved the nay-sayers wrong during their first year without the protection of the global quota system.

But industry officials say they have only done so with the help of additional safeguards imposed by the United States and European Union against textile giant China. The end in December 2004 of the decades-old international quota system known as the Multi-Fibre Arrangement (MFA), which gave developing countries guaranteed access to developed countries' markets, was expected to doom the garment sector in countries like Cambodia, Bangladesh and Vietnam.
But all three recorded post-MFA export gains of between 9.0 and 11 per cent during 2005, keeping hundreds of thousands in work in an industry that is a key economic driver.
"We've proved all the doomsayers wrong," said Fazlul Haq, president of the Bangladesh Knitwear Manufacturers and Exporters Association.

In it's first post-MFA foray, Bangladesh, one of the region's poorest countries, posted 11 per cent export growth led by knitwear-T-shirts, sweaters and polo-shirts. Bangladesh-where over 4,000 garments factories account for three-quarters of export earnings and some two million jobs-was singled out for its poor infrastructure, unstable political situation and lack of integration in the textile industry. But the latest figures have dispelled the dire predictions. "Last year, we easily beat our main competitor China in these
segments. In addition, many of our big factories are so swamped with export orders some had to refuse orders because of supply side constraints," said Haq. The association's figures showed that more than 150 new knitwear garment factories began production last year while a large number of existing companies ramped up their production capacities.

But Haq acknowledged the country struggled at first against China's massive assault on the sector, only continuing its surge after the United States and European Union imposed more quotas on the east Asian giant.

In May 2005, the United States invoked safeguards contained in China's WTO accession agreement, which allowed it to impose quotas on seven types of textiles from China.
The European Union took similar action in June following a sharp spiral immediately following the end of the MFA-sector employment plunged about 10 per cent to less than 250,000 in Cambodia which also saw a boom following the additional safeguards.

The $1.9 billion sector provides the kingdom with more than 80 per cent of its export earnings and employed 279,000 workers in 236 factories as of November 2005. Exports rose 9.0 per cent last year, according to Van Sou Ieng, chairman of Cambodia's Garment Manufacturers' Association, but he warned that the expiration of the new safeguards at the end of 2007 will force a sector re-think.

"There will be a strong effect on Cambodia ... we have to be more productive, more competitive in price. Everybody has to reduce their prices," he said.

One industry expert also said the smaller countries have to become more creative as market demands for cheaper products gives China an edge. "The tendency is always to buy cheaper ... we are a consumer market and price is making the difference," he said.

He said China's obvious strength is the availability of labour and materials that allow it to mass produce cheap goods, and "it seems that China should take over most of the job". But he said the smaller sectors could continue to survive by catering to smaller, high-end markets.

The sectors "still have a chance because China is interested with mass producing. China is not interested in smaller quantities that are more difficult to produce". "Definitely, there is a high-end market building in some department stores, so there might still be some room for these smaller countries," he said.

Vietnam, where exports rose 9.6 per cent in 2005, hopes to counter China's onslaught by producing more raw materials and lowering production costs, said Le Van Dao, the general secretary of Vitas, an umbrella group for Vietnamese textile producers.

"We need more investment in facilities, production of materials," he said "Vietnam does not have raw materials, so we have to import them. China has some, so their products are cheaper."

Textiles are Vietnam's second biggest foreign exchange earners after crude oil. But Vietnam's successes have perhaps gone too far, putting the country at the centre of a textile row with the EU, which slapped anti-dumping duties on Vietnamese-made shoes in February following a huge jump in imports.

The EU accused Vietnam's government of unfairly supporting manufacturers, allowing them to sell their good at below market prices. Vietnam has denied this. "We believe that Vietnamese enterprises do not sell their leather footwear to European market at dumping prices," Vietnam's foreign ministry spokesman Le Dung insisted last month.

Source: CCPIT TEX