Textile and Safty & Standards

Source: World_Trade_Organization_member_observer_states_2014_yemen_sm

* Structure of WTO

• Ensure that

• your country’s consumers are being supplied with food that

is safe to eat.

• strict health and safety regulations are not being used as an

excuse for protecting domestic producers

• Article 20 of the General Agreement on Tariffs and Trade

(GATT) allows governments to act on trade in order to protect

human, animal or plant life or health, provided they do not

discriminate or use this as disguised protectionism.

*Standards and Safety

*Cont….

2 W.T.O agreements

• Sanitary and Phytosanitary measures agreement (SPS)

• Technical Barriers to Trade Agreement (TBT)

*TBT Objectives

• Covers all technical regulations, voluntary standards and

the procedures to ensure that these are met.

• National security or the prevention of deceptive practices.

• Measures related to human disease control, unless they

concern diseases which are carried by plants or animals

(such as rabies).

• Labelling requirements, nutrition claims and concerns,

quality and packaging regulations.

Human or risks arising from additives,

animal health contaminants, toxins or disease

organisms in food, drink, feedstuff

Human life plant- or animal-carried diseases

Animal or pests, diseases, disease-causing

plant life organisms

A country other damage caused by entry,

establishment or spread of pests

from

from

from

from

*SPS Agreement Objectives

*Differences Between SPS & TBT

SPS

• Based on scientific

evidence

• Risk assessment from

pests, diseases, additives,

contaminants, toxins...

• Pesticide or veterinary drug

residues or identify

permitted food additives

TBT

• Based on legitimate

objective:

- national security,

- prevention from deceptive

- Human disease control

- food, labelling

requirements, nutrition

claims & concerns,

quality and packaging

regulations

*Examples of TBT & SPS Measures

TBT

*Labeling of composition or

quality of food, drink and drugs

*Quality requirements for fresh

food

*Volume, shape and appearance

of packaging

*Testing vehicles and accessories

*Regulations for ship and ship

equipment

*Safety regulations for toys

SPS

*Additives in food or drink

*Contaminants in food or drink

*Certification of food safety,

animal or plant health

*Processing methods with

implications for food safety

*Other sanitary requirements for

imports

*Labeling requirements directly

related to food safety and

others

• Collection of international food safety standards

• Protecting public health and minimizing disruption of

international food trade and developing relevant international

standards (explicitly under SPS, by implication under TBT)

• Identifies relevant scientific experts for WTO dispute cases

(especially SPS)

• Develops risk assessment

techniques (SPS)

*Role of CODEX in WTO

US/ Canada case against EC ban on hormone-treated meat (SPS)

US / Canada / Argentina case against EC

on GMOs (SPS)

Peru case against EC designation of

“sardines” (TBT)

*CODEX in WTO Disputes

• Food safety and Animal and Plant health

• Food safety:• US/Canada vs. EC - Hormones (WT/DS26, 48)• US/Canada/Argentina vs. EC - Biotech (WT/DS291, 292, 293)• EC vs. US/ Canada - Retaliation on Hormones (WT/DS320, 321)

• Plant Protection:• US vs Japan - Variety Testing (WT/DS76)• US vs. Japan – Fire blight (WT/DS245)• Philippines vs. Australia - Tropical Fruit (WT/DS270)• New Zealand vs. Australia - Apples (WT/DS367)

• Animal health:• Canada / US vs. Australia - Salmon (WT/DS18, 21)

Source: sms.mofcom.gov.cn/accessory/200812/1228894517064

*Current issues in SPS

*Standards and Trade Development

Facility(STDF)

*Joint initiative of FAO, OIE, World Bank, WHO and WTO

*Global partnership

*Supports developing countries in building their capacity to implement

international SPS standards, guidelines and recommendations

*Means to improve their human, animal, and plant health status and

ability to gain or maintain access to markets

*STDF Financing Available

*Funds up to normally US$20,000 are available for project preparation grants

*Funds up to normally a maximum of US$1 million are available for project implementation. Grants for projects (US$ 300,000 to 600,000)

*Least developed and other low income countries - 10% contribution

*Other developing countries – 30% contribution

*Focuses mostly on innovation and collaboration

Sources: http://www.standardsfacility.org/project-grants

• “A planned EU/US trade deal should sweep away "non-scientific

barriers" to US sales of many genetically modified crops and some

chemically treated meats in Europe”, the US agriculture secretary

said on 17th June 2014

• It could boost their economies by $100 billion (€74bn) a year each

• Vilsack: “Science is a common language”

• Eliminating "non-scientific barriers”

• Delay to gain access to European markets after winning clearance

from the European Food Safety Authority.

*EU/US Trade Deal

World's Largest Free-trade Pact

Safety argument

• Ecological group Greenpeace says GM crops are part of large-scale

intensive farming which degrades soils and pollutes water

• It says they create herbicide-resistant super weeds that require more

pesticides and are not proven to be safe to eat, with much of the

research funding coming from industry

• EU insisting on a label indicating a foodstuff contained a GM

product risked sending a wrong impression

• The European Commission said what could be offered to the United

States was the possibility of exporting a greater quota of hormone-

free beef, as has already been agreed between the EU and Canada.

*Cont..

• India had banned imports of various agricultural products from the US in 2007,

as a precautionary measure to prevent outbreaks of Avian Influenza in the

country

• The World Trade Organization's dispute panel said that restrictions imposed by

India on imports of poultry from America were "inconsistent" with the

international norms

• India's measures are arbitrarily and unjustifiably discriminate between Members

where identical or similar conditions prevail and are applied in a manner which

constitutes a disguised restriction on international trade

• US exports to India of just poultry meat alone could easily exceed USD 300

million if barriers are removed

* India Loses WTO Case Against US on Poultry

Imports On October 14, 2014

*Textiles : Back in the mainstream

*Textiles, like agriculture, was one of the hardest-fought issues in the WTO,

as it was in the former GATT system.

*It has now completed fundamental change under a 10-year schedule agreed

in the Uruguay Round.

*The system of import quotas that dominated the trade since the early 1960s

have now been phased out.

*From 1974 until the end of the Uruguay Round, the trade was governed by

the Multi fibre Arrangement (MFA)

*Since 1995, the WTO’s Agreement on Textiles and Clothing (ATC) took

over from the Multi fibre Arrangement.

*Cont..

*By 1 January 2005, the sector was fully integrated into normal GATT

rules

*Textiles and clothing products were returned to GATT rules over the

10-year period.

*Took place in four steps to allow time for both importers and exporters

to adjust to the new situation over 10 years period

*For products that had quotas, the result of integration into GATT was the

removal of these quotas

*The agreement stated the percentage of products that had to be brought

under GATT rules

*The agreement said the quantities of imports permitted under the quotas

had to grow annually, and that the rate of expansion had to increase

*Cont..

Step

% of products to be

brought under GATT

(including removal of any

Quotas)

% of products to be brought

under GATT (including

removal of any Quotas)

Step 1: 16% 6.96%

1 Jan 1995 ( to 31 Dec 1997)

(minimum, taking 1990

imports as base)

per year

Step 2: 17% 8.70%

1 Jan 1998 (to 31 Dec 2001) per year

Step 3: 18% 11.05%

1 Jan 2002 (to 31 Dec 2004) per year

Step 4: 49% No Quotas left

1-Jan-05 (maximum)

> Full Integration into GATT

(and final elimination of Quotas)

>Agreement on textiles and

Clothing terminates.

The actual formula for import growth under quotas was:

by 0.1 x pre-1995 growth rate in the first step;

0.25 x Step 1 growth rate in the second step; and

0.27 x Step 2 growth rate in the third step.

*Products brought under GATT rules cover the four main types of

textiles and clothing: tops and yarns; fabrics; made-up textile

products; and clothing

*Damage to the industry arose during the transition, the agreement

allowed additional restrictions to be imposed temporarily under strict

conditions.

*“Transitional safeguards” were not the same as the safeguard

measures normally allowed under GATT because they can be applied

on imports from specific exporting countries

*Safeguard restriction

*Reviewed by Textiles Monitoring Body (TMB)

*Cont..

*Textiles Monitoring Body (TMB)

*Supervises the agreement’s implementation

*Consists of Chairman & 10 members

*Also deals with disputes under the Agreement on Textiles and Clothing

*Monitors actions taken under the agreement to ensure that they were

consistent

*Reports to the Goods Council which reviews the operation of the

agreement before each new step of the integration process

*Unresolved disputes will be brought to the WTO’s regular Dispute

Settlement Body

*When the Textiles and Clothing Agreement expired on 1 January 2005, the

Textiles Monitoring Body also ceased to exist

*Multi Fibre Arrangement (MFA)

1974-1994

*Major departure from the basic GATT rules and particularly the

principle of non-discrimination

*Up to the end of the Uruguay Round, textile and clothing quotas were

negotiated bilaterally and governed by the rules of the Multi fibre

Arrangement (MFA)

*Application of selective quantitative restrictions when imports of

particular products cause, or threaten to cause, serious damage to the

industry of the importing country

*1 January 1995 replaced by the WTO Agreement on Textiles and

Clothing which sets out a transitional process for the ultimate

removal of these quotas

The ATC is a transitional instrument, built on the following key elements:

a) the product coverage, basically encompassing yarns, fabrics, made-up

textile products and clothing;

b) a programme for the progressive integration of these textile and

clothing products into GATT 1994 rules;

c) a liberalization process to progressively enlarge existing quotas (until

they are removed) by increasing annual growth rates at each stage;

d) a special safeguard mechanism to deal with new cases of serious

damage or threat thereof to domestic producers during the transition

period;

*WTO Agreement on Textiles and Clothing

(ATC) 1995-2004

e) establishment of a Textiles Monitoring Body (“TMB”) to supervise

the implementation of the Agreement and ensure that the rules are

faithfully followed;

f) other provisions, including rules on circumvention of the quotas,

their administration, treatment of non-MFA restrictions, and

commitments undertaken elsewhere under the WTO's agreements

and procedures affecting this sector

*Cont..

*In December 1997, the General Council decided upon the composition for

the second stage (1998-2001) with TMB members to be appointed by WTO

Members designated from the following constituencies:

1. India and Egypt/Morocco/Tunisia

2. Japan

3. Latin American and Caribbean Members

4. The United States

5. Turkey, Switzerland and Bulgaria/Czech Republic/Hungary/ Poland/Romania,

Slovak Republic/Slovenia.

6. ASEAN Member countries

7. Canada and Norway

8. Pakistan and China (after accession)

9. European Communities

10. Korea and Hong Kong

*Cont..

*Textile Industry In India

*World's second largest producer of textiles and garments

*The Indian textiles industry accounts for about 24 per cent of the world's

spindle capacity and eight per cent of global rotor capacity

*The potential size of the Indian textiles and apparel industry is expected to

reach US$ 223 billion by 2021

*Major contribution to the national economy in terms of direct and indirect

employment generation and net foreign exchange earnings

*Sector contributes about 14% to industrial production, 4% to the gross

domestic product (GDP), and 27% to the country's foreign exchange inflows.

*It provides direct employment to over 45 million people

*Second largest provider of employment after agriculture

*Cont..

*Market Size

*Strong growth by strong domestic consumption as well as export demand

*Most significant change in the Indian textiles industry has been the advent

of man-made fibres (MMF) which are placed across globe

*MMF production recorded an increase of three per cent during the period

April-July 2014.

*Cotton yarn production increased by four per cent during April-July 2014

*Blended and 100 per cent non-cotton yarn production increased by five per

cent during April-July 2014.

*Cloth production by mill sector registered a growth of six per cent during

April 2013-July 2014.

*Cloth production hosiery sector increased by eight per cent during April-

July 2014

*Total cloth production grew by two per cent during April-July 2014

*Cont..

• The industry (including dyed and printed) attracted foreign direct

investment (FDI) worth US$ 1,495.07 million during April 2000 to

September 2014

• Some of the major investments in the Indian textiles industry are as

follows:

1. Arvind Lifestyle plans to invest Rs 126 crore (US$ 20.37 million) as

capital expenditure this fiscal to expand its footprint

2. Sangam India plans to venture into the seamless garment segment with an

investment of Rs 120 crore (US$ 19.39

*Investments

* Mr Bagri's Metmin Investment Holdings has bought a 30 per cent

stake from private equity (PE) firm Avigo Capital, which owns a

majority stake in Spykar.

* Arvind Lifestyle Brands plans to foray into the children's wear retail

segment in India, as it has signed a franchisee agreement worth US$

1.8 billion with US-based The Children's Place.

* Private Equity (PE) firm Everstone plans to invest Rs 100 crore (US$

16.16 million) for an undisclosed minority stake in the fashion label of

designer Ritu Kumar.

*Cont..

*Govt. Initiatives

*The Indian government has come up with a number of export promotion

policies for the textiles sector.

*It has also allowed 100 per cent FDI in the Indian textiles sector under the

automatic route.

*Some of initiatives taken by the government to further promote the industry

are as under:

1. The Ministry of Textiles plans to ink a deal with Flipkart to provide an

online platform to handloom weavers to sell their products.

2. The Ministry of Textiles will implement the scheme for in-situ up

gradation of plain power looms for SSI sector in Surat and Ahmedabad

power loom clusters in Gujarat.

3. The government has taken a number of initiatives for the welfare and

development of the weavers and the handloom sector.

4. Encouraged by the turnaround in textiles exports, the Government of

India plans to set up a US$ 60 billion target for the current financial

year, a jump of over 30 per cent from the previous financial year.

5. The Cabinet Committee on Economic Affairs (CCEA) has approved

an Integrated Processing Development Scheme (IPDS) with a corpus

of Rs 500 crore (US$ 80.82 million) to make textiles processing units

more environment-friendly and globally competitive

*Cont..

* Textile Industry In Bangladesh

*The textiles and clothing industry is Bangladesh’s biggest exportearner

Source: Board of Investment, Bangladesh (Prime Minister’s Office)

• Clothes/textile makes up 80 percent of the country’s export.

• There are 5,600 factories with 4 million workers.

• In 1990, there were only 759 factories and340,000 employees in the

industry.

Source: Board of Investment, Bangladesh (Prime Minister’s Office)

*Cont..

*Favored Trading Status

*Bilateral agreements with 28 countries and Generalized System of

Preferences (GSP) of the EU are key reasons for Bangladesh RMG

products having access to global markets.

*Bangladesh is now a significant Ready Made Garment supplier to North

America and Europe

*The Bangladesh RMG industry has depended largely on imported yarns

and fabrics and produced only 10% of the export-quality cloth used by

the garments industry

*The need for establishment of backward-linkage industry has become an

immediate concern to the government

*there are enormous opportunities to set up a composite textiles industry

combining textile, yarn and garments

*Investment Opportunities and

Government Support

*Backward linkage is a significant trading opportunity and is supported by agovernment backed incentive

* 15% cash subsidy of the fabric cost to exporters sourcing fabrics locally

*Establishment of new textile/RMG mill in the private sector

*Joint ventures with the existing textile/RMG mill

*Acquisition of public sector textile mills that are being privatized

*Indirect investment through financial services and/or leasing

*The government is supporting spinners by providing lower tariffs for

machinery spares and raw materials, cash incentives, reduced tax rate,

and low-cost funding etc.

*The most beneficial public policy of introducing back to back Letter of

Credit and bonded warehouse facilities provide a tremendous impetus to

the export scenario in Bangladesh

*Cont..