INTERNATIONAL
NATIONAL
India needs to follow a cautious approach while negotiating labour provisions in free trade agreements (FTAs) as those could have potential repercussions on domestic manufacturing and overall trade competitiveness, experts say. International trade experts claimed that in a significant shift from its longstanding stance, India has begun to engage on labour issues in its trade negotiations with the UK, European Union, and the US-led Indo Pacific Economic Framework for Prosperity (IPEF). Inclusion of these issues in trade pacts could have negative impacts, they said, adding that the recent US presidential memorandum of Joe Biden on worker rights indicates a deepening focus on labour standards in trade deals. Negotiations are on fast track with a comprehensive trade agreement with the UK, which seeks to promote trade in goods, services and two-way investments. Think tank Global Trade Research Initiative (GTRI) Ajay Srivastava said that such provisions could erode the competitive advantage of developing countries by inflating manufacturing costs. Citing an example, he said that the US-Mexico-Canada free trade agreement, which mandates a minimum wage in Mexico's auto sector, potentially diminishes its competitiveness. Sharing similar views, trade expert and former government official Sangeeta Godbole also expressed reservations about labour clauses in trade deals. She was involved in the negotiations of the India-EU trade agreement. "Even non-binding labour provisions in the EU-South Korea FTA led to a dispute adversely impacting South Korea's auto industry, cautioning against complacency in negotiations," Godbole said. International trade expert Abhijit Das said that labour provisions in trade agreements often seek enforcement of domestic laws and can lead to punitive actions for non-compliance. He noted that the labour clauses in the recent supply chain resilience agreement under IPEF as a potential gateway for increased scrutiny and a pressure point for the imposition of import restrictions in future based on alleged labour law violations. "India must tread carefully in negotiating labour provisions in trade agreements, mindful of the potential repercussions on its manufacturing sector and overall trade competitiveness," the experts said.
Source: Economic Times
India has imposed anti-dumping duty on Bangladeshi jute products since January 2017. The country now wants to impose a new countervailing duty (CVD) on jute products. Exporters say that if India's new initiative to impose tariffs succeeds, there will be a major blow to Bangladeshi jute exports However, CVD cannot be levied on a product if there is an anti-dumping duty. It is prohibited by the World Trade Organization (WTO) as well as Indian law. In view of India's interest in this regard, Bangladesh held a meeting with the Directorate General of Trade Remedies (DGTR) of the Commerce Department of the Ministry of Commerce and Industry in Delhi on October 30. Md. Hafizur Rahman, former Director General of WTO Cell of Ministry of Commerce and member of Bangladesh Competition Commission, led the delegation of three members of Bangladesh in the meeting. During the meeting, Bangladesh made a verbal request to India not to impose CVD while the imposition of anti-dumping duty on jute products remained in force. After that Bangladesh made the same request to DGTR in writing last Tuesday (November 21). India began its push to impose CVD last August. The DGTR wrote to the Bangladesh High Commission in Delhi on August 4 that they wanted to settle the issue of CVD on Bangladeshi jute products on an amicable basis. The letter also said that the Indian Jute Mills Association (IJMA) has requested imposition of CVD on jute products produced in Bangladesh or exported from Bangladesh in a petition. IJMA complained DGTR that Bangladesh exports jute sacks and similar bags used in rice packaging to India. Bangladesh is providing huge subsidies on the import of capital machinery used in the jute industry and is also providing cash incentives to companies producing jute and jute products. These are affecting the Indian jute industry. India in January 2017 imposed anti-dumping duties ranging from $19 to $352 per ton on Bangladeshi jute exports for a period of five years. After the expiry of the period on January 1, the country extended the period for another five years. In such a situation, if India implements the new CVD initiative, it will have a negative impact on the entire jute sector of Bangladesh.
Source: Textile Today
An upcoming mega apparel and textile park in Gujarat will propel the key sector to new heights and generate large-scale employment opportunities, Union Minister of State for Textiles Darshana Jardosh said on Thursday. The Pradhan Mantri Mega Integrated Textile Region and Apparel, or PM MITRA Park, in coming up in Navsari district of south Gujarat. Jardosh was speaking at a seminar on the textiles and apparel sector in Surat city as part of the 10th edition of the Vibrant Gujarat Global Summit 2024, which will be held in Gandhinagar between January 10 and 12.
Source: PTI News
Directorate General of Foreign Trade (DGFT), under Ministry of Commerce and Industry, is collaborating with various e-commerce players to leverage the Districts as Export Hubs initiative and promote e-commerce exports from the country. For this, DGFT has signed a MoU with Amazon India. DGFT is in discussion with various e-commerce platforms like Flipkart/Walmart, E-bay, Rivexa, Shopclues, Shiprocket, DHL Express etc. to have similar collaboration in other districts of the country under the Districts as Export Hubs initiative. Under the MoU with Amazon India, 20 districts have been identified for such capacity building and handholding sessions. The MoU was signed in the presence of Santosh Sarangi (Additional Secretary and Director General, DGFT), Chetan Krishnaswamy (Vice President, Public Policy – Amazon) and Bhupen Wakankar (Director Global Trade – Amazon India). It is a significant move to enable micro, small and medium enterprises and boost e-commerce exports from the country. As part of this MoU, Amazon and DGFT will co-create capacity building sessions, training and workshops for MSMEs in districts identified by the DGFT as part of the District as Exports Hub initiative outlined in the Foreign Trade Policy 2023, in a phased manner. The initiative seeks to link local producers even in rural and remote districts with global supply chains. The collaboration aims to enable exporters/MSMEs to sell their ‘Made in India’ products to customers internationally. Under the collaboration, Districts will be identified by various e-commerce platforms across India, to undertake various capacity-building and outreach activities in collaboration with DGFT- Regional Authorities. These activities will focus on educating MSMEs on e-commerce exports and enabling them to sell to customers across the world. In addition, the capacity building session will allow MSMEs to learn about imaging, digital cataloging of their products, tax advisory amongst others. With this, Indian entrepreneurs can build their e-commerce exports businesses and global brands.
Source: Apparel Resources
In the next one month, India will have around 38 lakh weddings and it can bring cheer to apparel retailers as well, as a big chunk of wedding expenditure is also set to go for clothing. Traders’ body Confederation of All India Traders (CAIT) believes that retailers and traders across all the segments are expected to see Rs 4.74 lakh crore business during the period. In the similar season last year, around 32 lakh weddings took place that generated trade worth around Rs 3.75 lakh crore. As per industry estimates, around 10 per cent of wedding expenditure is incurred on textiles and the amount can be around Rs. 40,000 crore From top cities to Tier-3 and -4, all generate good business in this season. At the same time from high end clothing, party wear to different products including innerwear to nightwear etc, nearly all kinds of products witness demand in wedding season. As per an estimate drawn by CAIT after talking to prominent trade bodies of 30 various cities of different states, which are known as distribution centres and different stakeholders both in goods & services, it is estimated that around 38 lakh weddings will be solemnised across the country with a massive flow of about Rs 4.74 lakh crore by way of wedding purchases and procurement of various services by consumers having marriages in their homes. Many apparel manufacturing hubs are also upbeat about the coming wedding season. For example, in Indore, the association of ready-made garments have pegged the annual sales of clothes in Indore to around Rs. 800-Rs. 1000 crore. Ready-made Textile Dealers Association president Ashish Nigam said, “This season seems much better than last year looking at the volume of orders and enquiries from retailers. Retailers from the outstation markets have started placing orders and units have ramped up production to meet the demand well in advance in the wedding season.”
Source: Apparel Resources
INTERNATIONAL
Turkish clothing manufacturers, the third-largest suppliers of apparel to Europe, face higher production costs and risk falling further behind their Asian rivals after the government hiked taxes on textile imports, sector leaders say. Ankara raised tariffs by 30- 100% on hundreds of incoming textile products last week, aiming to support local yarn and fabric manufacturers that appealed for support against a wave of cheaper imports. Apparel officials say the new taxes are squeezing the industry, which is among Turkey's biggest employers, supplying heavyweight European brands such as H&M, Mango, Adidas, Puma and Inditex. Job cuts could come, sector representatives say, as import costs rise and Turkish producers shed market share to rivals like Bangladesh and Vietnam. Exporters can technically apply for exemptions from the tax, but industry sources say the exemption regime is costly and time-consuming, and in practice does not work for many companies. The sector was already fighting soaring inflation, waning demand and lower profit margins due to what exporters see as an over-valued lira, as well as the effects of Turkey's years-long experiment with cutting interest rates as inflation rose, a policy recently revisited. The price of a Turkish-made t-shirt is now 40% higher for a European shopper than one from Bangladesh, said Seref Fayat, chairman of Turkey's TOBB Clothing and the Apparel Industry Assembly. A couple of years ago the gap was 15-20%, another source said. "Fashion brands can bear higher prices up to 20%, but anything more leads to market losses", Fayat said. Timur Bozdemir, president of DF Manhattan Inc, which manufactures women's garments for the European and U.S. markets, said the new tariff will raise the cost of a $10 t-shirt by no more than 50 cents. He does not expect to lose customers, but said the changes reinforced the need for Turkey's apparel industry to shift from mass production to value-added. "If we insist on competing with Bangladesh or Vietnam for a $3 t-shirt, no doubt we will lose," he said.
COMPETITIVE EDGE Turkey exported $10.4 billion in textiles and $21.2 billion in clothing last year, making it the world's fifth and sixth biggest global exporter respectively. It is the second-largest textile and third-largest clothing supplier to the neighbouring European Union, European Apparel and Textile Confederation (Euratex) data shows. But its share of the European market slipped to 12.7% last year from 13.8% in 2021. Western customers turned to Turkey during the COVID-19 pandemic to cut freight costs amid supply disruptions. When it ended, the combination of plunging shipping costs and rising domestic inflation dulled its competitive edge. Textile and apparel exports fell more than 8% through October this year, while overall exports were flat, sector data shows. The textile sector, facing a rise in cheaper imported fabrics and yarns which in part sparked the need for the tariffs, saw its number of registered employees falling 15% through August. Its capacity utilisation rate was 71% last month, compared to 77% in manufacturing overall, and sector officials say the rate is near 50% for many yarn manufacturers. "I've almost stopped production and cut most of the jobs in my yarn facility - and I'm not the only one in this situation," said Fatih Bilici, who runs an Osmaniye-based yarn factory that supplies local and foreign markets. His company cut daily production to 5 tonnes from 50 tonnes a few months ago. He said the tariffs are vital for an industry struggling to survive. "It costs me $3.20/kg to manufacture, whereas my Uzbek rival sells it at $2.70. How can I can compete?". The lira has shed 35% of its value to the dollar this year and 80% over five years. But exporters say the lira should depreciate yet more to better reflect inflation that is running above 61% and touched 85% last year. TOBB's Fayat said the textile and apparel sector had cut 170,000 jobs so far this year. As monetary tightening cools an overheated economy, it is expected to hit 200,000 by year-end.
Source:
The Bangladesh Bank (BB) said that the supply of US dollars in banks is more than their requirement, so reducing the exchange rate is logical. Bangladesh Bank spokesperson and Executive Director Mazbaul Haque said this at a press conference at the BB headquarters in Motijheel on Thursday. He said that last year short-term foreign debt liability was $16 billion, now it is reduced to $6.9 billion. Besides, there is a surplus of $1.0 billion in the current account. Now the LCs are opened with immediate dollar payment. In addition, the supply of dollars in banks is now more than the demand. As a result, the decision of the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) is correct, the BB spokesperson said. He said that the US dollar price is determined depending on demand and supply. Dollars are used to purchase services and goods and to clear service debts and foreign liabilities. Now the import price is being monitored. As a result, the demand for dollars has reduced, he said. On Wednesday, for the first time in more than a year, banks decided to lower the exchange rate of US dollar. The decision to reduce the price of the dollar by Tk0.50 has come into effect from Thursday. Besides, the price of the dollar has decreased by Tk 0.50 paisa for sale to importers. The BAFEDA and the Association of Bankers Bangladesh (ABB) decided to reduce the dollar price in a meeting held in the evening on Wednesday. According to the decision, the price of the dollar to buy expatriate and export earnings will be Tk 110, which was earlier Tk 110.50. To meet the import liability, the dollar price can be taken as Tk 110.50, which was Tk 111 earlier. However, in addition to the government’s 2.5 per cent incentive on expatriate income, banks can also give the same amount of incentive. As a result, the beneficiaries will receive a maximum of Tk 115.50 per dollar for inward expatriate income. Despite such a statement from the BB, the banks still bought expatriate income at the rate of Tk 121 and more per dollar.
Source: The Financial Express
The European Union has released new trade policies and requirements for exporting textiles to the EU market — policies that have been accused of trade protectionism. Among them, the June 2022 EU Strategy for Sustainable and Circular Textiles (EUSSCT) is likely to significantly impact East Asian textile makers, who supply over 70 per cent of the European Union’s textiles. Within the EUSSCT, a series of environmental regulations stipulate that by 2030, companies trading clothing and apparel with the European Union must adhere to standards regarding durability, the absence of hazardous substances and the predominant use of recyclable materials. This strategy is expected to serve as the foundational plan for the evolution towards more sustainable consumption of clothing and apparel by EU member states. In doing so, the European Union could be a pioneer in enforcing its commercial partners to adopt sustainable manufacturing. Garment, textiles and footwear sectors remain a critical contributor to Asian economies, generating around 60 million jobs for the region and indirect employment for millions more. The textile industry is still growing in most East Asian countries, with the fastest growth rates recorded in China, Indonesia, Vietnam and Cambodia. The region is the production hub for heavyweights of the European fast fashion industry like Nike, Zara, C&A and H&M. Textiles are the fourth largest burden on the environment stemming from European consumption. The East Asian region is the main garment producer in the world — playing a key role in the textile and garment supply chain. In 2019, the region made up around 55 per cent of global textiles exports. For example, Vietnam exported apparel, garment and textile products valued at US$37.6 billion to the global market in 2022. Out of these exports, 5.4 billion euro (US$5.8 billion) went to the European Union. The industry is seeing rapid growth, which is partly attributed to increased engagement in Southeast Asia driven by the EFTA–Singapore Free Trade Agreement and the EU–Vietnam Free Trade Agreement (EVFTA). The EVFTA has led to an increasing reliance on the EU market by Vietnamese goods. Yet since the COVID-19 pandemic, the East Asian garment and textile industry has struggled due to lower demand in key markets, including the European Union and the United States. Textile exports from Indonesia, Malaysia, Thailand and Vietnam also fell in 2020. In light of this, the EUSSCT’s new regulations may impact East Asian garment and textile manufacturers more significantly than previously anticipated. The EUSSCT is expected to pose challenges and potentially increase costs for the East Asian apparel sector. Enterprises operating within this sector should be proactive in adapting to these forthcoming regulations to ensure exports continue. The European Union has set 2030 as the target year for full circularity. This places pressure on textile and clothing businesses to comply with different aspects — including circularity, traceability and decarbonisation. East Asian clothing and apparel producers who do not utilise recyclable materials may face heightened scrutiny. Also, this sector’s heavy water and chemical usage contributes to severe water pollution as it discharges substantial volumes of wastewater containing hazardous substances into rivers and waterways. Reducing carbon emissions will require changes to the sector’s business models and technological and process innovations. But opportunities abound. The domestic transformation required to meet EU standards could make the region better prepared if other developed markets implement similar policies. Embracing green production practices can have a positive impact on the local environment and the quality of life of East Asian people. It can also open up new sustainable production and business opportunities. In turn, this could attract more foreign investment from developed countries. Despite the challenges caused by these new regulations, companies in the region are proactively addressing them. Singapore-based Ramatex has already made strides in sustainability by researching how to create clothes that do not shed microfibres. In Vietnam, the Spectre garment factory relies on renewable energy to power its operations, while South Korea’s Hansae Group and the Hanoi Textile and Garment Joint Stock Corporation have collaborated to produce recycled textiles for exports to the European Union. To some extent, opportunities for environmental progress depend on existing capabilities and other facilitating factors, including policy frameworks and infrastructure. Mitigating the environmental impact of textile manufacturing requires a systemic shift towards a circular economy. This transition should encompass green public procurement, eco-design, labelling and standards, and increasing producers’ responsibility. It is imperative to adopt a new development approach that is both net-zero carbon and environmentally restorative. A substantial challenge in the sustainability transformation of the textile industry in East Asia is the limited knowledge and technical know-how regarding environmental sustainability. To make the East Asian textile and apparel industry greener, key projects must be set in motion. They include investing in research and development and providing comprehensive education and training programs to increase expertise in environmental sustainability. Governments should also enact supportive policies and incentives for sustainable manufacturing in the textile sector, including tax incentives and subsidies. These incentives should encourage the adoption of eco-friendly technologies and promote green supply chain practices. International and domestic collaborations to share best practices and strategies for sustainability are also vital. By addressing these issues, East Asian textile and apparel manufacturers can better position themselves to meet the evolving standards of the European market and improve their sustainability.
Source: East Asia forum
