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Source: Reuters

Pakistan's textile seeks greater market access

Published: 19 Aug 2010 17:22:33 PST

* Pakistan textile industry suffering

* Falling global demand

* Cotton sector devastated

KARACHI, Aug 19 - Pakistan's textile industry is asking for greater access to the U.S and European Union markets as it struggles for survival after floods devastated the country.

Industry representatives say flood damage to the cotton crop and consequent supply shortages could be a final blow to an industry that is already under pressure from shrinking global demand, crippling power shortages and instability brought on by a Taliban insurgency.

Textile makers are asking for support to help make up for the losses.

"We have requested that the government ask the EU and U.S. for greater market access," said an official at the All Pakistan Textile Mills Association.

Foreign Ministry spokesman Abdul Basit told reporters in Islamabad on Thursday that the EU was mulling a meeting of its foreign ministers to discuss providing flood assistance to Pakistan, and possibly greater market access for Pakistani products.

Some products from Pakistan enter the EU market duty-free or at a reduced rate, but textile products such as bed linen and towels, which account for more than 65 percent of its exports to the EU, still face a 12 percent tariff.

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For a graphic on Pakistan's floods, click

http://graphics.thomsonreuters.com/RNGS/2010/AUG/PAK5.jpg

For a story on agricultural costs of floods

For an analysis of risks to watch in Pakistan, click

http://r.reuters.com/pyj83n

For a slide show, click http://link.reuters.com/sum54n

For more Pakistan stories, click, or click

http://link.reuters.com/kac58m

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Pakistan's total textile exports stood at over $10 billion in the 2009/10 financial year (July-June), of which about $6 billon worth of textile products went to the United States and the European Union.

The floods, the worst in the country's history, have killed up to 1,600 people, forced more than 4 million from their homes and disrupted the lives of about 20 million people - nearly 12 percent of the population.

The floods also damaged up to 2 million bales of cotton, and traders say Pakistan will have to import up to 3 million bales to make up for a shortfall. A Pakistani cotton bale weighs 170 kg.

Pakistan produced 12.7 million bales in the 2009/10 (July-June) financial year, when the country had to import about 2 million bales, and was hoping to harvest 14 million from the 2010/11 crop.

"This is really the worst time possible for textiles -- that the floods could have occurred -- because textile mills have no cotton," said Ziad Bashir, director of Gul Ahmed Textile Mills, Ltd, one of the country's biggest mills.

"The devastation they (floods) are causing definitely warrants an action like this (duty-free status for Pakistan's textile products)."

The textile sector is the source of over half the country's exports and about 40 percent of manufacturing jobs. Low output could further add to Pakistan's trade deficit.

"The government, in consultation with the industry, will take appropriate measures to help the textile sector, depending upon the extent of damage to the crop," said Textile Ministry Secretary Waqar Masood.

Textile mill owners say any further damage to the cotton crop would be devastating.

"If the floods continue, and this (the amount of cotton crop loss) goes up to 4 million or something, it's going to be colossal," Bashir said.

(Additional reporting by Augustine Anthony; Editing by Jane Baird)

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