Although labour is cheap in both countries, infrastructure is atrocious and corruption - even when compared with China - rife.

India, while also deeply corrupt, has relatively passable infrastructure and an unmatchable supply of cheap cotton, and will attract production from neighbouring countries when quotas are removed.

Cambodia will be one of the hardest-hit countries. Garment factory workers are now demanding their wages in advance, fearing their jobs may not last into the new year.

'Several small garment factories have already closed, creating a mood of panic. That is why so many workers are asking for their pay,' said Sun Jianjun, general manager of Grace Sun Cambodia Garment, a Hong Kong-owned factory.

Garment exports to the US accounted for 64 per cent of Cambodia's exports last year, with garment exports to Europe making up another 25 per cent. The country's garment exports came to US$1.6 billion last year, or about 94 per cent of the country's exports and 40 per cent of nominal gross domestic product, according to Cambodian government data.

About 240,000 workers, mostly women, are employed in the country's garment factories.

'I know two garment factories that closed recently, including one with thousands of workers,' said Liu Haopeng, the supervisor at Chinese-owned MG Garment Manufacturing.

The Cambodian government is negotiating with the US government for a reduction of import duty on Cambodian garments, Mr Liu said. 'If the talks fail, a lot of orders will move to China.'

To mitigate the impact of quota elimination, the US may offer some affected nations improved market access with free trade arrangements, said BNP Paribas Peregrine analyst Mohan Singh.

The WTO predicts that after the expiry of quotas, China's share of the European Union garment market will jump to 29 per cent from 18 per cent and its share of the US garment market will leap to 50 per cent from 16 per cent.

The rest of Asia outside China would see its share of the world textile trade fall to 20.1 per cent in 2008 from 31.9 per cent in 2000, while the rest of the world excluding China would suffer an even bigger drop from 45.7 per cent in 2000 to 29.4 per cent in 2008, projected US consultancy McKinsey.

Bangladesh, Cambodia and Pakistan are the most vulnerable to the end of textile quotas, as garments account for more than 70 per cent of their exports, according to the International Monetary Fund and the World Trade Organisation. Also vulnerable are Mauritius, Sri Lanka and Tunisia.

Corruption in Cambodia was even worse than China; many government departments demanded kickbacks from factories, said Mr Liu, a Chinese national.

Given the wretched state of Cambodia's economy, it would be difficult for retrenched garment workers to find jobs in other industries, said Roger Tan, deputy chairman of the Garment Manufacturers Association in Cambodia.

Bangladesh is another textile-dependant country that, mired in corruption and inefficiency, will have difficulty coping with the end of textile quotas.

Last year, the country ranked last of 133 countries in Transparency International's Corruption Perception Index.

'The perception of widespread corruption reduces the attractiveness of Bangladesh as an investment destination and source of imports,' according to an IMF paper by Montfort Mlachila and Yang Yongzheng.

Bangladesh's current textile quota allocation system is inefficient and does not encourage competition, said the IMF report. 'The system has favoured large and well-established firms at the expense of newer, potentially more innovative firms.

'Bangladesh needs to make determined efforts to raise productivity through structural reforms.'

In 2002, Bangladesh exported US$1.8 billion of textiles and garments, accounting for 70 per cent of its total exports. The country, which has a population of 140 million, employs 1.8 million garment workers.

The IMF paper projected Bangladesh's exports could fall substantially after quotas are removed, cutting total employment by 7.7 per cent, textile and clothing exports by 29.5 per cent and GDP by 4.1 per cent.

'If Bangladesh could achieve China's level of efficiency and product quality, it could double its current value of exports to the US,' the IMF said.

That is not likely to happen.

'It's going to be painful. Bangladesh is manufacturing garments using Indian cotton only because of quotas. When quotas go, it's not going to make sense to source from Bangladesh, because it will be cheaper to source garments from India,' said Kurt Cavano, chairman of TradeCard, a US firm that provides technology and services to international textile trading.

Three years ago Sri Lanka's textile industry adopted a strategy to be more competitive in the face of quota expiry, said Omar Ashrof, chairman of the Joint Apparel Association Forum which represents the country's textile industry. The plan calls for a shift to services and higher-end products, as well as focusing on niche products where Sri Lanka is competitive, such as intimate apparel and children's wear.

Sri Lanka, like Cambodia, is trying to adhere more closely to international labour and environmental practices to attract orders from US and European buyers, added Mr Ashrof, who is also chief executive of Brandix Lanka, Sri Lanka's largest apparel exporter with US$250 million of annual exports and 17,000 employees.

'We believe there will be a serious adjustment for sure. Some garment categories may disappear, but we hope other categories will take up the slack,' he said.