KARACHI, Jan 6: Prime Minister Shaukat Aziz is presiding over a meeting of Textile Board on Saturday at Islamabad, which among other issues , is considering the enforcement of a price check monitoring and safety system on exports of Pakistani textile products in a quota free environment after January 1.

The meeting is being held with an open agenda, which is being attended by a few federal and state ministers, senior officials of the ministries concerned and three dozen top exporters and textile manufacturers. The meeting would consider the factors that have led to a gradual fall in textile exports every month since September.

"Open agenda means that any issue related to textile business can be raised," a textile manufacturer and exporter pointed out while disclosing that "there is now a virtual outbreak of price war among the Pakistani textile exporters on expiry of quota regime."

For last many years, a handful of quota barons had out sourced their export orders to a number of small textile companies. Now that the quotas have expired and there had been a bumper cotton crop sending the cotton prices tumbled down, the buyers of textile products in Europe and USA are demanding a fresh look at their contracts with their Pakistani partners to revise the prices.

While the big business textile groups have invested about $4 billion in last four years to expand their capacities and improve upon their production techniques, a large number of small textile business thrive on electricity theft, tax evasion and exploitation of labour, who are not paid even subsistence level wages.

The foreign buyers have also the option to contact textile manufacturers and exporters in India, China, Indonesia, Bangladesh and other countries which have put Pakistani exporters under serious stress.

Big textile houses fear levy of anti-dumping duties on their products and have already raised the issue of taking protective measures against cut-throat competition and an outbreak of price war among themselves.

Fears of possible anti-dumping measures are being expressed at a time when a team of auditors is coming to Pakistan next month to begin anew the cost pricing of seven Pakistani companies of bed sheets. The European Union imposed 13 per cent countervailing duty in March last year after it accused Pakistan of dumping bed sheets. An auditors' team from EU did come but did not do the job after, it is said, receiving threats.

Leading exporters say that for last many months, the export of grey cloth from Pakistan to Turkey and a number of East European countries has increased. The grey cloth is being converted into bed sheets and is taking up the lost share of Pakistan.

In last few weeks, many Pakistani textile exporters and dealers have expressed fear that cut-throat competition and price war may lead to anti dumping measures. Their prescription is either to levy an export tax or fix a benchmark price after a close monitoring.

Late December, China announced export tax on a long list of textiles and apparel from January 1. Since the export tax is extremely low, it is not expected to slow down sales to foreign countries in the post quota era.

The rates of duties range from 0.2 to 0.5 yuan per piece (2.4 to 6 cents a piece). These will be levied on 148 tariff lines. Anticipating a possible retaliation from the US and EU importers, the Chinese authorities took a wise step to levy tax giving no excuse to importers.

"But the decision to impose a tax or fix a benchmark price will not be easy as the number of small companies and exporters is big. It can eventually become a political issue.