Pakistan textile share likely to rise after WTO entry
Pakistan Times Business & Commerce Desk

KARACHI: Pakistan could rise its textile and clothing market share by 62pc and 67pc respectively after entering the WTO. Diana Hochraich, Senior Economist, Ministry of Economics, France, said this while addressing the members of Karachi Chamber of Commerce & Industry on Monday. She was delivering a lecture about “WTO with special reference to China’s accession to WTO and its impact on South Asia.”

She advised the local business circles that industrialization is a necessity if they want a country to enhance productivity. Being exporters of raw materials would not lead them to any improvement in productivity and growth. It suffices to consider how badly hit are raw materials producers when terms of trade deteriorate. But industry, especially manufacturing industry does not represent a “natural endowment”.

Two conditions may be needed to implement industrial development: A policy aiming to create manufacturers, even if it is just a “market friendly”. And, to be able to go up the value added ladder, specialization must switch to more sophisticated goods, may be implying to move out textiles, she added.

Diana said China’s accession to the WTO opens a new era in the Asian division of labor. Being part of the Organization gives more guarantees that this country will comply with the rules of international trade. For this reason, more and more countries relocate to China manufacturing industries, on account of its large reserves of skilled and unskilled labor. So doing, China became the world’s workshop.

To developing Asia, this is a tremendous challenge. China is catching up with countries like Korea and Taiwan. In the same time, it is competing with countries like Thailand and Malaysia, especially in electronics. But on account of its big domestic market and its small availability of land, China offers huge opportunities to its neighboring countries.

Diana further said that textile and apparel is the largest Pakistani industry, representing 30pc of industrial output, 40pc of industrial employment and 60pc of export earnings. Despite its importance to Pakistan’s economy, Pakistani textile industry holds a tiny share of the world market, 2.2pc for textile and less than 1pc for clothes. Its main markets are North America, the EU and Japan.

On the other hand, China’s exports represent currently 6pc of the world trade, compared to 1% 20 years ago. Its main partners are the US and Japan. In the American market, China’s share is 10%, and 20pc in Japan’s, thus surpassing the dragons in both markets.

China’s exports consist mainly in textiles and electronics. China’s electronic exports have steeply improved. In consumer electronics it represents 20pc of the world market and 25pc of the US market, while textile exports are on the decline; they stood for 35pc of the total in 1992; and they represented only 25pc in 2002. But its textile share may again increase when ATC will be definitely abolished.●