India, supported by China and Pakistan, as well as Hong Kong, whose textile exports are expected to benefit from the international agreement to eliminate quotas in January 2005, opposed the proposal during a WTO committee meeting, trade sources said.
The issue is expected to be discussed among the WTO member states over the next two months, the sources added. "They are dragging their feet," a diplomat said.
"It's clear that the Chinese and Indians would be happier if we end this procedure, while the Least Developed Countries (LDCs) and the United States would like to continue," he added.
Several studies have shown that China stands to make huge gains in major export markets like the United States and Europe when the Agreement on Textiles and Clothing draws to an end. The quotas were designed 40 years ago to cap textile imports from individual countries and are being phased out under the binding agreement struck nine years ago.
China currently accounts for about 28 percent of the world clothing markets. A WTO study has indicated that Chinese clothing should snatch 50 percent of the US imports after quotas are abolished, against 16 percent currently.
About 20 countries, including Bangladesh, Mexico, Mauritius and Tunisia, fear massive job losses amid unbridled competition from China, which was not a member of the WTO when the phase-out was agreed.
They have urged other trading nations to temper the impact of the binding agreement, while the WTO has said it is lining up World Bank and International Monetary Fund (IMF) support for poor countries that suffer.
China and India said in the WTO meeting that the question of 'adjustments' to help smaller producers should not just deal with the liberalisation of the textiles markets, but should extend to other areas like agriculture, the trade source said.
"In fact they don't want the WTO to continue to deal with textile as one sector, but rather that it is dealt with by the Least Developed Countries' sub-committee," the source said.
The European Union has said it is ready to take advantage of a provision allowing temporary measures to safeguard its textiles industry if there is a surge in cheap trade from China.
But the provision is limited in time until 2007, and the EU supports overall implementation of the binding global agreement on textiles and clothing.