Egypt's textile and clothing sector is bracing itself for the impact of the GATT Accord in two months' time when customs duties on imported clothing will be lifted.

The resulting influx of better quality - and cheaper - clothing from China, India and Indonesia could devastate the local industry, threaten jobs and send the budget deficit soaring.

Until now, high tariffs on imports have kept local industries afloat. But once tariffs are removed and the cost of imports plummets, consumers may disregard local products altogether.

The Egyptian Federation of Industries (EFI) reported recently that there are 4,250 weaving, textiles and clothing manufacturers. Their production accounts for 26 per cent of national industrial revenues and 24 per cent of industrial exports. Total exports of ready-made clothing are estimated at US$448 million per annum, making Egypt the world's 38th largest garment exporter.

Abdel Wahab el-Sharkawi, deputy chairman of the Chamber of Textile Industries said high taxes and interest rates on loans prevent local factories from producing competitively-priced goods. He also said local manufacturers paid up to 40 per cent more on raw materials, and called on the government to help reduce these production costs to avoid the closure of thousands of factories.

Ali Moussa, chairman of the Egyptian-French Chamber of Commerce, warned that only the large companies would survive the advent of GATT. He urged smaller textile and clothing companies to merge and benefit from economies of scale.

By Barnabas Thondhlana.