When the textile trade liberalises, China could be denied its riches from rags by an anti-surge device
When the quota controls that govern the world's textiles trade are scrapped in 2005, China should, in theory, be the biggest winner. But post-quota 'safeguard measures' erected by the United States to prevent export 'surges' from the mainland will ensure that China's gains are limited.
China is the world's biggest producer of textiles and garments. It exports more than US$50 billion annually and accounts for about 13 per cent of the world's textile trade.
As agreed by World Trade Organisation member countries, the Multi-Fibre Arrangement (MFA) will be phased out by 2005, when quotas on yarn, fabric, textiles and clothing will be abolished.
Developing countries are expected to gain US$40 billion to $50 billion from the liberalisation.
'The impact of the Multi-Fibre agreement on the world will be tremendous, but the impact on China will be less tremendous,' said William Fung Kwok-lun, group managing director of Li & Fung, which trades billions of HK dollars worth of textiles annually.
'The [MFA's] impact on Asian textile employment and exports may be substantial,' Kim Eng Securities wrote in a report. 'Employment in light industries in Europe and the US may fall by over 20 per cent, while corresponding employment in countries once restricted by MFA may rise by as much as 80 per cent.'