Indonesia supports calls for textile quota extension

Zakki P. Hakim, The Jakarta Post, Jakarta

Indonesia supported a proposal from a group of developing countries, which basically aims to extend the current global textile quota system, a minister said.

Minister of Industry and Trade Rini MS Soewandi said on Monday that those countries needed Indonesia's support as their exports relied heavily on textiles.

"Some countries whose key industry is garments like Mauritius are anxious that they would not be competitive once the quota system is removed," Rini told reporters on Monday.

Her comments came after a number of developing countries including Mauritius, Bangladesh, Dominican Republic, Fiji, Madagascar, Sri Lanka and Uganda proposed that the World Trade Organization (WTO) study the global impact of phasing out the textile and garment quota system. There was no indication, however, whether the WTO would adopt the proposal and commission a study.

The quota system, which for years has allowed inefficient producers to enjoy market access particularly in the main U.S. and European Union markets at the expense of more efficient exporters, is scheduled to be terminated early next year. The plan is part of the Uruguay Round treaty on trade liberalization.

There has been fears that more efficient exporters from textile giants China and India would dominate the global textile market once the quota system is ended, threatening the economies of other developing nations like Mauritius and the above mentioned countries whose exports are heavily dependent on textiles, accounting for more than 50 percent of their total export revenue.

Rini said that those countries had only limited resources for exports, while Indonesia still had numerous other top commodities to be exported.

"We will at least try to strive for a quota extension," she said, adding that any extension would naturally benefit Indonesia.

However, she acknowledged that the chances of a quota extension were slim as under WTO regulations, as one vote against the proposal would be enough to end hopes for an extension.

China has been quite outspoken in demanding an end of the quota system, and it would be unlikely that the textile giant would back down from its current stance, Rini said.

The Indonesian Textile Association (API) has calculated that after the quota abolition the Indonesian market share in the U.S. will be reduced to 2 percent from the current 4 percent.

Meanwhile, API projected China's market share in the U.S. would triple from 16 percent to 53 percent after the quota abolition.