IMPACT OF CHINA'S ACCESSION TO WTO ON TEXTILE TRADE OF SOUTH ASIA

This article analyzes the profound impact of China's accession to the World Trade Organization (WTO) on the textile and clothing (T&C) trade of South Asian countries, particularly in the context of the impending phase-out of the Multi-Fibre Arrangement (MFA) quotas. The study examines the competitive threat posed by China, a highly efficient and large-scale producer, to the T&C export sectors of countries like Bangladesh, India, and Pakistan. The research assesses the potential for trade diversion, where buyers would shift their sourcing from South Asia to China in a quota-free environment. The paper also explores the opportunities, such as the potential for South Asian countries to supply raw materials and intermediate goods to the Chinese T&C industry. The analysis concludes that China's WTO entry presented a formidable competitive challenge that required the South Asian T&C industries to urgently enhance their productivity, quality, and compliance standards to survive and thrive.

The accession of China to the WTO in 2001, combined with the scheduled end of the global textile quota system in 2005, created a "perfect storm" of competitive pressure for the textile and clothing (T&C) industries of South Asia. This paper provides a detailed analysis of this impact. The study begins by outlining the sheer scale and efficiency of the Chinese T&C industry, establishing it as the benchmark for global competitiveness. The core of the article is an assessment of the dual challenges facing South Asian exporters. The first is the direct competition in the major export markets of the US and the EU. The paper analyzes the potential for massive trade diversion as global buyers, freed from quota constraints, would be able to source a much larger proportion of their goods from the most efficient producer, China. The second challenge is the competition within the regional supply chain. The paper explores how China's competitiveness extended to fabrics and other inputs, posing a challenge to the textile industries of countries like India and Pakistan. However, the study also explores the potential opportunities. It discusses the possibility for South Asian countries to find niche markets or to integrate themselves into the China-centric production networks by supplying specific types of yarn or fabrics. The findings lead to a clear and urgent policy conclusion: the survival and growth of the South Asian T&C sector in this new era would depend on a rapid and radical improvement in its own competitiveness, moving beyond a reliance on low wages to a new model based on higher productivity, better quality, and greater supply chain efficiency.