The dynamics of trade in textiles and clothing will change dramatically. The Agreement on Textiles and Clothing (atc) under the World Trade Organization (WTO) allows some developed countries to maintain import restraints on textiles and clothing products from some high-volume low-cost developing countries. By January 1, 2005, these restrictions would have to be completely eliminated. This would provide enormous opportunities for countries like China and India, whose exports have been most restricted, but India could gain much more if it can pursue parallel domestic reforms. Otherwise, the expiry could adversely effect small-scale operators such as those in Belgaum, Karnataka.

The atc is a transitory agreement towards the full integration of textiles and clothing into the multilateral trading system. Under this agreement, effective from 1995, four countries