US Moves WTO On Textile Export Sops (03-Mar-2010)
The U.S has asked the World Trade Organization (WTO) to inspect whether India still qualifies for concessions which allow it to give export subsidies to the textiles and clothing sector.
However, India is confident that its subsidies to textiles exporters cannot be challenged at the multilateral forum as they are mostly short term.
In a recent submission to the WTO committee on Subsidies and Countervailing Measures (SCM) the U.S has stated that it has reason to believe that India has met the ''export competitiveness'', as defined in the SCM Agreement for certain products. The agreement exempts developing country members (who are having per capita income less than $1,000) from prohibition on export subsidies, as long as exports of individual products are lower than 3.25 % of world trade for 2 consecutive years.
In its submission the U.S requested to the Secretariat (WTO) to undertake a computation of the export competitiveness of textile and apparel exports from India, in accordance with Article 27.6 of the SCM Agreement.
A government official said since most of the support given by the Centre to textile exporters was on a short-term basis, there was very little risk of U.S move leading to action against India''s exports. Things are at an initial stage. We are certainly going to keep an eye on how things develop.
Currently, the subsidies being given to Indian textile exporters including - handicrafts and carpets accounts for a discount on interest on loans and incentives for exporting to particular markets in the form of duty-free import scrips that can be sold in the market. These subsidies are part of the Centre''s efforts to help the Indian industry to overcome the effects of the global economic slowdown.
Mr. D K Nair, Secretary General of (Confederation of Indian Textiles Industry) CITI said since the subsidies were short term in nature, they would probably be gone by the time the WTO takes a decision on the issue. Besides, these subsidies may not be actionable under the WTO.
Mr. Manab Majumdar, Head of FICCI''s WTO committee said even if India''s exports of textiles and clothing turn out to be greater than 3.25 %, the country could easily continue to give subsidies under other flexibilities allowed by the WTO. India is also allowed to give support to exporters under the Special & Differential Treatment (S&DT).
According to FICCI, that in 2008 India''s textiles and clothing exports stood at $21 billion, forming 3.4 % of the sector''s global trade at $612 bn. However, in 2009, India''s textile exports to E.U and U.S (which together account for more than half of India''s total textiles and clothing exports) had come down mainly due to the severe slowdown in demand.
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