Sheila Mathrani
Posted: Thursday, Dec 16, 2010 at 0121 hrs IST
India is being accused of violating its WTO obligations by putting quantitative restriction on cotton exports. Textile groups from over 14 countries (including the 27 member EU) have protested against quantitative restriction on cotton export from India which is affecting the global prices. The US textile industry has written to its decision makers to take action against India. Since April 2010, when India banned cotton export, the prices have skyrocketed.
According to just-style.com, textile groups from 10 Latin America countries have also called for action against India for violating WTO rules by restricting cotton export and contributing to global shortage. The groups claim that the Indian government is subsidising its textile and apparel export sector by restricting exports of cotton and there is a price difference of 16 cents per lb between what the Indian textile and apparel mills pay for their cotton and the worldwide price of cotton.
On December 3, the American Apparel and Footwear Association (AAFA) wrote to the US authorities to “send a message to India to immediately end” its restrictions on the export of cotton and ensure that the restrictions are not extended to cotton yarn and other products utilising cotton. “The Indian government must follow international trade rules,” the association said.
Addressing their plaint to USTR Ron Kirk, defence secretary Robert Gates, commerce secretary Gary Locke, agriculture secretary Thomas Vilsack and secretary of State Hillary Clinton, AAFA claims that the India's actions violate Article XI of the GATT agreement which prohibits export bans that benefit domestic industries. The AAFA states that India's export cap is intended to “artificially” lower prices on an integral input used by India's apparel and textile industries, industries which “were already major competitors in the global market.”
Since India’s quantitative restriction on cotton export, prices have more than doubled from an average of 62 cents per pound in April 2010 to around $1.40 per pound. India was the second largest exporter of cotton in the world prior to the ban. The US apparel, footwear and textile manufacturing base supplying to the US military are unable to bid for contracts as the price of cotton is volatile.
India`s decision and resultant soaring cotton prices the US Apparel industry has a choice of either absorbing the rising costs, and thus putting the “fragile economic recovery of the U.S. apparel industry” at stake, or passing the rising costs to the consumer when families can least afford it.
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