The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 26 SEPT, 2019

NATIONAL

INTERNATIONAL

India’s textile exports tumble as Bangladesh, Vietnam get preferred access in EU

India’s containerised exports to China declined by 20 per cent in the second quarter of the current fiscal year, led by a reduction in demand for India-made textiles & apparel. India’s textile and apparel industry is facing strong headwinds as key competitors such as Bangladesh and Vietnam are given preferred access in India’s biggest textile market — the European Union. These could make it increasingly more difficult for India’s apparel exporters to maintain their competitiveness in the EU, which accounts for over one-third of India’s apparel exports. Even, India’s containerised exports to China declined by 20 per cent in the second quarter of the current fiscal year, led by a reduction in demand for India-made textiles & apparel. These were large export commodities in the corresponding period last year. “Apart from challenges in the EU market, retail trends in the US also remain unencouraging, which could exert additional pressure on the order flow for India’s apparel exporters going forward,” said Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA. External environment for India’s apparel exporters remains challenging amid a pick-up in activity on several free trade agreements among the key trading nations, which has intensified competition from nations having a cost advantage over India, he added. Trade tension between the US and China was expected to give thrust to Indian industries by giving them an opportunity to fill the gap. However, India’s close competitors are squeezing far more profits than India. Although large exporters from India are well-positioned to benefit from the market opportunity, it would require companies to scale up their operations, maintain strict delivery schedules and meet stringent compliance requirements of the buyers in a short span of time, ICRA said in a report. Ironically, smaller companies in the textiles and apparel sector, with limited bargaining power and dependence on smaller US retailers are facing performance pressures and are more prone to the slowdown. Meanwhile, India’s containerized trade growth in Q2 FY19 slowed to 1 per cent, compared to 9 per cent in the same period last year, due to a combined effect of international factors such as slowing trade growth, and growing trade tensions, coupled with domestic factors like rural consumer distress, tightening liquidity and a slow-down in key manufacturing sectors. “Amidst increasing global volatility, a slower local economy and the USA’s withdrawal of preferential access for certain Indian products, India’s import-export trade is expected to continue to face headwinds in the coming months,” said Steve Felder, Managing Director, Maersk South Asia. Integration and enhancement of logistics value chain, coupled with the adoption of new technologies such as Blockchain and Artificial Intelligence across the logistics network, and concerted efforts towards the improvement of infrastructure at ports and roadways will ensure last-mile connectivity for farmers, MSMEs, and small businesses, driving economic growth and trade competitiveness of India, Steve Felder added.

Source: Financial Express

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India, US fail to seal trade deal over differences on import duties

ICT products make up a minuscule $407 million, out of the $35.54 billion of total inbound shipments from the US, as of now. Differences over reduction in import duties on high-value US smartphones and gadgets have held up efforts by India and the US to finalise a trade package, said officials. However, both sides have continued to discuss issues and trade negotiators are hoping for a breakthrough by Thursday, they added. “Commerce and Industry Minister Piyush Goyal, along with Commerce Secretary Anup Wadhawan and other trade department officials, are in the US,” said the officials. Prime Minister Narendra Modi will have a number of bilateral meetings on Thursday, one of which may see him sit with US President Donald Trump again. Addressing the press on Tuesday, Trump had promised a trade deal with India “very soon”, with a larger deal down the line. However, Modi has not commented so far.

ICT hurdle

The US wants India to reduce import duties on certain information and communication technology (ICT) products, such as high-end mobile phones and smartwatches, which may make iPhone products cheaper. While New Delhi had earlier considered the proposal, talks have been made difficult on the quantum of reduction demanded, the officials said. ICT products make up a minuscule $407 million, out of the $35.54 billion of total inbound shipments from the US, as of now. However, US Commerce Department officials have zeroed in on the category as a prime growth puller. Major corporations such as Apple have also thrown their weight behind the move, arguing that India is a major market for consumer electronics. The overall import of electrical machines in all forms from the US stood at $1.8 billion in FY19, slightly up from $1.75 billion in the year before. India has tried to reduce its exposure to foreign products for electronics imports, which, at $52 billion, is the third-largest on the country’s import bill. The government’s phased manufacturing program has targeted reducing the import of technology products over the next five years.

FTA or not?

The US continues to pressurise India on a full-fledged free trade agreement (FTA), since a year, but New Delhi has consistently resisted. Commerce Department officials have argued that India stands to gain little from such a pact, given import duties for goods coming from the US are already among the lowest globally. India wants a mutually acceptable ‘trade package’ that provides an amicable solution to major grievances, according to a senior trade negotiator. India may consider dismantling the current price cap regime for coronary stents, with a trade margin policy. It may also lower duties on certain ICT imports. In return, the US has offered to step back from its aggressive posturing on ‘reciprocal taxes’. Trump has repeatedly accused India of being a ‘high tariff nation’, referring to duties placed on Harley Davidson motorcycles. The India-US trade talks had run the risk of falling through after the US had, earlier this year, cut off India’s duty-free access to the US market under the Generalized System of Preferences (GSP). Subsequently, India had raised import duties on key high-value imports from the US, mostly on agricultural products such as apples and almonds. The reinstatement of GSP benefits is a key demand from the Indian side, according to people in the know.

Source: Business Standard

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FTA with Indonesia, Vietnam hurting spinning mills

Industry demands increase in customs duty on imports. If weak export demand and uncompetitive prices were not enough for the textile mills in North, the phenomenal increase in the imported polyester yarn from Indonesia and Vietnam under the free trade agreement (FTA) is posing a threat to the domestic industry. According to data, from an average monthly import of 565 tonnes from these two countries in the pre-GST period, the imports have risen to 5,400 tonnes in the past two months, especially in July and August this year. Volume wise, the increase is 4,835 tonnes per month and in percentage terms, it registered a whopping 855% increase in quantity in just 26 months. Cotton spinning mills in the North have already resorted to production cut as they are grappling with weak export demand. While a few mills have stopped production, some are reducing the number of working days and shifts. On an average, the production is down by 25-30%. The substantial increase in imported yarn has further added to their miseries. According to Sanjay Garg, president, Northern India Textile Mills Association, the finished product of the mills — polyester yarn — is included in the list of items being cleared with SAFTA and imported at zero duty whereas the raw material — polyester staple fibre (PSF) — is not included in this list and hence cleared at full duty rate of 5%.He said in the pre-GST regime, there used to be some protection against the influx of imports under these FTAs as imported yarns were subject to Cenvat (12%) and a special additional duty (SAD) of 4% whereas the domestic yarn was exempted from Cenvat. However, post-GST, the Cenvat and SAD was removed and this has led to astronomical increase in the quantity of yarn being imported from Indonesia and Vietnam. The industry apprehends that the size of the spinning mills in Indonesia are huge and if left unchecked, this figure will surely increase threatening the survival of not just the North Indian textile mills but mills across the country. Perturbed over the rising imports, NITMA has proposed to increase the basic custom duty on polyester yarns from the current 5% to 10%.The textile mills in the Northern region have a combined turnover of Rs 50,000 crore. With an installed capacity of 750 lakh spindles, the northern region contributes 15% to the total capacity of the country. The region comprising Punjab, Haryana, Uttar Pradesh, Rajasthan and Himachal Pradesh has around 200 spinning units.

Source: The Tribune

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At 6%, UN body projects 7-year low GDP growth for India in 2019

The UN body also pointed towards challenges in meeting sustainable development goals (SDGs) at a time when private debts are rising globally. The United Nations Conference on Trade and Development (UNCTAD) has pegged India’s economic growth rate at a seven-year low of 6 per cent in calendar year (CY) 2019. It also highlighted the pitfalls of shadow banking in countries such as India and China, citing the example of Infrastructure Leasing & Financial Services (IL&FS). The UN body also pointed towards challenges in meeting sustainable development goals (SDGs) at a time when private debts are rising globally. India’s economy grew 7.4 per cent in CY18. It grew below 6 per cent in 2012 — called the policy paralysis year — under the UPA 2 government. “Growth projections for India have been marked down because of a sharp fall to 5.8 per cent in the first quarter of CY19 (relative to the corresponding quarter of the previous CY),” said UNCTAD in its trade and development report for 2019. It should be noted that UNCTAD did not take into account an over 6-year low economic growth rate of 5 per cent that the country recorded during the second quarter of CY19. Highlighting the risks of shadow banking, it said such institutions were fragile alternatives to public banks and development finance institutions, as the roles of the latter were reduced or done away with, as part of liberalisation. Quoting a study, UNCTAD said an example of this development was Infrastructure Leasing & Financial Services (IL&FS), which sourced capital using short-term instruments such as commercial papers (CPs) to fund long-term investments. This maturity mismatch did not prove to be a problem initially, because of the presumption that being a government-sponsored entity, it enjoyed sovereign guarantee. Owned one-third by state-owned financial entities, IL&FS was one of the largest issuers of CPs and enjoyed a triple-A credit rating. However, by August 2018, it suffered a series of bond defaults by group entities, leading to a change in management, legal proceedings, and a painful restructuring of the company that is still in progress, UNCTAD said. The report also highlighted concerns over SDGs. It said these concerns were compounded by the dizzying rise in debt levels to a scale similar to those seen before the financial crisis.  “If the routine warnings from financial analysts and at global gatherings are to be believed, the addiction to debt is no longer sustainable," it said. The report suggested that meeting financing demands of SDGs required rebuilding multilateralism around the idea of a ‘Global Green New Deal’, and forging, by implication, a different collective financial future.

Source: Business Standard

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US asks for WTO panel to settle dispute with India over retaliatory duties on 28 products

The US has asked the World Trade Organisation (WTO) to set up a dispute panel to settle its disagreement with India over retaliatory import duties imposed by the country on 28 American products which include walnuts, apples, almonds, chemicals, chickpeas, pulses and some steel products. New Delhi imposed higher duties on select items imported from the US in June this year in response to Washington’s decision to increase import duties on Indian aluminium and steel by 10 per cent and 25 per cent respectively in 2018 on the ground of security concerns. “The additional duties measure applies only to products originating in the United States. The additional duties measure does not apply to like products originating in the territory of any other WTO Member, and thus appears inconsistent with the most-favoured nation obligation in Article I of the GATT 1994,” the US said in its submission to the Dispute Settlement Body (DSB) of the WTO. Moreover, the additional duties measure results in rates of duty greater than the rates of duty set out in India’s schedule of concessions, and thus appears inconsistent with multilateral trade rules, the submission added. The DSB will respond to the request possibly in its next meeting. The US had requested consultations with India on the matter in July which is the first step that a complainant needs to take before it requests for a dispute panel to be formed. “Unfortunately, these consultations did not resolve the dispute,” the US submission said. India has been defending its move on the ground that retaliatory tariffs are permitted under the WTO’s Agreement on Safeguards. The US, however, argued that the additional import duties imposed by it on Indian steel and aluminium were not safeguard duties (imposed when there is a surge in imports on a particular commodity) but were taken on grounds of national security. The WTO panel, once constituted, will now take a call on whether India was justified in imposing unilateral duties on American products in response to Washington’s penal duties on its aluminium and steel. Interestingly, India too has filed a case against the US for its duties on alunimium and steel. India’s increase in import duties for certain American products is relatively substantial. While import duty on walnut has been hiked to 120 per cent from 30 per cent, duty on chickpeas, Bengal gram (chana) and masur dal were raised to 70 per cent, from 30 per cent. Import duty on lentils was increased to 40 per cent.

Source: The Hindu Business Line

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Textile mills in TN appeal for status quo on energy policies

The textile spinning sector in Tamil Nadu is caught between external factors such as the US-China trade war and domestic issues such as excess capacity and rising raw material and transportation costs. The proposal of Tangedco (Tamil Nadu Generation and Distribution Corporation) to curtail certain benefits such as wind power banking, group captive power purchase by MSMEs for less than one MW and removal of old windmills is adding to the woes of the spinning sector. The Southern India Mills’ Association (SIMA) Chairman Ashwin Chandran has appealed to the State Chief Minister for status quo on energy policies in Tamil Nadu. Stating that there is no incentive for investing in the textile industry in Tamil Nadu, the SIMA chief said the government should continue with the existing energy benefits. “There are over 1,500 micro, small and medium sized textile mills operating in the State. These mills source open access power either under group captive or their own windmills. The State government issued a GO in April 2018, curtailing open access to industrial units having less than one MW. This denial would ruin the 1,500-odd mills, their survival is already at stake,” Chandran said. The association has also sought extension of wind mills banking facility beyond March 2020. It also asked the government not to insist on removal of wind mills so long as they have the stability to perform and generate power. Chandran also came down heavily on the levy of one per cent Agricultural Market Committee fee on cotton waste. “No other State in the country levies such a fee on cotton waste. There is no logic in the levy of such a fee on the byproduct of cotton.”

Source: The Hindu Business Line

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9th India-China Financial Dialogue held ; Joint Statement issued at the conclusion of Dialogue reflects shared vision of both the countries to further strengthen cooperation in the financial sector

The 9th India-China Financial dialogue was held in here today. A high level Chinese delegation led by Ms. Zou Jiayi, Vice Minister, Ministry of Finance, People’s Republic of China interacted with the Indian delegation led by Shri Atanu Chakraborty, Secretary, Department of Economic Affairs, Ministry of Finance, Government of India on wide-ranging issues of mutual interest. India and China bilateral relationship has entered into a new era after the historic informal summit between Prime Minister of India and China’s President held in Wuhan in April 2018. The India-China Financial Dialogue is a mechanism between the two countries with an aim to promote cooperation in the financial sector. During this dialogue, both sides had in-depth exchange of views on macroeconomic situation & policy, cooperation in multilateral framework, bilateral investment and financial cooperation. Both sides also committed to promote a favorable environment to enable continuous growth of bilateral trade and investment, strengthen their efforts to promote more balanced and healthier development of trade and economic cooperation and further enhance the closer development partnership between two countries. A Joint Statement was issued at the conclusion of the Financial Dialogue reflecting the mutual understanding and shared vision of both the countries to further strengthen cooperation in the financial sector. The next round of India-China Financial Dialogue is to be held in China.

Source: Press Information Bureau

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FOGWA claims govt turns deaf ear to weavers on RCEP

Powerloom weavers in Surat have blamed the commerce and textile ministries for ignoring the representation of the industry stakeholders in the proposed Regional Comprehensive Economic Partnership (RCEP) scheme. The Federation of Gujarat Textile Traders Association (FOGWA) has written a letter to textile minister Smriti Irani and commerce minister Piyush Goyal demanding representation of the powerloom associations and FOGWA from Surat and other powerloom clusters for their views on the proposed inclusion of textile sector in the RCEP scheme. Last month, FOGWA and the Federation of Indian Art Silk Weaving Industry (FIASWI) had represented the commerce ministry demanding imposition of import duty on the Chinese fabric to protect the SME sector in Surat. FOGWA stated that the import of heavily under-invoiced fabric from China has crossed the Rs 5,500 crore in the last one year. Imported fabrics are heavily under-invoiced and could be worth Rs 10,000 crore. FOGWA president, Ashok Jirawala said, “The government is inviting office bearers of Confederation of Indian Textile Industry (CITI). Majority of the office-bearers are importers of fabrics. However, they are not opposed to the proposal of including textile sector in the RCEP.” Jirawala added that FOGWA has demanded that the industry stakeholders from Maharashtra and Gujarat should be heard first as they are providing employment to lakhs of workers and inclusion under RCEP will directly affect the weavers. Ashish Gujarat, leader of FOGWA said, “WE have demanded that the government should organise meeting of the stakeholders regarding RCEP in the powerloom clusters to get proper response.”

Source: Times of India

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GSP may help restore some exports we lost following India-US trade deal: Saugata Bhattacharya, Axis Bank

Some part of that $5-6 b exports that had been taken out following withdrawal of GSP, expected to be restored. The surplus that we have with the US is relatively small compared to the surplus that the US has with its other bigger trading partners, says Saugata Bhattacharya, Chief Economist, Axis Bank NSE -1.34 % . Excerpts from an interview with ETNOW. On what front can we expect bigger developments, given that Trump’s commentary has been encouraging with regards to India-US trade? It is difficult to predict the nature of the trade deal that will emerge but from all indications, a trade deal is in the works and might be announced as early as today. Remember that the surplus that we have with the US is relatively small compared to the surplus that the US has with its other bigger trading partners. What should we look forward to as part of the trade deal that could be in the works? I have no idea how they are managing the last mile issues but my own sense is that the main issue is with the Generalised System of Preferences (GSP) which the US had withdrawn. There could be some movement ahead and some resolution of problems. Some part of that $5-6 billion exports that had been taken out from the GSP, will be restored. That is an additional competitive advantage that India has. You could get at least the 5-10% reduction in tariffs. Broadly speaking, the issue of the US agricultural and livestock imports into India is the sticking point that is likely to be addressed. With regards to the broader issue of trade and investment, the coordination between Indian and US companies on shale and natural gas is a very important announcement. The issues of US and India outbound and inbound investments are also of paramount importance. As soon as trade deals are signed, you tend to see a pickup and US is a very big market for India. Could it lead to meaningful pickup in the near term? The US is a big market exporter of leather, textiles, electronics, engineering goods and the export of smaller vehicles that are made in India. In these areas, trade can pick up relatively easily. Having said this, we were looking at imports of India’s textiles into the US relative to Vietnam, Bangladesh and Sri Lanka -- some of our more immediate competitors. To our surprise, the share of Vietnam in particular has been much higher than that of India but India’s share, relative to the others in textiles, has held up relatively well. This is one area where we can increase our exports to the US, given the competitive advantages now that might be brought into place with the tax cuts and a more liberalised system of export credit, import costs. That is one area that India should be focussing on to try to increase exports into US. As soon as trade deals are signed, you tend to see a pickup and US is a very big market for India. Could it lead to meaningful pickup in the near term? The US is a big market exporter of leather, textiles, electronics, engineering goods and the export of smaller vehicles that are made in India. In these areas, trade can pick up relatively easily. Having said this, we were looking at imports of India’s textiles into the US relative to Vietnam, Bangladesh and Sri Lanka -- some of our more immediate competitors. To our surprise, the share of Vietnam in particular has been much higher than that of India but India’s share, relative to the others in textiles, has held up relatively well. This is one area where we can increase our exports to the US, given the competitive advantages now that might be brought into place with the tax cuts and a more liberalised system of export credit, import costs. That is one area that India should be focussing on to try to increase exports into US.

Source: Economic Times

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GST amendments: A bid to iron out the issues

While the GST Council did address some aspects that were causing pain, sector-specific measures were a given a miss. On September 20, taxpayers were looking forward to the outcome of the 37th meeting of the GST Council expecting some relief measures for the economy in general, as well as for certain sectors such as automobiles and textiles in particular. Long before the GST Council meeting commenced, the Finance Minister diverted attention by slashing income tax rates drastically. Eventually, the decisions taken at the GST Council meeting paled in comparison to the big-bang income tax announcement. No sector-specific reliefs were provided, nor was there any path-breaking announcement. Composition dealers and those with a turnover of up to ₹2 crore should heave a sigh of relief, since the need to file the annual return in Form GSTR 9 has been removed. For the others, the government has stated that a Committee of Officers would be appointed to recommend simplification of the forms. This is bound to frustrate these taxpayers, since they have attempting to understand and file this form correctly for quite some time now with little success. Instead of investing further time in changing and amending forms in an attempt to simplify them, the government would do well to permit a one-time revision to the GSTR 3B form for March 31, 2018 and March 31, 2019. 3B is a form that most taxpayers are familiar hence filing this revision should not pose any issues. Introduction of the new system of filing returns has been postponed to April 2020. The GST Council also cancelled the controversial Circular No.105/24/2019-GST, which attempted to clarify various doubts relating to post-sales discounts but ended up creating further confusion. The Circular had some strange clauses, such as “if the additional discount given by the supplier of goods to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then such transaction would be a separate transaction and the additional discount will be the consideration for undertaking such activity and therefore would be in relation to supply of service by dealer to the supplier of goods. The dealer, being supplier of services, would be required to charge applicable GST on the value of such additional discount”. What should worry the GST Council is how and why such Circulars which bring up more questions than answers are being issued. It could probably be traced to a lack of training and awareness on the part of the tax officers on the intricacies of GST laws. The CBIC should proactively engage with the officers to ensure that controversial circulars are not issued. The GST Council did not provide any specific relief to the automobile or textile industries. Instead, they proposed reduced rates on an eclectic variety of items, such as slide fasteners, wet grinders (consisting of stone as a grinder), marine fuel and dried tamarind. Probably with a view to encourage tourists, GST on room tariff and outdoor catering were reduced. The GST Council also solved the controversy surrounding the levy on fishmeal by providing an exemption between July 1, 2017 and September 30, 2019. There were doubts with regard to taxability of fishmeal in view of the interoperatational issues. However, any tax collected for this period shall be required to be deposited. As the GST journey continues, it is becoming increasingly apparent that both the Department as well as the taxpayer are facing issues due to a law which was implemented in a hurry and added unnecessary baggage when introduced. It could probably take another couple of years for the law to settle, provided the GST Council, CBIC and the taxpayers continue the process of learning and unlearning.

Source: The Hindu Business Line

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Asia’s emerging economies are winning US-China trade war

Vietnam exports to US jumped 33% while China’s fell 12% year-on-year in first half. Asia’s emerging economies have been the big winners from the US-China trade war and they will gain even more if it escalates, according to the latest outlook from the Manila-based Asian Development Bank. Exports from developing Asian countries to the US rose by 10 per cent over the previous year in the first half of 2019, even as exports from China fell by 12 per cent. Exports from Vietnam to the US jumped by 33 per cent and from Bangladesh by 13 per cent. The report shows how the huge trade diversion effects caused by the US-China tariff war are creating winners and losers as they reshape global supply chains, with Bangladesh seizing market share in textiles and Vietnam in electronics. “Chinese products are encountering tariff measures so exports and production are slowing down. Naturally, suppliers connected to these Chinese exports are also slowing down,” said Yasuyuki Sawada, chief economist at the ADB, which lends to developing countries in the region. “But at the same time we see this rather positive channel through trade redirection,” he said, at the launch of an update to the bank’s flagship Asian Development Outlook. The more serious trade tensions get, the bigger the trade redirection effect will become. In a worst-case scenario, with 30 per cent tariffs on all US-China trade plus an extension of the trade war to automobiles, the ADB expects a drag on overall growth in developing Asia of 0.7 per cent over the next few years. Within that, however, Vietnam’s economy would grow by an additional 2.3 per cent, with Malaysia, Thailand, Bangladesh and the Philippines all coming out as winners too. The analysis does not include the impact of uncertainty over trade hurting investment, which could lead to a worse outcome in reality, Mr Sawada noted. For the region as a whole, the ADB trimmed its growth outlook for 2019 from 5.7 per cent to 5.4 per cent, reflecting the global slowdown, trade tensions and a “sharp contraction” in the global electronics cycle — especially for semiconductors. The ADB cut its growth forecast for Hong Kong from 2.5 per cent to 0.3 per cent, reflecting the slowdown in global trade as well as political turmoil, and lowered its growth forecast for semiconductor-dependent South Korea from 2.5 per cent to 2.1 per cent. On the other hand, it raised its growth forecast for Bangladesh from 8 per cent to 8.1 per cent, predicting it will be the fastest-growing economy in the region this year and next. Mr Sawada said that risks to the region included the US-China trade conflict, the deepening growth malaise in advanced economies as well as a build-up of private debt in some emerging Asian economies. “The corporate sector in China and the household sector in Korea, Thailand and Malaysia have had a rising debt-GDP ratio. I think this is another risk,” he said.

Source: Financial Times

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Trump hints at ending trade war with China, says deal could happen soon

Trump on Tuesday had accused China of the theft of trade secrets 'on a grand scale' and said it was taking advantage of World Trade Organization rules US President Donald Trump said on Wednesday that a deal to end a nearly 15-month trade war with China could happen sooner than people think. "They want to make a deal very badly... It could happen sooner than you think," Trump told reporters in New York. The US leader spoke a day after delivering a stinging rebuke to China's trade practices at the United Nations General. Assembly, saying he would not accept a "bad deal" in US -China trade negotiations. China's top diplomat hit back at US criticism of its trade and development model later on Tuesday. Wang Yi, China's foreign minister and state councilor, said Beijing would not bow to threats, including on trade, though he said he hoped a round of high-level trade talks next month would produce positive results. Trump has sought to pressure China to agree to reduce trade barriers through a policy of increasing tariffs on Chinese products. On Tuesday, he accused China of the theft of trade secrets "on a grand scale" and said it was taking advantage of World Trade Organization rules. Although Trump held out hope in his UN speech that the United States and China could still reach an agreement, he made clear he wanted a deal that would rebalance the relationship between the two economic superpowers. Wang said the trade war was inflicting unnecessary damage on both countries, raising costs for American firms, pushing up consumer prices and dampening US growth potential.

Source: Business Standard

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Taiwan steps up lobbying to join trans-Pacific free trade deal

Taiwan has shelved its attempts to negotiate a free trade agreement with Australia and is instead concentrating on lobbying Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) members to join the pact in a bid to defy Chinese attempts to marginalise it globally. Taiwanese trade officials said 12 amendments to harmonise Taiwanese regulations with the CPTPP's requirements had already been submitted to its local legislature, with eight being passed, to lay the groundwork for formally applying to join the trade bloc. The amendments cover investment guidelines, fisheries management, pharmaceutical, cosmetics and pesticide regulations, and postal law. "Either TPP or CPTPP, Taiwan has always indicated its interest to join such a pact so that we can increase our opportunity to export our products with lower tariff rates. That's very important to us," one of its senior negotiators, Bruce Chih-yu Chien, told journalists. Of the two Asian-heavy free trade agreements, the CPTPP and the Regional Comprehensive Economic Partnership, Taiwan has a much higher chance of being able to join the CPTPP because China is not a member. While the Coalition in Australia has emphasised its success in finalising several free trade agreements since coming to power in 2013, it was revealed last year that the Turnbull government had scrapped negotiations with Taiwan following warnings from China that it would not look favourably upon Australia if it struck a deal. China's ruling Communist Party regards Taiwan, which has embraced Western-style democracy and the free market, as a rogue province that should be reunited with the mainland. As part of Beijing's campaign to undercut Taiwan, the Solomon Islands and Kiribati were last week persuaded to switch their diplomatic recognition to China. Even without an FTA, we are working very well on many aspects.

— Taiwan spokesman Isaac Chiu

Despite relations between Canberra and Beijing continuing to sour, there has been no move to reopen bilateral talks between Australia and Taiwan on a free trade agreement. Isaac Chiu, who has responsibility for trade issues with Australia, said there were 44 various agreements and memorandums of understanding already in place between Australia and Taiwan on economic co-operation. "Even without an FTA, we are working very well on many aspects," he said. "We are still hoping it will come true one day but if we join the CPTPP, maybe the [bilateral] FTA can be skipped." While Taiwan's unique status and lack of diplomatic recognition from many countries makes it difficult for official talks, Mr Chiu said Taiwan regularly raised its prospective membership in informal talks with countries including Australia. He said Taiwan was waiting for CPTPP members to reach a consensus about opening up to new countries before it made a formal application to join, pointing out that Taiwan had waited for years for its applications to join the World Trade Organisation and Asia-Pacific Economic Co-operation organisation to be accepted. "When we are talking to member countries, we let them know we are prepared. We are doing it informally so that one day when the atmosphere is good enough, we can take further steps. That means then we can start talking tariffs and market access," he said.

Eagerness to sign

Trade Minister Simon Birmingham said that while Taiwan was an important economic partner and Australia's seventh-largest goods destination for exports, there were no immediate plans to begin negotiations on a free trade agreement. However, he welcomed Taiwan's eagerness to sign up to the CPTPP. "I’m not surprised there is interest in the CPTPP given it is one of most comprehensive and ambitious trade agreements ever negotiated that is already delivering benefits to Australia’s economy," he said. "Any new members would be expected to meet the CPTPP’s existing high standards, including on issues such as agricultural market access." Apart from Taiwan, Indonesia, Thailand, Colombia and the United Kingdom have indicated interest in joining the 11 other CPTPP members.

Source: Financial Review

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Mozambican government plans to create Special Economic Zone in former Textáfrica neighbourhood

The neighbourhood of former cotton factory Soalpo, later called Textáfrica, in Chimoio, the provincial capital of Manica, will be transformed into a Special Economic Zone, the Mozambican Prime Minister announced during a meeting with former workers of the textile factory that has been at a standstill for over 20 years. The idea of transforming the neighbourhood into an industrial duty-free zone is intended, according to Carlos Agostinho do Rosário, to create conditions for national and foreign investments that enable the emergence of companies and job creation for locals, especially young people, some of whom are descendants of former company workers. The prime minister, quoted by daily newspaper Notícias, announced that all industrial, commercial and other developments that will be implemented in the future Soalpo Special Economic Zone will be exempt from taxes and customs duties on equipment imports. Do Rosário announced that the Government has already paid US$1 million to Banco Internacional de Moçambique (BIM), that Textáfrica owed to the bank, resulting from a loan secured by the houses where the former workers currently reside. Last July, the President of Mozambique announced that the Government was looking for solutions to monetise Textáfrica’s facilities, and even admitted the possibility of changing the activity in order to make the facilities of practical use. Over the years the factory has been the focus of a series of announcements of intent by provincial and national officials. In February 2019, Manica Provincial Governor Manuel Rodrigues stated that South African textile-related companies, which he did not identify, had expressed an interest in reactivating the factory and had even visited the textile facility, once one of the largest factories in the sector in Africa. In February 2018, the Prime Minister of Mozambique, Carlos Agostinho do Rosário, said that he had met with the provincial government, managers and other stakeholders in the process, “to understand the situation and to take appropriate measures to revive the sleeping monster, in order for it to operate and create jobs.” In April 2016, then-provincial governor of Manica Alberto Mondlane announced that the central government was conducting studies to restore Textáfrica to operation. The stoppage of two textile factories, Textáfrica and Empresa Moçambicana de Malhas (EMMA), both originally owned by the same Portuguese group, led the cotton crop to be reduced in that area of Mozambique, and their bankruptcy resulted in the dismissal of more than 3,000 workers.

Source: Macau hub

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MERCOSUR technical regulation on textile labelling

Brazil’s National Institute of Metrology, Quality and Technology (INMETRO) issued ordinance No.296 on June 12, approving the MERCOSUR Technical Regulation on labelling of textile products. Under the labelling regulation, textile products consisting of at least 80 per cent textile fibres and textile filaments by weight are subject to the requirements. The ordinance will become effective from the date of its publication. All mandatory information must be indicated through labels, stamps, stickers or similar means that are permanent, indelible, legible and clearly visible. The information must be presented in the language of the country of consumption but may also be presented in other languages without prejudice. The MERCOSUR member countries—Argentina, Brazil, Paraguay and Uruguay—early this year approved and issued the regulation to establish the labelling requirements for textile products produced in or imported for sale in MERCOSUR member countries. The mandatory labelling information for textile products include name, business name or trademark registered in the country of consumption and tax identification of a national manufacturer or importer; country of origin; name of textile fibres or filaments with their contents expressed in percentage by mass; care labelling instructions; and size or dimension, where appropriate, according to information on the website of SGS Global Softlines, an inspection, verification, testing and certification company. (DS)

Source: Fibre2fashion

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