Thai textile and garment traders are worried that markets worldwide will be sewn up by the time global free trade takes effect in 2005.

They fear that the US and Europe could shut out other traders by striking deals within their respective regions.

Quota restrictions that now govern trade are due to be abolished in January 2005 by the Agreement on Textiles and Clothing under the World Trade Organisation (WTO).

However, Boontipa Simasakul, inspector-general at the Commerce Ministry, said intra-regional trading of textiles and garments had grown dramatically between the US and Latin America. While Eastern Europe, including Russia and other former members of the Soviet Union, is a strategic partner of Western Europe in textile and clothing production.

The Bangkok Post reports that from 1990 to 1998, textile shipments from Western Europe to Eastern Europe and the former Soviet Union showed the highest growth rate in the industry at 16 per cent, followed by 13 per cent for intra-North American trade. Textile exports from Asia to North America grew by 8 per cent, and those to Western Europe by 8.7 per cent.

Over the same period, garment exports from Latin America to North America increased by 20 per cent. Shipments from Eastern Europe and the former Soviet Union to Western Europe showed similar growth.
However, garment exports from Asian countries to North America grew by only 5 per cent, and those to Western Europe by 4 per cent, she said.

Given the trends, trade blocs would become a serious barrier to free trade when quotas were eliminated.

Ms Boontipa suggested that Thai exporters respond by boosting trade in textiles and garments among Asian nations as this would both strengthen the regional market and reduce dependence on sales to the US and the European Union.

Ms Boontipa has worked with Thai textile and garment exporters on strategies for trade competition in a free market. Their proposals, which may become the master plan for the whole industry, include the Commerce Ministry's seeking hundreds of million baht in loans from the government or financial institutions to help manufacturers upgrade their machinery.

Thailand had benefited from the quota system, ranking among the 15 biggest exporters of garments and textiles.

However, Ms Boontipa told the Bangkok Post, full liberalisation would eliminate these advantages, forcing down prices and reducing the incomes of Thai exporters. Small and medium-size manufacturers that have not upgraded their technology are most likely to feel the pinch.

Pongsak Assakul, president of the Thai Textile Manufacturing Association, said that most small and medium-sized Thai factories had yet to realise the need to upgrade production to value-added items.
Each factory should evaluate its strengths and weaknesses, then secure a niche market before thinking about production, Mr Pongsak said.

According to 1998 statistics recorded by the Industrial Promotion Department, Thailand had 2,742 garment factories, 1,327 handling weaving and knitting, 414 printing and furnishing factories and 18 synthetic-fibre plants.

"Thailand's textile and garment exports lost out badly when Sweden cut its quotas some years ago," said Ms Boontipa.

Exporters must adjust to new realities, she continued. Conventional trading would be replaced by international supply chains with online links between buyers and sellers. The time between ordering products and the expected delivery date, currently six months, could be slashed to two.

Thailand's major competitors in the industry, in a free market, would be China, Indonesia and Vietnam, Ms Boontipa said.

China would become a key player in the WTO as the country's Most Favoured Nation trade ties with the US had been renewed.
Thai manufacturers had to bear in mind that they could not compete with China in making mass-market products.

WTO:

http://www.wto.org

Thai Textile Manufacturing Association:

http://www.thaitextile.org