Pakistan, India and China are likely to take advantage of the quota elimination in the United States cotton apparel market partly due to their low costs and full-integrated industries from cotton to garments, said a report from textile trade analysts. The report, however, acknowledged that Pakistan and India could face some difficulties in competing with China, depending on categories. However, both the countries were clearly protected by low limits until now imposed on China's products, said the report.

Compared with Pakistan and India, China, which enjoyed 15 percent share of the US market, was expected to grab a substantial share of the US market for cotton apparel in the coming years, the report said.

The shipments from China already accounted for 15 percent of the total US imports of cotton apparel in January-November, 2004 compared with 3.14 percent for India and 2.63 percent for Pakistan.

According to the category-wise break-up, China already has 41 percent of the total imports in Cat-359 (other cotton apparel, compared with 1.55 percent and 9.16 percent and 1.55 percent from Pakistan and India respectively).

In categories 349 (cotton brassieres) and 350 (cotton dressing gowns), where quotas have been removed between the beginning of 2002 and the end of 2003, China's share already reached 34 percent and 36 percent respectively.

Pakistan and India have negligible exports to the US by comparison, said the report.

In nearly all other categories, China's exports were until now limited by the low level in the US quotas. At the same time, Pakistan and India benefited from much higher limits, it said.

In merged categories of 338-339, China had a level of only 2.5 million dozens in 2004, compared with 12.7 million for Pakistan and six million for India. China's share of the US imports was below one percent in category 338 in the January-November period, while Pakistan has 6.48 percent and India 2.84 percent.

The report pointed out that in certain categories, the phasing out of the quotas could actually result in a sharp rise in the US imports from the three countries, but China could gain more shares of the US market than its major rivals.

In other categories, where India and Pakistan were far from fully utilising the US quotas, their shipments to the US could drop in the coming years.

Consequently, China could gain more market shares outside most sensitive categories such as cotton knit shirts (338/339) or cotton trousers (347/348).

In sharp contrast with India, the report continued, shipments from Pakistan had been clearly limited by the quotas in categories 334 (other cotton coats), 351/651 (cotton nightwear) and 352 (cotton underwear). Pakistan focused more as compared to India on the lower end of the market as indicated by a comparison of averaged unit value.

Copyright Business Recorder, 2005