New Delhi: Factory output growth recorded a four-month high of 7.1 per cent in February, aided by strong show in manufacturing and capital goods sectors. The Index of Industrial Production (IIP) had grown at a modest 1.7 per cent in February last year. On the other hand, retail inflation, measured by Consumer Price Index (CPI), was at a five-month low at 4.28 per cent in March on the back of lower food inflation at 2.81 percent (against 3.26 per cent in February 2018). The latest CPI print was however higher than the 3.89 per cent level recorded in March 2017. Sequentially, the CPI print has declined for the third straight month. CPI was at 4.44 per cent in February 2018. However, the not-so-good news is on the core inflation front, which rose to a 43-month high of 5.4 per cent in March. The March 2018 CPI inflation modestly exceeded the RBI’s medium term target of 4.0 per cent.
Commenting on the CPI print, Aditi Nayar, Principal Economist, ICRA, said notwithstanding the surge in crude oil prices and the uptick in the core inflation, there is a low likelihood of a change in the repo rate or stance of monetary policy until there is greater clarity on the impact of the minimum support prices (MSPs) for various crops, monsoon dynamics and fiscal risks on the inflation trajectory, which is unlikely to emerge in the next few months. Anis Chakravarty, Lead Economist and Partner at Deloitte India, said: “Core inflation has continued to remain on the upside on the back of likely pass-through of input costs. “In response to the comfortable inflationary position, the Monetary Policy Committee maintained status quo albeit turning hawkish. Despite the positive news on the food inflation front, we believe that inflationary pressures remain tilted to the upside and are likely to hover around the 5 per cent mark in 2018-19.”
Surge in oil prices
Nayar said the surge in global oil prices poses a risk to the trajectory of the CPI inflation in the near term. The extent of pass through of higher crude oil prices to retail fuel prices, in light of whether the uptick is absorbed by the OMCs or cuts in excise/VAT are instituted by the Central or State Governments, remains to be seen. At present, ICRA expects the CPI inflation to chart an uptrend in the ongoing quarter to around 5.3 per cent in June, before recording a base-effect led easing in the subsequent months.
Source: Business Line
New Delhi : The step to jointly bargain for crude oil is taken to get better prices as oil producers charge an Asian premium from India, China and others for supplying petroleum. Two of the largest consumers of petroleum products in the world — India and China — will explore the possibility of sourcing crude oil jointly from the international markets, India’s petroleum minister Dharmendra Pradhan said on Thursday during the conclusion of the 16th International Energy Forum. The 17th edition of the ministerial-level meet will be organised in China in 2020 and will be co-hosted by Morocco. The step to jointly bargain for crude oil is taken to get better prices as oil producers charge an Asian premium from India, China and others for supplying petroleum. On Wednesday, India’s Prime Minister Narendra Modi, while addressing delegates attending the meet from various countries, had urged for ‘responsible pricing’ of crude oil and natural gas. Pradhan said Indian Oil (IOC) and China National Petroleum Corporation (CNPC) have been asked to take the lead for both the countries and explore ways through which joint bargaining can be done. To start with, while the two nations may source crude oil from West Asia initially, they may likely be joined by Japan and South Korea later to bolster their bargaining power. India, China, Japan and South Korea are the top four consumers of petroleum products in the world apart from the US, which is the second-largest consumer. “CNPC is also concerned about the issue of Asian premium. We are looking for more co-operation on crude procurement, scouting for oil fields, bring in best enhanced oil recovery activities and technology sharing,” Pradhan said, adding that the co-operation will be multi-dimensional. Li Fanrong, deputy administrator, National Energy Administration of China, echoed the same view. The idea to look for crude oil jointly by these Asian countries has been discussed in the past as well, though no steps were taken. Sanjiv Singh, chairman of IOC and the lead appointed by India to steer dialogue with China, said the idea has been conveyed and the two sides will look for ways to execute the plan.
Source: Financial Express
Recently the United States (US) has threatened to drag India to the World Trade Organization (WTO) for providing export subsidies in a number of sectors, including apparel. While the Indian government is contemplating the idea of challenging the US in the WTO, it is important to understand whether India has a strong ground for challenging and if not how such measures is going to impact one of India’s key export items. Data shows that India’s export of apparel to the world between April 2017 and January 2018 was $13,783.4 million. India has acquired export competitiveness in the textiles and apparel sector by crossing the threshold of 3.25 per cent share of global exports in 2010. Therefore, if export linked subsides are given to this sector it can be countervailed by the receiving country. Some experts are of the view that India will get an eight year period for phasing out subsidies but the export data clearly shows that from 2010 the window of eight years is getting over in 2018. One needs to go deeper to understand why the US has suddenly raised the subsidy issue. In line with the WTO’s basic objectives of ensuring free and fair trade, the SCM Agreement recognized that since certain subsidies are trade distorting, it is important to impose disciplines on these subsidies. To achieve this goal, the WTO has established a set of rules to govern subsidies and export incentives in its member countries related to non-agricultural products and apparel industry is covered under this agreement. The SCM Agreement defines the term “subsidy” based on three basic elements: (i) a financial contribution (ii) made by a government or any public body within the territory of a Member (iii) which confers a benefit. All three of these elements must be satisfied in order for a subsidy to exist. However, even if a measure is a subsidy within the meaning of the SCM Agreement, it is not subject to the disciplines of the SCM Agreement unless the concerned subsidy is a “specific subsidy”. By “specific subsidy”, the SCM Agreement means subsidies that are specifically provided to an industry, a region, an enterprise or industry, or a group of enterprises or industries. In other words, the SCM Agreement will treat a subsidy as a “specific subsidy” if the granting authority limits access to the subsidy to certain enterprises or certain regions. A subsidy can be actionable, non-actionable or prohibited under this agreement. Prohibited subsidies include subsidies that are given to a firm or industry that are contingent on export performance and those subsidies that are contingent upon the use of domestic over imported goods. A number of subsides given under the Foreign Trade Policy (2015-20) and through other policy initiatives such as the SEZ policy are prohibited under the WTO’s SCM Agreement. Among these, apparel exporters are frequent user of the Merchandise Exports from India (MEIS) Scheme, which is clearly a WTO prohibited subsidy. According to the SCM Agreement, if a country grants or maintains prohibited subsidies, then other member countries can initiate remedial actions against the errant country. Article 4 of the SCM Agreement specifies the consultation and panel process and the US has asked India for consultation. If the US and India fail to reach a mutually agreed solution about the subsidy within a stipulated period, the matter will be referred to the Dispute Settlement Board of the WTO. If the dispute settlement procedure confirms that the subsidy is prohibited which MEIS is, it must be withdrawn immediately. Otherwise, the complaining country can take counter-measures, which may be in the form of charging “countervailing duty” on subsidized imports, which the US has done earlier. In any case, Indian exporters will loose their export competitiveness which that have due to the subsidies, vis-a-vis exports from competing countries such as Bangladesh, Thailand and Vietnam. As a least developed country (LDC) Bangladesh can continue to give subsidies, while other competing countries such as Vietnam has already changed their subsidy regime to make it non-actionable under the WTO. This is indeed a matter of grave concerns for Indian exporters. Coming back to Indian policymaking, until recently the country did enjoy “Special and Differential Treatment” under the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement). Article 27.2 of the SCM Agreement exempts LDCs and developing countries with per capita income of less than $1,000 from the prohibition of export subsidies. The list of these countries is given in Annex VII of the SCM Agreement, and India was in this list. Thus, India was eligible to give export linked subsidies for an indefinite period based on the threshold that was calculated in terms of current prices. In the Doha Round, to counter the fear that a country may cross the per capita income threshold of $1,000 merely by having inflation, the WTO adopted an alternate methodology that calculates the threshold in constant 1990 US dollars. Moreover, to graduate a country must reach or cross the $1,000 threshold (measured in terms of constant 1990 US dollars) for three consecutive years. Even based on this criterion, India can no longer qualify for the “Special and Differential Treatment” as is given in the notification issued by the Committee on Subsidies and Countervailing Measures dated 11 July 2017 (G/SCM/110/Add.14). It is rather surprising why the government and export promotion councils have not taken any measures to have design alternative and “smart subsidies” for the industry in 2017, which could have been WTO compliant. pecifically, since there are no discipline on subsidies in services in the WTO, with increase in servicification of manufacturing, subsides can be given to services which are inputs into manufacturing. Since logistics cost in India is high, logistics services used by exports can be subsidized. Subsides can also be given for creation of employment or training of workers. Such subsidies will help to retain India’s export competitiveness and cannot be challenged in the WTO.
Source: Forbes India
India is looking for greater market access in the European Union for items such as textiles and leather and seeking ‘data secure’ status to the country at the ongoing bilateral trade talks in Brussels where negotiators from both sides are making a last-ditch effort to re-start the stalled Free Trade Agreement (FTA) negotiations. “With the US adopting an aggressive posture against its trade partners, including the EU, the bloc may be in a more flexible mood this time round. It could be a last political effort by both sides to save the free trade talks,” a government official told BusinessLine. The India-EU FTA talks, formally called the Broad-based Trade and Investment Agreement (BTIA), were officially kicked off in 2007, but saw several ups and downs with disagreements over market access issues. .
What India wants
In 2013, the BTIA talks reached a complete standstill as the EU was unhappy with India’s offers for items such as wines and spirits and automobiles as well as financial services and retail. India, on its part, wanted more market access for key manufacturing items, grant of ‘data secure’ status that would bring more off-shore business to its companies and greater flexibility in H1-B visa rules. “There were at least five stock-taking meetings of relative positions of both sides since 2013, but so far differences could not be narrowed enough for talks to re-start,” the official said. However, this time things could be a little different. “The EU, and also to some extent India, have been on the receiving side of the abrasive trade measures of the Donald Trump-regime in the US. Hard positions may see some softening,” the official said. The Indian industry, especially the textiles and garments sector, is eager that India formalises the BTIA with the EU soon as its competitors such as Bangladesh and Vietnam enjoy preferential tariffs in the region. Two-way trade between India and the EU is well balanced with India’s exports to the region in 2016-17 at $47 billion and imports at $42 billion. The EU accounts for about 17 per cent of India’s total exports. When the talks broke-off, India had agreed to bring about significant cuts in tariffs for automobiles and wines and spirits, but it was not enough for the EU which argued that it had got a much better deal in its free trade pacts with other nations. The EU also wanted India to take commitments on market openings in financial services and retail, but New Delhi had its doubts.
Source: Business Line
The Cotton Association of India (CAI) plans to set up a full-fledged training institute for farmers in Mumbai, at a time when the country's cotton sector is experiencing a difficult phase, an official said here on Thursday. CAI President A.S. Ganatra said that its board has cleared the proposal to establish an All India Training Centre for Farmers at its Cotton Green premises in south Mumbai. "We are conscious of the challenges ahead in realising this dream. But, with the support of all the stakeholders, we can achieve it. It would go a long way in realising Prime Minister Narendra Modi's dream of doubling farmers' incomes by 2022," Ganatra said at the inaugural session of "Cotton India 2018" national conference earlier. At present, cotton is grown in 10 states in the country over 122 lakh hectares, under varying agro-climatic conditions, with relatively small land holdings. Nearly 60 per cent of the total area under cotton is rain-fed making is susceptible to the vagaries of nature. "Despite all odds, the sector has notched an envious growth and carved a niche for itself in the world cotton market. Today, India is the world leader with a crop of 360 lakh bales of 170 kg cotton each, from nearly one-third of the global acreage," Ganatra said. Besides, India is the second-largest consumer of cotton, ranking next only to China, with the annual domestic consumption likely to touch 330 lakh bales during the current year. This is further bolstered by several new textile mills coming up in Gujarat and other states adding around 3.50 million new spindles this year, he added. India is not only the second-largest exporter of cotton in the world after the USA but also has a vibrant import market. He said that there exists a huge untapped potential in this sector and if exploited to its optimum, Indian can become a "cotton superpower" in the world. "We have taken giant strides in terms of productivity, but its still below the global average. Against the world average productivity mark of 779 kg per hectare, India still manages around 500 kgs per hectare," Ganatra pointed out. If the country can achieve the world per hectare average productivity mark, the Indian cotton output would witness a quantum jump, he opined. Referring to other issues bogging down the sector, he said excess moisture due to pouring water on the cotton bales, poor quality of package of the bales, lack of uniformity in bale weight and different trading norms across the country, absence of contract sanctity and lack of training facilities need urgent attention.
Source: Business Standard
Hyderabad: Titan Company, a joint venture between Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO), which has been in the business of watches, jewellery and eyewear, is keen to revive one of the oldest occupations in the country- handloom weaving and the oldest garment ‘Saree’. The company which created a brand ‘Taneira’ last year, is looking at grabbing a significant share in the Rs 50,000 crore market in general, and the ‘occasion wear’ segment that accounts for 50 per cent of this market. Revealing the plans for this segment, Bhaskar Bhat, MD, Titan Company, told Telangana Today, “We are exploring the business of silk sarees. We will go to weavers across all the major markets and we have already started sourcing from certain weavers. They are an exploited community in the country like the karigars of jewellery.” He added, “We are evaluating options if a separate company should be carved out for this business. The idea is to bring all the sarees in the country under one roof. We will focus on opportunities in both silk and cotton segments. We have opened two stores in Bengaluru (Indira Nagar and Jayanagar) to test this model. We will in near future enter into Hyderabad, Chennai, Delhi and Mumbai. We have begun our hunt for appropriate locations. We are currently testing the waters before we go aggressive. Initial outlets will be company-owned.” Bhat explains that weaving and designs are very different from each region-Pochampally, Kancheepuram, Patan Patola, Chanderi, Banarsi and Bhagalpuri. Titan wants to bring all this under one roof. “Next year we will have 4-5 stores across India. We are still exploring it. We have to understand how margins work. We have enough cash with us and we will create outlets selectively,” he adds.
Source: Telangana Today
Indeed, they will also impact patents by locals such as Deepak Pental whose GM mustard is awaiting government approval —since Pental’s research was funded by the government-created National Dairy Development Board that spearheaded India’s milk revolution, though, he may not be interested in a patent. Sections of the government, egged on by powerful Andhra seed companies, are probably cheering the judgment of the Delhi high court’s division bench that just declared Monsanto’s Bollgard-II patent illegal. Sections of the government, egged on by powerful Andhra seed companies, are probably cheering the judgment of the Delhi high court’s division bench that just declared Monsanto’s Bollgard-II patent illegal. Given how this will affect the future of Indian agriculture, though, they haven’t understood the importance of the judgment since its implications go beyond Monsanto. Indeed, they will also impact patents by locals such as Deepak Pental whose GM mustard is awaiting government approval —since Pental’s research was funded by the government-created National Dairy Development Board that spearheaded India’s milk revolution, though, he may not be interested in a patent. The government, this newspaper has chronicled over the years, has gone out of its way to hit Monsanto, on grounds it was over-charging farmers even though few farmers objected to Monsanto’s tariff. Even among the seed companies that used Monsanto’s technology, only one—Nuziveedu Seeds—was fighting over the royalty payment. The anti-Monsanto campaign included a cap on prices, a cap on royalties (this was later withdrawn), and even the additional solicitor general (ASG) telling the courts that the patent—granted by the government’s Patent Office!—was illegal. It is this argument, put forward by Nuziveedu—the government didn’t finally submit an affidavit to back the points made by the ASG—that the division bench has backed, overturning the view of a single-judge bench of the same court. The government’s stance never made sense since, with 95% of the cotton crop using Bt technology, it was obvious farmers thought the cost-benefit was favourable (see graphic). Indeed, such is the farmers’ faith in Bollgard-II, they are happily paying 1.7 times the price for illegal copies of an advanced version of it—the product, Bollgard-II RRF (Roundup Ready Flex) was developed by Monsanto, but illegal knock-offs of it are being sold since, faced with the government’s attitude, Monsanto never introduced it in the Indian market. Around 8-10% of India’s cotton acreage is based on the illegal knock-offs. The crux of the controversy over whether the Monsanto technology can be patented centres around Section 3(j) of the Patents Act—Section 3 deals with what are not inventions and cannot be patented and 3(j) talks of “plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals”. So, how did the Patent Office, in 2008, give Monsanto a patent if this is in violation of the Patents Act? Indeed, more than 70 other patents have been given for similar products, including “a method of producing a transgenic plant”, “a method to produce a plant tolerant to stress conditions”, “a method for increasing seed yield and/or biomass under normal growth conditions”, etc. Monsanto’s invention comprised (a) identification of desired gene (Cry2Ab) from the DNA of BT (Bacillus thuringiensis) bacteria, which is found naturally in the soil; (b) making (synthesising) nucleic acid sequence by copying the Cry2Ab for insertion into a plant cell; and (c) the method of inserting this nucleic acid sequence into a plant cell. Once this was done, Monsanto licensed the technology to various seed companies, like Nuziveedu, and they used this to develop various cotton hybrids that had the essential qualities of what Monsanto developed. Monsanto argued its product was a biotech one, a microbiological process/microorganism, which was patentable under the Patents Act. Indeed, it said Section 3(j) did not apply to it since what it had developed was not ordinarily part of a plant, it was inserted into a plant using its technology. This seems reasonable to even a layman since, if the anti-bollworm gene was part of a plant, any seed company working on hybrids could have developed what Monsanto had. This is something the single judge bench agreed to when it said Monsanto’s technology “involve(d) laboratory processes and are not naturally occurring substances which only are to be excluded … in Section 3(j)”. The division bench, however, gave this a totally new twist. It said, “the nucleic acid sequence which is the invention in question (the Cry2AB gene) has no existence of its own; it is of use, after introgression at a particular place, none else. Even thereafter, the seed material has to undergo further steps of hybridization to suit local conditions. Therefore, these products are not ‘microorganisms’ and consequently excluded from the exclusion clause in Section 3(j)”. In other words, Monsanto’s patent was really useful after it was inserted into a plant, but once it was introduced into a plant, however, Section 3(j) applied! That’s really ironical since it is clear as daylight that none of the hybrids, such as those created by Nuziveedu, would have had the properties they did had it not been for Monsanto’s work. So, at a time when India most needs genetic modification (GM) technology to raise yields, to protect against certain pests, to provide protection against water stress or floods, the court has ensured no GM patents can be given. Theoretically, a Monsanto or a Pental can apply for ‘benefit-sharing’ under what it called the Protection of Plant Varieties and Farmers Rights (PPVFR) Act, but this means accepting the benefits given by the PPVFR Authority, which is quite different from deciding on a royalty commensurate with the investments made—a Pental, as we’ve said, can easily apply under the PPVFR Act since his R&D was fully paid for by the government; few commercial organisation, including in India, are likely to go for this. It will be interesting to see whether the government gets into the case to challenge the damage done. For Monsanto, though it will probably challenge the verdict, the damage is minimal since, in any case, it had put on hold the introduction of any new product in India, given the government’s policies. With little private investment in seed technology, it is befitting that the government has, only recently, come out with a policy to promote Vedic and gau mata farming. What that does to crop production/yields is a different matter.
Source: Financial Express
The ongoing hostilities between the United States (US) and China can upset existing equations and force new alignments in the global textiles and apparel industry. Assuming, of course, both countries stick to their guns till the end of May when the new tariffs imposed by the Trump administration on Chinese imports set in, and the counter-tariffs of China come into play. Till then, the global textiles and apparel industry would have little to do but wait and watch the game of who-blinks-first. This, however, is more than just an eyeball-to-eyeball confrontation, and had been expected-with varying certainties, of course-since Day One. US President Donald Trump's views about Chinese domination of global manufacturing was well known, but his assertive action has come more than a year after he took over the presidency. The US withdrawal from the Trans Pacific Partnership (TPP), nevertheless, had been immediate. But in case of China, Trump bid his time, preparing ground through jingoistic rhetoric. The first sign that the US would take China head on came in February. Thereafter, it was only a matter of time before the war of words would escalate into a trade war.
The First Salvo
President Trump on April 3 released a long-winding list of Chinese imports that his administration intended to target as part of a crackdown on what he believed to be unfair trade practices. The sectors covered by the proposed tariffs included products used for robotics, information technology, communication technology and aerospace. The US Trade Representative (USTR), which announced the list, said it was targeting products that benefit China's industrial plans "while minimising the impact on the US economy." The tariffs were directed at Chinese policies that "coerce" American companies into transferring technology and intellectual property to local Chinese companies. The US was expected to levy tariffs on $50 billion to $60 billion of Chinese imports annually. The official announcement underlined that the total value of imports subject to the tariff increase would be equal to "the harm caused by China's unreasonable technology transfer policies." The official note remarked, "The Trade Representative proposes an additional duty of 25 per cent on a list of products from China." The American list included over 1,300 imported products. The Chinese reaction was immediate. The very next day, it announced additional tariffs on 106 US products. This was in addition to 128 other US export products that had been listed earlier by China. The effective start date for the new tariffs has not been announced, though China's ministry of commerce made it amply clear that the tariffs were designed to target up to $50 billion of US products annually. Though the American list had not included apparel and footwear, the sigh of relief that industry had heaved on April 3 did not last long-the Chinese list included cotton.
Trump's decision went down well with his voters, but industry was not pleased. Certainly not the American Apparel and Footwear Association. Its president and CEO Rick Helfenbein reacted the same day, "We are pleased with the administration's decision to avoid adding tariffs to US imports of apparel, footwear, and travel goods from China. At the same time, we are concerned that the list includes tariffs on machinery used in our domestic manufacturing process. This would directly raise costs on domestic manufacturers and impact our ability to grow Made in USA." This is where some of the catch lies-more than 80 Chinese products can be linked directly to machinery needed for apparel and textiles manufacturing. Broadly, the list includes textile printing machinery, carding machines for preparing textile fibres, textile spinning machines, machinery for producing textile yarns, weaving machines, circular knitting machines, flat knitting machines, embroidery machines, spindles and sewing machines; not to speak of spare parts of those same machines. In short, the cost of doing business would go up, and even though the US President harped on the job protection string, many believed that the additional tariffs would only push up costs of apparel for the average American customer. American companies are already said to be scouting around for alternative sourcing hubs should tariffs be imposed on apparel as well, since domestic apparel manufacturing would become more expensive with the additional duties on machineries. Besides, changing sourcing partners overnight is not easy either. But right now, those are all contingency plans being slowly rolled out. Yet, brands and retailers have reason to be wary. Just because apparel had not been listed the first time out does not mean that it would not make it to a subsequent list. In fact, as if on cue, President Trump continued with his China-bashing, announcing only two days later that he was considering imposing penalties on $100 billion in Chinese goods in addition to the proposed tariffs on $50 billion of imports that had already been announced. Since the President did not specify which goods he would target, the US apparel/retail industry remains on tenterhooks.
Taking it to the Fields
The impact on the apparel industry, however, paled into insignificance soon once China announced uncombed cotton and cotton linters from the US would face new tariffs. If the US strike was aimed at Chinese manufacturing, the retaliatory move was in many ways directed at agriculture/livestock. Apart from cotton, China proposed additional tariffs on soybeans and pork. The National Cotton Council was understandably upset, because for the current 2017 crop year, China is the second largest export market with purchases of approximately 2.5 million bales of US cotton. Council chairman Ron Croft said, "I cannot overstate the importance of China's market to US cotton farmers and the importance of US cotton in meeting the needs of China's textiles industry. The cotton industries of the US and China enjoy a healthy, mutually beneficial relationship." The NCC encouraged the two governments to engage in immediate discussions "that can resolve trade tensions and preserve this long-term collaborative relationship. The US cotton industry stands ready to assist the US government and our trading partners in China to find a resolution to this damaging trade dispute." So far, those pleas have fallen on deaf ears. Not that the Trump administration had not been cautioned. The high-profile United States Fashion Industry Association (USFIA) had, in fact in March, even reiterated over an earlier statement, "In case we weren't clear the first time, while we support efforts to protect the intellectual property of brands and retailers, we will never support punitive tariffs based on the fiction that imports harm domestic jobs and growth. These new tariffs will not create more jobs in the United States, but instead, will harm the companies that already create thousands upon thousands of high-quality jobs in design, in marketing, in retail, in logistics, in compliance, right here in the United States."
Notes of Dissent
The confrontation with China is not the beginning; it is only an escalation. The first move had come on March 8 when President Trump imposed heavy tariffs on imported steel and aluminium which he argued were necessary to boost the US industry suffering from "unfair" business practices. He signed two proclamations that levied a 25 per cent tariff on steel and a 10 per cent tariff on aluminium imported from all countries except Canada and Mexico. The tariffs were to go into effect in 15 days. Other countries would have to negotiate with the USTR if they wanted exemptions from the tariffs. The European Commission stung back, saying it would respond "firmly" to the proposed duties on steel and aluminium. It drew up a list of 2.8 billion euros ($3.46 billion) worth of US products on which it could apply a 25 per cent tariff. Those products included Harley Davidson (HOG.N) motorcycles, bourbon and Levi's jeans. The USFIA too had reacted strongly, "These tariffs will be catastrophic for the US economy and jobs. While our members don't import a lot of steel or aluminum, these tariffs could result in disastrous consequences for them. Already, the EU is calling out a variety of industries, including iconic American denim and t-shirts, as potential targets for tariff increases of their own." The US apparel exports were estimated to be $88 million. The US beat a retreat and suspended the tariffs on imports from the European Union as well as Argentina, Australia, Brazil, Canada, Mexico and South Korea. But China remained a target. The invoking of Section 301 of the Trade Act of 1974 was criticised. Helfenbein, in a scathing article, wrote: "One could try to argue that targeting China for their $375 billion trade surplus by using an obscure trade law is an awkward way to resolve a thorny issue. Simply put, it won't work, and it will likely cause more harm than good. However, the president got everyone's attention and, perhaps, that's what the he wanted to do. Our apparel / footwear industries are already some of the most overtaxed, over-regulated and over-burdened groups that exist in America." Helfenbein, on that occasion, had concluded, "Being upset with China for one infraction doesn't translate into taking it out on another. Trying to punish China with tariffs (that will ultimately be paid by American citizens) is just not practical. It's like telling your son he did something wrong and then punishing your daughter."
From the Ringside
As pundits speculate on what a post-confrontation world could look like, lists are also being drawn up of countries that could fill in the innumerable voids that would be created in the world trade theatre. Most items/subjects would be beyond the scope of this publication. Cotton/textiles/apparel would, however, can and should be looked at. It is too early to comment on the possibility of apparel being drawn into the Sino-American conflict. Apparel manufacturing in China has been on a gradual decline for a few years now, with many Western companies shifting base to other Southeast Asian countries like Vietnam. But Chinese companies are known for back-door entries. By the time the flight of capital had started into Vietnam, many Chinese companies had already set up bases in African countries like Ethiopia. Moreover, the domestic apparel market in China itself remains humongous and attractive enough for brands and retailers, and with a government crackdown on polluting units and an increasing shift away from manmade fibres, the demand for cotton by the Chinese textiles sector is likely to grow. The imposition of tariffs on American cotton will now render the situation fluid. As of now, China produces about 32 million bales of cotton, but needs roughly 45 million bales; the shortfall is met by imports. China's cotton stockpile is expected to come down to around 15 million bales by the end of this year; much of that is reckoned to be of poor quality. Among the initial reactions after the conflagration broke out were those from the cotton sector in India. Early speculations hovered over the possibility of India trebling its cotton exports to China. Atul Ganatra, president of the Cotton Association of India, told Reuters that India was looking to sell between 2.5 million and 3 million bales, each of 170 kg, to China in the next marketing season beginning October, up from around 800,000 bales of expected exports in the 2017-18 marketing year. This year China is scheduled to import 2.5 million bales of cotton from the US, with the other major suppliers being Brazil and Australia. But for India to replace Australia, to start with, as the second largest exporter of cotton to China, Indian cotton will need to match that of the Australian variety. One reason why Indian cotton sells so much is because of discounted prices, and not quality.
Pakistan recently put on hold the signing of a revised free trade agreement (FTA) with China at the last moment due to strong reservations regarding the final offer list shared by Beijing, according to the country’s minister of state for finance Rana Muhammad Afzal. He was briefing the National Assembly Standing Committee on Finance on the FTA’s second phase. The Chinese ambassador to Pakistan reportedly held recent meetings with the Pakistani commerce secretary and Prime Minister Shahid Khaqan Abbasi to push the deal. The standing committee expressed concern over what it termed the secret nature of the FTA-II talks, according to Pakidtani media reports. The business community of Pakistan’s textilehub Faisalabad voiced serious reservations over the final offer list by China. Till now, both sides have held ten rounds of negotiations for finalising the FTA-II. However, the industry and Federal Board of Revenue fiercely resisted after the commerce ministry revealed in an internal meeting that Pakistan would offer zero duties on 75 per cent of imported tariff lines, the reports said. Under first phase of the FTA, Pakistan gave duty concessions on 35 per cent of tariff lines, which led to a huge influx of Chinese goods and many local industries could not survive. Afzal regretted that the commerce ministry did not take all stakeholders into confidence before offering huge concessions to Beijing. Trade with China was already one-sided and if further concessions are offered, no industry would survive in Pakistan, he cautioned. (DS)
Thailand wants to join the new 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), deputy prime minister Somkid Jatusripitak said recently. The Thai Government has asked the commerce ministry to look into the details on how to join the partnership. Thailand will seek support from Japan on the matter, Somkid said. If there are no problems, Thailand will join the grouping this year, media reports from Thailand quoted Somkid as saying. Eleven countries, including Japan and Canada, singed the CPTPP deal earlier this month after the United States withdrew last year from the original 12-member agreement, known as the Trans-Pacific Partnership (TPP). (DS)
With President Donald Trump’s new trade tariffs, the US has been transformed from the global multilateral trading system’s leading champion and defender to its nemesis. But it would be very difficult for an erratic politician suddenly to overturn long-established structures and mechanisms, were it not for a more fundamental economic shift. The first formal manifestation of today’s trade tensions occurred in the steel sector — an “old economy” industry par excellence, one that is plagued, especially in China, by enormous excess capacity. Excess capacity is a recurrent phenomenon in the steel sector, and has always produced friction. Back in 2002, President George W Bush’s administration imposed steep tariffs on steel imports, but relented when a World Trade Organization dispute-resolution panel ruled against the US. Although the Trump administration trade hawks remember this ruling as a loss, most economists agree that it was ultimately good for the US economy, which does not gain from taxing a major input for many other industries. In any case, today’s tariffs differ from Mr Bush’s in a crucial way: they specifically target China. Under Section 301 of the US Trade Act of 1974 — which empowers the president to act if US industry has been damaged by a foreign government’s unjustified actions — Mr Trump has imposed steep tariffs on some $50 billion worth of Chinese imports. And China has already hit back, introducing steep tariffs on imports of 128 US-made products. So why is Mr Trump risking a trade war? His administration’s main complaint is that China requires foreign companies to reveal their intellectual property (IP) as a condition of access to the domestic market. And it is true that this requirement can do serious damage to US tech companies — as long as those companies are dominant in their industries. For a major player in social networks or search engines, for example, the cost of entering a new market is essentially zero. Since the existing software can easily serve many more millions of users, they just need to translate their interface into the local language, meaning that entering a new market mostly means more profits. But if such companies are forced to reveal their IP, their business models are destroyed, as local players can then compete effectively in that market — and potentially in others. This is not the case for companies operating in competitive industries. For them, producing and selling more abroad costs much more, limiting the marginal profits that can be reaped. In other words, in the more competitive “old” economy, the gains of opening new markets are much smaller. That is why lobbying by potential exporters for better access to markets with high tariffs has usually been muted — hence the lack of resistance to India’s protectionism. This is changing in the new “winner-take-all” tech economy: with IP-owning winners missing out on massive profits when a big market like China is protected or closed, trade conflicts become more acute. Meanwhile, trade policy becomes focused primarily on re-distributing rents, with employment and consumer interests viewed as secondary. (Under competitive conditions, policymakers place a higher priority on maximising trade’s potential to boost productivity and create high-quality employment.) Monopoly rents translate into high market valuations. And, indeed, the new economy giants have a much higher stock-market value than their “old economy” equivalents. The three largest US tech companies are worth over 50 times more than the three largest US steel producers. The looming trade war promises to be asymmetric. The US — home to all the dominant tech firms — will struggle to find allies against China. After all, in Europe and Japan, IP-owning companies operate mostly in more competitive industries, meaning that China’s demand for that IP will have less of an impact. Making European support even harder to come by, some European governments are eager to secure their share of rents from US firms. This is the ultimate aim of European efforts to raise taxes on the profits of digital multinationals, though such a tax is unlikely to do the job. Proponents of that tax argue that profits should be taxed where they are earned, with the implicit argument being that they are earned where the consumers are. But this is an arbitrary criterion. US firms can legitimately claim that their “European” profits are just a return on their IP, which can formally be localised anywhere, preferably in a low-tax jurisdiction. A European tax on these companies is thus unlikely to yield substantial revenues. In the old competitive economy, trade wars might be easy to win for a country with a large trade deficit. But in the emerging winner-take-all economy, a trade war launched with the goal of forcing the rest of the world to open up, thereby allowing the aggressor’s own winning firms to earn higher rents, is an altogether different proposition. So the US government is essentially arranging its diplomatic guns behind its Internet giants, while Europe and China are baying for their monopoly profits. This is more destructive than a zero-sum game: it will do serious damage to the global trading system, leaving everyone worse off.
Source: Business Standard
GENEVA (Reuters) - World trade in goods is maintaining a robust recovery, but it still might falter if trade tensions escalate further, the World Trade Organization said in its annual forecast on Thursday. Trade in goods will grow 4.4 percent this year after a decade averaging 3.0 percent a year following the financial crisis. Last year it grew 4.7 percent - much higher than the 3.6 percent forecast in September - and a further 4.0 percent rise is expected in 2019, the WTO said. “However, this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” WTO Director-General Roberto Azevedo said in a statement. “A cycle of retaliation is the last thing the world economy needs.” The United States and China have threatened each other with tens of billions of dollars’ worth of tariffs in recent weeks, leading to worries that Washington and Beijing may engage in an all-out trade war. The WTO’s 2018 forecast puts world trade growth at the top end of previous expectations, since the organization said last September that it expected 2018 growth of 1.4 to 4.4 percent, most likely around 3.2 percent. The latest forecast raises that to 3.1 to 5.5 percent based on current GDP forecasts, but “a continued escalation of trade restrictive policies could lead to a significantly lower figure,” the WTO said. “These forecasts do not, and I repeat, they do not factor in the possibility of a dramatic escalation of trade restrictions,” Azevedo told a news conference. “It is not possible to accurately map out the effects of a major escalation, but clearly they could be serious,” he said. “Poorer countries would stand to lose the most.”
CHINA KEY TO GROWTH
New trade restrictions could trigger cycles of retaliation that weigh on global trade and output, but disruption could equally come from central banks raising interest rates rapidly or from geopolitical tensions, it said. Cyber attacks were a further risk, with potentially even greater impact on trade in services than trade in goods. Trade in commercial services grew by 7.4 percent in 2017, after two years of weak or negative growth, the WTO said. Last year’s growth in goods trade was led by Asia, by investment spending and by higher commodity prices. China’s rebalancing away from investment and towards consumption could mean it imports fewer capital goods, putting a drag on world trade growth. “Less investment could also help reduce overcapacity in sensitive sectors such as steel and aluminum, thereby alleviating trade tensions,” the WTO said. Steel and aluminum were the targets of one of U.S. President Donald Trump’s three big tariff announcements this year, each more controversial than the one before. The steel and aluminum tariffs, justified on national security grounds, came soon after a restriction on imports of solar panels and washing machines. They preceded a huge package of tariffs that Trump has proposed to punish China for its alleged theft of U.S. intellectual property. China’s commerce ministry said on Thursday that Washington’s attempts at dialogue were not sincere and vowed to retaliate should Trump escalate further.
American Institute of Economic Research (AIER's) Everyday Price Index fell 0.1 percent in March following a 0.4 percent rise in February. The EPI measures price changes people see in everyday purchases, such as groceries, restaurant meals, gasoline, and utilities. As a comparison, the more widely known price gauge, the Consumer Price Index, which is reported by the Bureau of Labor Statistics and includes less frequently purchased items, rose 0.2 percent in March. The EPI is not seasonally adjusted, so we compare it with the unadjusted CPI. The EPI including apparel, a broader measure, rose 0.1 percent in March, as apparel prices rose for a third consecutive month on a not-seasonally adjusted basis. The EPI and the EPI including apparel exclude prices of infrequently purchased, big-ticket items (such as cars, appliances, and furniture) and prices contractually fixed for prolonged periods (such as housing). Over the past 12 months, the EPI has risen 2.4 percent, while the EPI including apparel is up 2.3 percent. For the same period, the CPI is up 2.4 percent. Over the past five years, the EPI and the EPI including apparel are up at an annualized rate of just 0.3 percent, while the CPI is up 1.4 percent. In the latest month, the 1.6 percent jump in apparel prices was offset by a 0.3 percent drop in motor fuel prices and a 0.5 percent decline in other fuels and utilities prices. Apparel prices have risen for three consecutive months on a not-seasonally adjusted basis. However, over the past 12 months, they are up just 0.3 percent. Over the last 5 and 20 years, apparel prices are unchanged and down 0.2 percent at annual rates, respectively. Motor fuel prices fell an unadjusted 0.3 percent in March but are up 11.2 percent from a year ago. Over the last two decades, motor fuel is up at a 4.7 percent annual rate, though the five-year annualized change is -5.9 percent. Among the components of the EPI, 13 of the 24 categories were up in March, while 11 were down. For the components with the largest weights in the EPI, food at home (21.0 percent weight) was unchanged in March and up 0.4 percent from a year ago, food away from home (17.2 percent) rose 0.1 percent in March and is up 2.5 percent over the last 12 months, household fuels and utilities (13.5 percent) were down 0.5 percent last month but up 3.0 percent for the year, and motor fuel (11.7 percent) was down 0.3 percent last month and has gained 11.2 percent since last March. Combined, these top four categories account for 63.4 percent of the EPI.
Source: Seeking Alpha
A memorandum of understanding between the National Social Security Fund and the Techo Volunteer Youth Doctor Association was signed on Wednesday in order to improve healthcare for garment workers. The MoU was signed by TYDA chairman Hun Manet and NSSF director Ouk Samvithya. An NSSF report stated that the MoU between the two institutions will reinforce and expand healthcare by providing services to citizens who qualify for social security, including garment workers. Mr Samvithya said during the signing ceremony that the MoU is meant to improve and expand healthcare. “It will make it easier for experienced doctors to check and treat patients,” he said. Mr Manet said TYDA first launched in 2012, doing charity work by going in the field and checking the health of people in various provinces. He added that TYDA also supports factory workers, orphaned children and other organisations. “This MoU is a common direction to enhance the implementation of the government’s task to strengthen healthcare,” he said. “It is important for the government to pay attention to garment workers.” Last year Prime Minister Hun Sen ordered the Health Ministry to set up more health centres with ambulances so nearby factory workers could come for check-ups. Cheav Bunrith, spokesman for NSSF, said yesterday that he expected the MoU to help disadvantaged workers in the provinces. “The plan is for NSSF and TYDA to visit every place and they should go down to all provinces to conduct check-ups and treat workers,” he said. He said so far there are more than 1,250 government and private health centres cooperating with NSSF to provide free treatment for garment workers.
Source: Khmer Times
Oeko-Tex release the Key to Confidence Survey Oeko-Tex has released the results from a commissioned “The Key To Confidence” online study, where more than 11,000 clothing and home textile consumers participated globally. The results confirmed that Millennials think differently about textile sustainability. Textile certification reassures time-strapped millenial consumers that their brands are pursuing a sustainable path - Image credit: Shutterstock. Oeko-Tex has released the results from a commissioned "The Key To Confidence" online study, where more than 11,000 clothing and home textile consumers participated globally. Of the total sample, approximately 30 per cent fell into the age group born between 1981-2000, otherwise known as Millennials, in line with the global population. The results were interesting confirming that Millennials think differently about textile sustainability and how parenthood affects those attitudes. Due to their internet and social media usage, Millennials are more aware of the textile industry’s environmental and social shortcomings than older respondents. They are more inclined to consider the textile industry to be a major polluter. As a result, Millennials are much more concerned about harmful substances in their clothing and home textile products.
Millenials are more concerned about harmful substances Due to their internet and social media usage, Millennials are more aware of the textile industry’s environmental and social shortcomings than older respondents. As a result, Millennials are much more concerned about harmful substances in their clothing and home textile products. Parenthood tends to intensify worries about all things. Parents of young children in particular voice concerns about harmful substances in a wide variety of products, but especially in home textiles and apparel. Parents’ product safety qualms outpace the concerns of non-parents. Their awareness of and reported purchase of “eco-friendly” clothing and home textiles is substantially higher than people without young children in the house.
Time-starved consumers want brands to react
As featured in the mega trend from ISPO Textrends, ‘Blind Faith’, consumers are much more aware of what is happening in the textile industry, what is available and how we can overcome past misdemeanors, however, whilst they are increasingly aware of new developments they hold their brands responsible to do the right thing. Correspondingly, interest in certified textiles is higher with both Millennials and Parents. “Both of these time-starved consumer groups are seeking shortcuts to trust and transparency”, says global brand and sustainability research expert, Ellen Karp. “Millennials and Parents want to do the right thing for society and the planet as well as for their families. Brands and certifiers play important roles in communicating the information that helps these engaged consumers make the responsible purchase decisions they are eager to make.” “At Oeko-Tex we are excited to share these findings with our customers and with the textile industry in support of our 25-year mission to help companies and consumers make informed decisions,” said Anna Czerwinska, Head of Marketing and Communication at Oeko-Tex. “The information reinforces the important role that independent Oeko-Tex certifications and labels can play in helping Millennials and Parents select sustainable textile products that are better for their families and the planet.”
Bring some sunshine to your wardrobe with our Spring shopping selection sampling the best of ethical, sustainable and independent fashion brands.
Cindy Sweatshirt by Riyka, £129 (approx. €150)
This sustainable clothing brand based in East London was launched in 2011. The label’s collections comprise relaxed-fit dresses, bombers and loose sweatshirts with distinctive geometric paneling which is the brand’s signature. The garments are made in Bulgaria and the company apply a zero waste policy with any leftover fabric sent to be up-cycled with different charities, twice a year, to avoid landfill. Follow on instagram @riykalondon
Anne Level Jeans, Kings of Indigo, €139,35
This vintage inspired boyfriend fit is made out of 100 percent organic cotton - like all jeans from Kings of Indigo. The fabric comes from Orta in Turkey and the pair was produced in Artlab, Tunisia. The brand was launched in 2012 by Tony Tonnaer and is currently based in Amsterdam. It prides itself in never using sandblasting which is very harmful for the workers and focuses on more sustainable techniques such as laser, ice blast and ozone, that are used to substitute manual scraping, stonewash and bleach finishes. Follow on instagram @kingsofindigo
Derya Small Pepper Rose, Armed Angels, €89,90
Tencel (also called Lyocell) is a natural fibre made out of wood (cellulose), which production is environmentally friendly, and is the perfect fabric for mid-season dresses as it feels like silk on the skin but cools down like linen and warms up like wool depending on the temperature. It is one of the many smart textiles used by Armed Angels that only offers garment in organic cotton, linen, wool, recycled polyester, and Lenzing Modal. Follow on instagram @armedangels
Keisha Camargue shirt, Tinsels, €125
Add a summer vibe to your wardrobe with this lovely shirt which exclusive print is inspired by Camargue, Picasso paintings and the South of France. Tinsels is a young brand, based in Lyon, that draws from the city’s strong heritage of quality textile. Garments are made in Europe, out of French fabrics, and the collections boasts a great blend of workwear essentials and more relaxed pieces. Follow on instagram @tinselsboutique. Little painted faces top ($135 - approx. €109) and Chelsea Curlywaist skirt ($175 - approx. €140) by Chelsea Bravo. Independent designer Chelsea Bravo’s collection is a reduced, well-edited line of pieces crafted using hemp. Hemp is a fast growing plant that uses 20 percent of the water needed to grow cotton, requires no fertilisers or pesticides, and gives back through nourishing the soil that it's grown on. The brand channels an artistic vibe and focuses on handmade embroidery and hand applications making each garment unique. Follow on instagram [**@chelseabravo**](http://www.instagram.com/chelseabravo
Faor Jumpsuit, Aéryne, €129
This sexy chic jumpsuit by Aéryne, a Swedish fashion brand with its creative studio located in Paris, is both trendy (the stripes) and versatile (a good day to night option). The brand aims to « Empower Women Through Style » via its “Aeryn Academy” collection with 100% of the profit dedicated to finance a year of education for underprivileged girls in India. _Follow on instagram @aeryne_paris_
Rose bag, Bembien, $185 (approx. €150)
Endorsed by every women’s magazine on Earth and prominent fashion bloggers, Bembien is definitely a brand to watch. We liked the ethos behind the (sleek) instagram façade. Indeed, every bag, including this 100% handwoven rattan one, help to support financially the work of local artisan around the world from Bali to Morocco and Vietnam. Follow on instagram @bembien
Comb Mobile Earrings, Artisans & Adventurers
, £45 (approx. €50)
These original earrings in ethical hand-cut gold tone brass are as sweet as it can get. Artisans & Adventurers is a successful brand (two physical shops already) based in London and ran by friends, designer Amy Fleuriot and craft development expert Bee Friedmann. From chocolate to cushions, and jewellery to woven baskets, their shops are go to when it comes to sustainable and conscious living.