Prior to ending of textile quotas begining 2005, economists had forecast that it will result into difficulties for several landlocked countries neighbouring China.
Study of post quota scenario results released on May 25 by UN stated that Mongolia was one of the countries which suffered the most.
Mongolian textile and clothing exports to its only customer, the United States, slumped 41 percent in value and 30 percent in volume terms.
Mongolian ready-made garment exports to the US dropped from US $229 million to $135 million with its renowned knitted cashmere jerseys and pullover products sliding more than 90 percent.
Raw cashmere exports to China rakes in almost half of Mongolia's foreign exchange.
However, due to absence of cashmere processing sector, the same is used to produce the end product and resold by China to Mongolia.
India and China have benefited the most from lifting of quotas in 2005, states the UN report.
Mongolia's textile and clothing sector exports amounted to 10 percent in 2004, employing between 20,000-40,000; mostly women.
Expiry of quotas led to closure of 10 garment factories and cutting of almost 5,000 jobs.
China has opened factories in Ulaanbator in order to cut down expenses.
Lifting of safeguards on Chinese products in 2008 will further create unfavourable conditions for nations to compete with China, the report concurs.
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