Surviving and success within WTO regime

In spite of being blessed with a great tactical mind, a lion's heart and a self belief bordering on divinity, Alexander had his own in-securities about facing the challenges of Asia Minor and Asia controlled by the legendry King of the World Darius III. The endeavour was to achieve what no European, let alone a Macedonian, had ever achieved or even dreamt of achieving before! To succeed in his purpose and quest he, as always, decided to seek Aristotle's counsel - his revered tutor and the great philosopher.
The advice from the big man to his student was, "given the sheer enormity of the domain you are about to enter, i) play with your strength, ii) address the glaring weakness and iii) be flexible with time."
This is exactly what we also need to do now that we have entered, in true letter and spirit, the enormous regime of the World Trade Organisation (WTO). A culture of global trade based on free movement of goods and fair business practices amongst member countries. In reality the visible quotas have come to an end and importing countries are no longer able to discriminate amongst exporters. Pakistan too has the opportunity to export as much as possible of any given product to any member country and expand on its market share by maximising its potential. However, the important thing to watch here would be that while we are competing to get someone else's market share, others are competing to get ours.
These are early days and testing times when everyone is trying to find the initial balance in the ring. Timely in-roads and gains are important to set the tempo and more importantly to give the industry a good start from the blocks. The race for which it has been warming up for the last 10 years in now on!
The obvious and indeed the most glaring strength of Pakistan is its Textile industry. Accounting for such over bearing chunks of the total national economic activity, 46% of the total manufacturing sector, 38% share in the manufacturing's employment generation and 67% share of the total exports, the industry not only stands strong but fortunately has the potential to survive and grow in this open and free trade era. Consistent investment in terms of balancing and modernisation, capacity enhancement and quality up-gradation by this sector over the last 5 years has ensured its competitive edge under free market conditions, ie if applied on a level playing field.
INVESTMENT (IN BILLIONS OF US DOLLARS):

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2000      - 0.80

2001      - 1.00

2002      - 1.00

2003      - 2.00

2004      - 3.00

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Today, it stands as one of the strongest textile industries of the world and certainly unique in such complete dominance of its respective national economy. Important question here is that how do we compare it to our main two competitors, China & India - the other two leading textile sectors of the world. A comparison below (exhibit A) shows that while on sheer size based on installed capacity we lag behind but when looked at from a more relevant angle, by using respective population figures as a denominating factor, our ranking comes out on top by a long way in almost all areas of this industry.
Important question now is that where do we go from here? Have we done enough, are we optimising our potential and have we structured ourselves properly to meet the upcoming challenges within the WTO regime? Whereas the industry has done well thus far, the scope for further growth is immense - Pakistan currently enjoys only a meager 2% market share in the total global textile trade.
From a quality and value addition point of view our products are still in their infancy stage and great deal of prudence is required at this critical juncture in planning our future strategy, ie to effectively play on and build on our primary strengths in the battle ahead.
Key here is to recognise our strong areas within the industry and develop them further while carefully and patiently exploring new areas and product ranges. In wake of the challenges which will be made on our traditional product mixes, venturing out prior to consolidating our existing lines can be a slippery slope. With tangible limitations gone we now need to contend with tariff and non-tariff (hidden) barriers.
The pressure on prices is already mounting and only the efficient, dependable, quality conscious and competitive business houses will survive. Before it is too late we need to put a body in place, preferably for all industries but surely for textiles, responsible for helping and guiding the small to medium size industries at least in the first two years. It should first quickly conduct its own in-depth research and then provide a clear vision and road map to the industry.
On a national scale a separate WTO Ministry or a properly structured cell is required which is directly responsible and is solely focused on managing WTO affairs. One can argue that such bodies are already in place but if we are to truly succeed then such departments have to be made potent and effective by ensuring that they are autonomous and are functioning in partnership with the private sector.
The fear to fully comprehend, assess and practically implement Trade Related Aspects of Intellectual Property Rights (TRIPS) remains our inherent weakness within the WTO system. Insecurity stems from lack of belief in our ability to survive, be able to sustain resultant inflationary costs and more importantly in our ability to innovate and be able to stand on our own two feet! If we truly want to grow as a nation then our industry will at some stage need to mature as a responsible entity relying on its own research and development.
The "anything goes" attitude to intellectual property (IP) rights protection has to change. Like China and India we need to first establish an on-site IP information office to address complaints and to provide assistance and simultaneously work on a 5 years national plan on how to prepare our own back yard into providing the kind of support our local industry will require once TRIPS becomes fully applicable internally on a national scale.
Interestingly, the experience of China & India has been that while their on-site offices received complaints from foreign companies against respective local manufacturers, there were a good number of accusations filed by the Chinese and Indian manufacturers as well. By raising the IP awareness everyone will benefit in the long run.
To assume that a business will advance by copying someone else's ideas is not only foolhardy but counter productive. If we are to compete internationally then we will have to keep pace with our foreign counter parts in terms of innovations and product introductions. Once this is achieved, there is no reason why we cannot build brands that carry as much prestige as their foreign competitors'.
Finally, coming now to the time factor. If the MFA/ATC, era which lasted more than 40 years, is anything to go by then we must realise that no quick fix solutions should be adopted. No one is advising or expecting us to develop an IP culture overnight or address other irritants on an immediate basis - in fact all measures need to be adopted in a gradual and systematic manner.
A practical schedule, which allows sufficient duration to our industry to prepare for these changes. We are now a part of an overall system which is likely to continue for at least the next fifty years, if not more, and hence our policies should have a sense of purpose and continuity about them.
It is not about individual laurels through short-term gains but about visionary planning to take the nation forward in times where personalities will no longer be relevant. Alexander is long gone but Alexandria thrives!
TEXTILE INDUSTRY STRUCTURE IN PAKISTAN, INDIA & CHINA.

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                                 PAKISTAN              INDIA       CHINA

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Ring Spindles (Million)                      9.75       36.91      33.83

Open End Rotors                           145,528     442,000    593,000

Shuttles Looms                             23,000       7,955    113,300

Shuttle Looms                             225,000   1,650,000    637,500

Cotton Production (000 tons)                1,700       2,312      4,920

Yield (Kg/Hacter)                             617         312      1,058

Cotton Consumption (000 tons)               1,945       2,901      6,400

Production of Cotton Yarn (000 tons)     i) 1,955       2,267      7,898

Production of Cotton Fabrics (000 tons) ii) 1,125       1,804      3,762

Production of MMF (000 tons)     iii)         562       1,913      9,198

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51,300 Shuttles looms shipped to China during 2002

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ON POPULATION BASIS WE COME OUT AS UNDER

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Population               i)          130          23              61

                                  (Rank 1)    (Rank 3)      (Rank 2)

Pakistan Factor 15      ii)           75          18              29

India -        130                (Rank 1)    (Rank 3)      (Rank 2)

China -        130     iii)           38          19              71

                                  (Rank 2)    (Rank 3)      (Rank 1)

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