TEXTILE QUOTA

Over programming disrupting the flow of exports

By AMANULLAH BASHAR
Jan 20 - 26, 2003

The flow of textile exports to the European Union (EU) has been disrupted following a decision by the EU Commission to put an embargo on the imports of certain categories in which over programing was done by the exporters against the allotted quota.

The embargo has been imposed on category 6 (shorts and pants) and bedlinen. However, the EU Commission which had disallowed the special flexibility quota of 4000 tons annually, has allowed flexibility quota of 2000 tons in category 9 (towels). This would, however, provide relief to the exporters who have already made shipments in this category.

It may be mentioned that the EU Commission has already initiated anti-dumping proceedings on bedlinen imports from Pakistan. Pascal Lamy, EU Commissioner for trade in a meeting with Pakistan's Minister for Commerce, Humayun Akhtar who visited EU in connection to get relief especially to get flexibility quota, has said that the process for anti-dumping could not be interrupted at this stage as the legal course has to be completed in normal course.

Pakistan textile exports, it may be recalled, had an edge over its counter parts especially over India because Pakistani goods were free from any anti-dumping or regularity duties as compared to Indian goods on which the antidumping duty was already imposed. However, some circles in the textile sector say that anti-dumping duty and embargo on certain categories has come in mainly because over programing of the quota by the exporters. It is said that a large size of over shipped consignments of textile goods are stuck up at different ports of the EU states. Pakistan's Minister for Commerce had visited EU to get this problem sorted out with the EU Commission.

Contrary to the usual practice, the EU which generally allows special flexibility quota of around 4000 tons in different categories did not give its consent for flexibility which created hardships for the exporters indulged in over programing.

The hanging shipments waiting for clearance are in category 6 of around 2.88 million pieces against its annual allowed quota of 46 million pieces, while in category 20, the over shipment is around 1200 tons against the allowed quota of 50,000.

The Export Promotion Bureau reacting over the situation has suspended the licence for the export of bedlinen to EU obviously to avoid over programing which resulted over-shipments and initiation of anti-dumping proceeding by the European Commission against Pakistan cotton type bedlinen. In order to avoid recurrence of such a situation and let the exports to sail on a smooth keel, people at the helm of affairs are required to be cautious about any step on the part of the exporters which might result in creating problems for the private sector it self.

Currently, the textile sector has performed exceptionally well during the first half of the current year and if the current pace for progress maintained the textile sector alone would help getting country's overall exports well ahead target at the end of the current financial year. The current financial year has seen a continuation of the shift in Pakistan's export structure towards manufactured goods which reached an all time high of the total exports. Although in the backdrop of September 11 events the Western world especially, the EU and US have given special incentives to Pakistan's export sector, yet the Asian region still remains the largest export market for Pakistani products.

During the previous year, the total export earnings fetched by the textile sector were estimated at $5.8 billion. The textile sector is performing even better as compared to the previous year and seems to improve its overall contribution to the export earnings this year. All these outstanding achievements by the textile sector are the result of enhanced market accessibility as well as successful Balancing-Modernisation-Replacement (BMR) drive currently underway to revitalize the textile sector to face the challenges of a quotafree environment from 2005.

In the previous year, quota exports accounted for 39.8 per cent of total export of textile manufactures and earned $2.3 billion registering a 1.7 per cent growing over financial year 2001. Exports of non-quota textile items earned an additional $1.4 billion, showing a 5.3 pr cent increase over the previous year.

During the second half of the financial year 2002 quota exports to EU depicted a slightly higher growth of 11.3 per cent which clearly shows that impact of 15 per cent quota increase from January last year. On the other hand, the impact of quota enhancements by the USA is not yet clearly visible as textile industry in the US is already facing difficult times due to economic depression.

There are strong indications that the textile sector in Pakistan is gradually getting into a position where it can perform without the quota support and protections as a result of an impressive investment on BMR, which ultimately leading towards value-addition and quality improvement. The light at the end of the tunnel is getting bright and hopefully, the textile sector which is undoubtedly the mainstay of the national economy would rise to the occasion in a free trade environment in the years to come. The sector, however, speed-up its efforts to be able to compete in the open global market.