Free trade for textiles from 2005 after textile quotas abolished

The textile industry and the government are going to prepare for world environmental changes with the help of academia and industry.
The Multilateral Fiber Agreement (MFA) begun in 1974 seems to be completely repealed and free trade will become a reality after 2005 according to a WTO (World Trade Organization) agreement. Also, China, the biggest textile producer, is expected to enter the WTO sooner or later.

If the global textile market trades freely in 2005, the Korean textile industry will lose its vested rights under the textile quota system. And, also, if China enters the WTO, Chinese exports will increase thanks to customs cuts on Chinese products and increased investment in China from developed countries. These could influence Korean products, currently competitive in major markets.

Dr. Lee Jaeduck at the Korea Institute for Industrial Economics and Trade (KIET) predicted in the meeting with the MOCIE minister , Shin KukHwan, March 20, that China will dominate the world textile market to the tune of 22.7 percent in 2006 from its 12.9 percent in 1999, if it is allowed into the WTO. Therefore Korea and Taiwan, main textile export countries to the U.S. would be badly affected in the wake of weak price competitiveness, he added.

On the other hand, the government expected that although price competitiveness will be seriously compromised, there will growth opportunities for exports based on technology and design. An official said that China will compete with low prices, causing fiercer competition in low price markets. However, if the quota system for each item is abolished in low price markets, it could be another opportunity for goods that excel in design and technology, thanks to larger markets. Therefore, the industry needs to aim at high technology, new product development, and streamlining to survive, a government official said.