The US has immediately withdrawn the manufacturing identification codes of the 10 Thai exporters, said the offficial who asked not to be named. The codes are needed to secure an export licence to the US market.

The official explained that the exporters had set up a company focusing only on trading without operatingmanufacturing plants in Thailand. They registered with the Business Development Department, but had given fake addresses.

"It was difficult for the ministry to find out who the real business operators were," the official said.

Last month, US inspection teams came to Thailand to look into 40 garment manufacturers in Bangkok.

They found that 10 of those companies were re-exporting Chinese-made products instead of Thai-made garments - mainly underwear.

This illegal practice is one of the ways to release huge stockpiles of underwear from China which is currently facing anti-dumping duties imposed by the US government.

Another four products that are being closely monitored in case they are being re-exported are T-shirts, sweaters, trousers and shirts.

The source said the ministry had launched an investigation to find out if the illegal exporters were real Thai companies or had been set up as nominees.

Vallop Vitanakorn, secretary-general of the Thai Garment Manufacturers Association, said the association had tried to eliminate illegal companies such as these by directly informing the Foreign Trade Department.

"Such illegal practices will soon be reduced because both the government and other exporters are closely monitoring [the situation]," the official said.

Vallop is concerned that some illegal exporters may also be re-exporting Chinese garments to the European Union, the country's second-biggest export market after the US.

Following the end of the textile quota regime in 2005, Chinese textiles have flooded onto the global market.

That forced the US and the EU to implement safeguards to protect their own industries.

 As a result, China has had to reduce its huge stockpile of textile products and find new ways of accessing foreign markets. One way is to use circumvention practices by shipping to other countries and re-exporting them.

According to the Commerce Ministry, garment exports from Thailand to Europe increased 14.8 per cent to US$338.9 million (Bt13 billion) in the first five months of the year compared to the same period last year.

Vallop said the government was strictly monitoring garment manufacturers that it suspects of re-exporting Chinese goods and may inspect their factories.

"I believe some exporters have been re-exporting Chinese products to Europe, but we try to suppress them.

"There are thousands of manufacturers and we can't always know which companies are operating illegally," he said.

This practice of re-exporting has also been found in the shoe industry.

Petchanet Pratruangkrai

The Nation