Hong Kong's textiles and apparel makers, government and academia should pool their ideas to explore what direction the industry should take in preparation for the removal of quotas by 2005.

Industry experts speaking at the Chamber's January 13 seminar, "Textiles 2005: What Can We Do?" warned that with just over one year to go before customers started placing orders for 2005, it was essential that the impact be more closely studied soon.

Following the removal of worldwide quotas by 2005 under the World Trade Organisation's Agreement on Textiles and Clothing, a slew of protection mechanisms -- Special Textiles Safeguards, Product-specific Safeguards, and Anti-Dumping Measures -- are expected to be built up in Hong Kong's major markets to protect domestic companies. However, no clear explanation of exactly what those measures will involve or under which circumstances they should be used has been published. Consequently, makers fear the worst.

Among suggestions raised to guard against protectionism measures was that government should do more to lobby politicians in key markets, especially the United States. Hong Kong has always worked hard to comply with requests from Washington DC, so government should remind politicians that we have, in fact, maintained a very good record, Henry Tan, managing director of Hong Kong-based apparel manufacturer Luen Thai International, said.

But manufacturers expect to face restrictions from other countries as they follow the U.S.'s lead to protect their markets. And these are not just restricted to developed markets. Assistant Director General of Trade & Industry Rosanna Law told the audience that import restrictions on 18 textile categories by Indonesia, reportedly due to a surge in Chinese imports, have been applied for.

Because a large percentage of garments are today produced in countries that have quotas or are quota free -- rather than the most suitable place -- Mr Tan said we could see an enormous consolidation of manufacturing plants. Companies will be able to set up not necessarily where production costs are the lowest, but where the best infrastructure and support services are in place.

Among the 11 most popular garment manufacturing countries in Asia, China, is the fourth most expensive. However, it has a much better infrastructure than other areas, and is also a major producer of fabrics and accessories. Its proximity to Hong Kong and cultural similarities add to its advantages.

Given the uncertainty of protectionist mechanisms that might be imposed against China, however, manufacturers fear they may be putting all their eggs in one basket if they consolidate their operations in China.

That is why it makes good sense to lobby U.S. government and politicians who deal with textile issues and urge them to exclude Hong Kong textile makers from the measures. They also encouraged the government to push for a Hong Kong-U.S. free trade agreement -- as Singapore has done.

Dr Zhang Zhiming, from the Institute of Textiles and Clothing, Hong Kong Polytechnic University, urged all manufacturers and government to work together to make Hong Kong a world-class design and fashion centre.