WTO Implications for Engr. Akber Sheikh akbers@yahoo.com

WTO Implications

for

Engr. Akber Sheikhakbers@yahoo.com

WTO ISSUES

-TEXTILE TRADE INTEGRATION(2004)

-LOWERING OF TARIFFS

-EXPIRY OF TRIMS CONCESSIONS(2004)

-TRADE REMEDY ACTIONS

-TECHNICAL BARRIERS TO TRADE

-ENVIRONMENT

-REGIONAL/PREFERENTIAL TRADE AGREEMENTS

-SINGAPOREAN ISSUES

BUSINESS ADVOCACY& TRADE DIPLOMACY

-DOHA ROUND-RTA’s-TIFA-THE CHINA FACTOR

THE INFORMATION GAP

-DOHA ROUND

-TRADE REMEDY DEFENCE-TRADE REMEDY COMPLAINTS-DISPUTE SETTLEMENT-RTA’s-COMPLIANCE DATES & PLANNING-IMPLEMENTATION ISSUES-MFN STATUS-TEXTILE QUOTAS

COMPETIVENESS ISSUES

-HUMAN RESOURCE DEVELOPMENT

-EFFICIENT INFRASTRUCTURE• UTILITIES .PORTS .DRAINAGE & EFFLUENT

• TREATMENT .SALES TAX .INVESTMEN IRRITANTS

-TRUE ZERO RATING OF EXPORTS

-INPUT COSTS

RECOMMENDATIONS

-EFFECTIVE INFORMATIONS DISSEMINATION

MECHANISM

-EFFECTIVE BUSINESS ADVOCACY FORUM

-ECONOMIC RESEARCH UNIT

-TRADE REMEDY ACTION COMMITTEE

-TRADE DISPUTE SETTLEMENT BODY

COMMITTEE

-IMPLEMENTATION & COMPLIANCE

COMMITTEES

Textile SectorProblems, Issues and

Recommendations

Cotton Balance Sheet

Cotton Consumption (Million Bales)

8.544

11.363

4.000

5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

1991-92 2002-03 (Projected) *

•Consumption of 500,000 spindles in unorganized sector is not accounted for. Source: TCO

Cotton Stock to Use RatioCotton Stock to Use Ratio

• Pakistan despite being 4th largest producer of cotton, has an extremely low stock of cotton reserves, i-e only 13% of its consumptions. Lowest in comparison to its competitive countries

Source: USDA

0%

20%

40%

60%

80%

100%

Cotton Stock to Use Ratio

% of Cons. 13% 46% 86% 32% 29%

Pakistan China USA India EU-15

World Fiber Consumption (Thousand Tons)

-

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

CottonNon-Cotton

The projected demand of fibers in the world is estimated by studies to reach 84,850,000 metric tons by the year 2010. MMF would take 67.7 % share of this demand and the rest of 32.3% would be filled by all natural fibers .

Source: Asian Textile Journal

Cotton Requirement 2006-07 Staple Length Wise

Category Staple Length Yarn Counts Cotton Required (Million Bales)

1

1-1/32 1-1/16

1-1/8

MEDIUM

1-3/32

1s-36s 10.500

1-3/16

1-7/32 1-1/4

1-8/32 1-5/16

1-11/32

LONG

1-3/8

37s-60s 3.750

1-13/32 1-7/16

1-15/32 EXTRA LONG

1-1/2

60s-120s 0.750

Total 15.000

Textile spinning industry, which was once bench- marked as one bale per spindle per year, is now consuming more than 1.3 bales per spindle.

Source: APTMA

Investment plan recommended

Stitching Machines (No.) Do-Able

New Capacity

High Road New

Capacity

Recommended New Capacity

Invest Rs bill

Stitching Machines (No.) 109,003 388,068 388,068 39 Processing in Weaving (M sq. m) 3,218 2,742 3,218 73 Processing in Knitting (M kg) 294 365 365 7 Knitting Machines (No.) 3,609 7,327 7,327 29 Shuttle-less looms 0 0 0 0 Air Jet Looms 10,348 7,744 10,348 54 Power & Auto Looms-Cotton (No.) 0 0 0 0 Auto/Power Looms-Synthetic 0 0 0 0 Weaving- Water jet 1,458 10,489 1,458 6 Spinning (Spindles) 4,326,884 4,326,884 4,326,884 87 Polyester fiber (Tons) 130,499 213,499 213,499 29

Total 295

Source: APTMA

------THE CHINA FACTOR------ USA TEXTILE IMPORTS

S.# Country 2001 2002 % Charge

1 World 32811.747 38287.647 15.59

2 China P 2210.674 4963.116 101.24

3 Mexico 4289.934 4335.089 -9.93

4 Canada 3267.516 3386.791 2.81

5 Pakistan 2189.346 2536.917 5.55

6 Kor Rep 1383.482 2032.158 2.15

7 India 1250.245 1544.604 16.48

8 China T 1224.379 1391.379 0.32

9 Thailand 1308.481 1315.546 -15.92

US TEXTILE IMPORTSFROM PAKISTAN

S.# Product 2001 2002 % Charge

1 Total MFA 2189.346 2536.917 5.55

2 Apparel MFA 347.009 382.067 30.83

3 Non-Apparel MFA 1842.337 2154.850 1.69

4 Yarns 276.988 297.516 -24.51

5 Fabrics 475.592 695.948 -4.11

6 Made Ups/Misc. 1089.757 1161.387 11.65

7 Cotton Products 1782.967 2061.727 7.85

8 Cotton Apparel 290.349 318.433 27.81

9 Cot. Non-apparel 1492.617 1743.293 4.72

US TEXTILE IMPORTS FROM BANGLADESH

S.# Product 2001 2002 % Charge

1 Total MFA 1169.041 1149.765 -1.9

2 Apparel MFA 965.942 927.717 4.3

3 Non-Apparel MFA 203.099 222.048 -19.15

4 Yarns 0.807 1.687 70.44

5 Fabrics 10181 6.393 -68.57

6 Made Ups/Misc. 192.112 213.968 -17.36

7 Cotton Products 702.638 701.001 -0.76

8 Cotton Apparel 601.968 577.162 2

9 Cot. Non-apparel 100.67 123.639 -12.77

US TEXTILE IMPORTSFROM CHINA

9

8

7

6

5

4

3

2

1

S.#

49.861188.134600.791Cot. Non-apparel

77.19653.218342.832Cotton Apparel

58.831841.353943.623Cotton Products

146.202753.929882.006Made Ups/Misc.

12.72612.630331.065Fabrics

3.8131.59421.624Yarns

111.993398.1531234.695Non-Apparel MFA

77.531564.963975.980Apparel MFA

101.244963.1162210.674Total MFA

% Charge20022001Product

US TEXTILE IMPORTSFROM MEXICO

9

8

7

6

5

4

3

2

1

S.#

-6.96394.939412.253Cot. Non-apparel

-3.521123.1441145.007Cotton Apparel

-4.511518.0821557.260Cotton Products

-19.591041.608953.287Made Ups/Misc.

-16.62569.980443.132Fabrics

-5.27566.304603.373Yarns

-14.732177.8931999.793Non-Apparel MFA

-4.952157.1962290.142Apparel MFA

-9.934335.0894289.934Total MFA

% Charge20022001Product

US TEXTILE IMPORTSFROM INDIA

9

8

7

6

5

4

3

2

1

S.#

2.98869.029781.035Cot. Non-apparel

17.36338.751250.102Cotton Apparel

7.441207.7801031.137Cotton Products

17.41842.502683.713Made Ups/Misc.

9.63169.754151.196Fabrics

40.3423.63312.525Yarns

16.601035.889847.434Non-Apparel MFA

16.28508.715402.811Apparel MFA

16.481544.6041250.245Total MFA

% Charge20022001Product

• ATMI Analyzed Chinese Growth into US Market in all 29 Apparel categories removed from quota control onJanuary 01, 2002

• KEY POINT: First time the China competing head to head withoutquotas with everyone else – Vietnam,Bangladesh, India, Mexico…..

29 INTEGRATEDCATEGORIESCHINESE SHARE BY DOLLAR

Apparel 2001 2002 Percent Change

Cotton 17% 28% 65%

Man-made Fiber 13% 22% 69%

Wool Apparel 11% 9% -18%

Vegetable Fiber 27% 53% 96%

Mixed 6% 26% 333%

Total 15% 31% 106%

29 INTEGRATED CATEGORIESCHINESE SHARE BY VOLUME

Apparel 2001 2002 Percent Change

Cotton 11% 28% 155%

Man-made Fiber 8% 24% 200%

Wool Apparel 11% 12% 9%

Vegetable Fiber 20% 54% 160%

Mixed 3% 27% 200%

Total 9% 31% 244%

PROJECTED EXPORT LOSSES TO

CHINA (POST 2005)S.# Country/Region Loss $ Mil.

1 CBI 6279

2 Mexico 5423

3 India 2623

4 EU 2477

5 Hong Kong 2285

6 Canada 1861

7 Honduras 1763

8 Korea, South 1620

S.# Country/Region Loss $ Mil.

9 Pakistan 1412

10 Indonesia 1390

11 Turkey 1316

12 Dominican Republic 1287

13 Taiwan 1282

14 Guatemala 1265

15 Philippines 1236

16 Italy 1218

17 Thailand 1161

18 Bangladesh 1051

19 El Salvador 1015

29 INTEGRATED CATEGORIESAverage Price Per Square Meter

Pre and Post Quota Removal

Country 2001 2002 Change

China $ 5.79 $ 3.24 -44 %

Rest of World $ 3.55 $ 3.47 -2 %

29 INTEGRATED CATEGORIESAverage Price Per Square Meter

Pre and Post Quota Removal

Country 2001 2002 Change

China 142 554 + 412

Rest of World 1,439 1,238 -201

29 INTEGRATED CATEGORIESAverage Price Per Square Meter

Pre and Post Quota Removal

Country 2001 2002 Change

China $ 824 $ 1,792 + 967

Rest of World $ 5,104 $ 4,303 - 801

• ATMI has requested safeguard actions using new China WTO safeguard provisions.

• No action has been taken yet.

• US Imports from China in sensitive categories have gone up an average of 600 percent over the past year!

China Growth:Sensitive Categories

China increased its exports by a RECORD 2.8 billion square meters. 96% of China’s increase was in quota de-controlled categories.

Why is China Unbeatable?According to ATMI

• OVER 50 % OF CHINA’S TEXTILE SECTOR IS STATE – OWNED AND SUBSIDISED

• VAT REFUND REGIME IS A HIDDEN SUBSIDY• CHINA’S CURRENCY IS UNDERVALUED• .$500 BILLION IN NON-PERFORMING LOANS

HAS A SUBSIDY EFFECT• CHINA’S TEXTILE INDUSTRY IS INDULGING IN

PREDATORY DUMPING

• IS IT TRUE ?

WHAT IS OUR

FUTURE

????