MARKETWATCH 02 DEC, 2019

NATIONAL

INTERNATIONAL

12 global companies evinced interest to shift base from China to India: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Saturday said about 12 global companies have evinced interest to shift their base from China to India, taking advantage of competitive tax rate of 15 per cent announced recently. In a biggest reduction in 28 years, the government in September reduced corporate tax rate by almost 10 percentage points in a bid to give a boost to sagging economy. Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and for new manufacturing firms incorporated after October 1, 2019 and starting operation before March 31, 2023, it was slashed to 15 per cent from 25 per cent. "I had said that I will form a task group, which will look into those companies which want to get out of China, and in the meanwhile I announced the corporate tax cut. There were many companies which were showing interest and wanting to come back. "So, this task force has already started contacting many of these companies. The last count, I came to know was about 12 of them have already been spoken to, their minds understood, their expectation listed out so that the government can come up with a concrete offer for them to shift from where they are now, so that the ecosystems can get built here, new industries can come," she said. The minister said the word that was given for bringing newer industries, which are moving out of China, is actively moving forward. "And I am sure, I will be able to report some progress on that," she added. With regard to investment of Rs 100 lakh crore in the next 5 years, she said, the task force will come out with a list 10 major infrastructure projects by December 15 and investment in these projects would be front-loaded. "We made sure that a set of officers were looking into pipeline that can be readied, so that once the fund is ready and it will be frontloaded...that task is near completion," Sitharaman said. Before December 15, she said the government will be able to announce the front-loading of at least a 10 major projects. The finance ministry in September set up a task force headed by Economic Affairs Secretary to prepare a road map for the "national infrastructure pipeline" from 2019-20 to 2024-25 under a Rs 100 lakh crore infra plan. The task force expected to cover greenfield and brownfield projects costing above Rs 100 crore each. The finance minister also listed some of the measures taken by the government to boost consumption and liquidity in the system since August this year. Talking about the GDP growth rates, she expressed hope that the next numbers should be better. India's growth falling to a more than six-year low of 4.5 per cent in the second quarter of 2019-20 is sub-optimal and below the potential of the economy, the industry pointed out. During the loan outreach programme in October, public sector banks have disbursed more than Rs 2.5 lakh crore, the finance minister said while outlining various measures taken by the government to revive economy. "They (banks) reached out to 400 districts, literally the hinterland where the money went. And as a result, now I can see somewhat that kind of spend has helped in somewhat reviving the consumer spirits and purchases have gone up and I also hope that it will lead to improvement in tax collections," she said. She, however, said the progress on partial guarantee scheme is not very satisfactory. "I'd like to draw your attention to the partial guarantee scheme which we brought in, so that all the pooled assets could be bought over by the banks and for which the government would give the partial guarantee with a minor haircut... A lot more is going to be done on that and I admit that things have been a bit slow," she said at the Ecnomic Times Award event here. To ensure transparency in the taxation, Sitharaman said that faceless assessment has been introduced in direct tax, and indirect tax too will have this system soon. "And the last word on GST. The systems are really being worked on so that it becomes as simple as we claim it to be. We would further like to simplify it," she said. As regards the rationalisation of the taxation, she said, "We are having a good conversation with all the states and want to make sure that those essential items may be put to the lowest if not exempt, but for the rest of them, we are trying to rationalize".

Source: Economic Times

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India will not negotiate any FTA on back foot; will protect India's interest: Piyush Goyal

India will not negotiate any free trade agreement (FTA) on the "back foot" and will always ensure protection of interest of people and industry, Commerce and Industry Minister Piyush Goyal said on Saturday. Prime Minister Narendra Modi is ready to bite the bullet and because of that India decided to walk out from the mega free trade pact Regional Comprehensive Economic Partnership (RCEP) as the concerns of India was not addressed, Goyal said. "When we do FTAs...the trade deal with the US...we ensure that domestic interest and our industry is a paramount. That is what will define the terms of engagement of India with the rest of the world. "No more will India stand with weak knees, no more will India negotiate from the back foot. The country plays on the front foot," he said here at the ET (Economic Times) Awards 2019. Talking about investments, he cautioned the e-commerce companies to follow the laws properly as millions of small traders are involved in the business in the country. "We shall not allow, just in the garb of investment, or even large investment, anybody to bring in unfair trade practices to India, howsoever big or powerful the company may be," he said. "You call us swadeshi, we are happy to carry that tag," he added. The minister said that he is regularly getting complaints and "we have to address their concerns". "I would urge all that please recognise e-commerce" laws in letter and spirit, he said. Goyal cautioned the firms against giving huge price discounts, which are going to cut small retailers as "60 million small retailers in the country providing work to 120 million". Further, he said the government has laid out a roadmap for an investment of Rs 100 lakh crore in the next five years, which would lift the economy.

Source: Economic Times

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RCEP pullout: Innovation and productivity key to benefiting from FTAs

Given this context, India’s decision to withdraw from RCEP, designed to be the world’s largest trading bloc, was a landmark decision, notwithstanding official comments that we will rejoin if our concerns are addressed. Trade is the life-blood of the world economy. We all know that. The share of global trade grew from around 10% of global GDP to close to 60% by the 2010s. And, those countries which grew their share of the global trade benefited from the huge multiplier effect on their economy. Given this context, India’s decision to withdraw from RCEP, designed to be the world’s largest trading bloc, was a landmark decision, notwithstanding official comments that we will rejoin if our concerns are addressed. This decision has both passionate supporters and sceptics; the former group agrees with the government’s ‘strong’ decision based on the rationale that the conditions being negotiated for joining RCEP would have been detrimental for Indian industry. The opposite logic put forth is that by withdrawing, we would actually be disadvantaging Indian industry in terms of preferential access to the largest and the fastest growing markets. So, who is right? To answer this question, let us look at the data from past FTAs and their impact on competitive positioning of Indian industry in global trade. In the last decade and a half, India has signed three regional FTAs—with South Asian, ASEAN, and Mercosur (the trading bloc of Latin American) countries. The other FTAs have been bilateral agreements with individual countries. Of the three regional FTAs, in only the South Asian FTA (Afghanistan, Bangladesh, Bhutan, India, Nepal, Sri Lanka, Pakistan, and Maldives) did India increase its exports faster than imports; this is understandable given the member countries. In case of both, the ASEAN and Mercosur FTAs, India’s trade deficit with these two regions increased post signing. For example, post signing of the India-ASEAN FTA in 2010, trade between India and ASEAN increased from $52.6 billion to $64.6 billion in 2016. However, ASEAN countries benefited more, with India’s trade deficit increasing from less than $8 billion in 2009-10 to about $22 billion in 2018-19. Similarly, post signing of the India-Mercosur FTA in 2009, India’s exports grew from $2.31 billion in 2009 to $3.14 billion in 2016, but its imports grew faster, from $5.34 billion to $11.46 billion in the same period. This data, thus, supports the government’s view that RCEP will be harmful to India’s interests unless carefully calibrated and negotiated. Now, let us look at data supporting the logic of the critics of the RCEP pullout, who claim that this will disadvantage Indian exporters by denying them preferential access to large markets. Let us use the example of apparel exports, which has been a focus industry for Indian policymakers for many years given the potential of its high labour intensity to generate millions of new jobs. While India’s share of global apparel trade has stagnated around 4%, that of competing countries like Bangladesh, and even Vietnam, which entered the global market much later, has leapfrogged ahead of India’s. This, despite the potential advantages India has in terms of higher scale from larger local market, domestic supply of cotton and synthetic yarn, and large pool of labour. In a BCG study of India’s competitive position in the sector, we found that Indian exporters face a cost disadvantage of 14-15% for exports into the EU, compared to Bangladesh. What is interesting to note is that over 60% of this gap is explained by preferential access to the EU market basis Bangladesh’s FTA with the EU (India has not signed one). The balance cost gap is driven by a variety of domestic structural, regulatory/policy, and productivity factors. For example, the scale of an average Indian clothing plant is much smaller than that in Bangladesh due to our restrictive labour laws (to be fair to the NDA government, they have tried to partially address the labour issue for the textile industry, but much more needs to be done); this gives a cost penalty to the average Indian apparel exporter. India has tried to incentivise exports to overcome some of these structural gaps with several export promotion schemes, but the recent ruling by WTO against India on a complaint by the US has put the future of many of these incentives in doubt. So, basis the data, the views on both joining and quitting RCEP have a strong rationale. And, one can argue that the government took a pragmatic decision as it did not want a similar increasing-deficit story repeated with the new regional treaty, especially given the fear of being swamped by exports from China. Unfortunately, this decision also highlights the lack of global competitiveness in many sectors of Indian industry—even with smaller developing countries, given the experience post ASEAN and Mercosur FTAS. India has rightly been focusing on ease of doing business (EoDB) as critical to build competitiveness and attract FDI. It is equally critical, if not more so, to focus and improve the high cost of doing business (CoDB), which broadly has three components: higher factor costs (land, industrial power, productivity linked labour, financing), higher cost of compliance with government regulations, and high logistics costs from both hard and soft infrastructure (e.g., time taken by processes at ports). And, unless we annually benchmark and improve the CoDB as we are doing for EoDB, our manufacturing industry, especially compared to our peer developing countries, will continue to be threatened by FTAs rather than seeing them as windows of opportunities. Clearly, FTAs are a double-edged policy sword for India. If wielded right, it can open large markets and drive growth of exports (and push up GDP). It also puts pressure on the domestic industry to become more globally competitive. If wielded badly, i.e., without the policies to improve CoDB, it can be equally harmful to the domestic economy. Countries that have done it right have ensured that their trade policy, investment policy, and industrial policy are well-aligned. They calibrate the opening of the domestic market with the right industrial and investment policies to structurally improve the competitiveness of the domestic industry. The industry, in its turn, has to match these enabling policies with a strong effort to improve productivity, and invest in innovation to increase global competitiveness, rather than complaining of cheaper imports flooding the country. Otherwise, we will continue to be ambivalent about FTAs, and struggle to become the next highly competitive manufacturing engine of the world.

Source: Financial Express

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Japan indicates efforts are on to address India’s concerns on RCEP

NEW DELHI : Japan is pushing for India to join the Regional Comprehensive Economic Partnership (RCEP) and is working with other countries that are part of the mega trade deal to ensure that New Delhi’s concerns are addressed, Atsushi Kaifu, deputy spokesman for the Japanese foreign ministry, said on Sunday. Kaifu, however, seemed to distance himself from a report last week that said Japan would not consider joining the China-led trade pact if India was not part of it. The issue of India joining the RCEP was not discussed at the first ever “2+2" dialogue between the foreign and defence ministers of Japan and India in New Delhi on Saturday, the Japanese official said. However, the matter was raised when Japanese foreign minister Toshimitsu Motegi and defence minister Taro Kono called on Prime Minister Narendra Modi ahead of the “2+2" dialogue with Modi, Kaifu said. It was also discussed when foreign minister S. Jaishankar met Motegi last month on the sidelines of the G20 foreign ministers’ meet in Japan, he said. “All 16 countries (including India) were working together to resolve India-related outstanding issues," Kaifu said when asked about a Bloomberg report last week that said Japan would not join the RCEP if India is not a part of it. At the meeting of the Association of Southeast Asian Nations (Asean) in Bangkok last month, 10 countries in South-East Asia and their six dialogue partners including India were to sign the RCEP that would have created the world’s largest free trade area. New Delhi, however, decided to stay out of it, worried that goods from China, with which India already has a $50 billion trade deficit, would flood the Indian market through third countries. Several issues were discussed at the first “2+2" dialogue between Japan and India that is to form the backdrop for a visit to India this month by Japanese Prime Minister Shinzo Abe for the annual Japan-India summit, Kaifu said. These include the situation in Sri Lanka following the elections last month that saw former defence secretary Gotabaya Rajapaksa become the President. Japan aims to collaborate with India on connectivity projects in South Asia, including Sri Lanka as well as in India’s northeastern region, he said. “Sri Lanka was of particular interest to Japan given that it is located in the middle of our sea lanes of communication. I sensed an eagerness (between both countries) to work on development cooperation," the Japanese official said, adding that this could also be in Africa. Kaifu also said that Japan was looking at the situation in Kashmir “very carefully". “I do not remember the ministers going into the detailed discussion on the specific issue. However, at the same time, I can say we looked at the situation there very carefully," he said. In August, New Delhi revoked the special status granted to the region. Several Western countries have expressed concerns over the severance of communications links and restrictions over the movement of people though New Delhi has partially restored mobile phone and landline services. India and Japan aimed to add to the strategic depth of their bilateral security and defence cooperation, according to a joint statement issued on Saturday after the “2+2" talks. The two countries also “welcomed the significant progress made in the negotiations of Acquisition and Cross-Servicing Agreement (logistics support pact to improve interoperability)," it said.

Source: Live Mint

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Odisha government inks pact with Flipkart to help weavers

Managing Director of Boyanika Jyoti Prakash Das said the software which was launched at the head office here on a pilot basis will be integrated with all 42 Boyanika stores by December 31. Odisha government on Saturday signed an MoU with e-commerce platform Flipkart to increase business and trade opportunities for weavers and artisans of the state. As per the MoU signed between Handlooms, Textiles and Handcrafts department and Flipkart, the online shopping platform will run ‘Flipkart Samarth Programme’ in the state to provide time-bound incubation support and national market access to weavers, artisans and craftsmen to showcase their hallmark products. The programme will be rolled out within two months. “As part of the initiative, the government will work with Flipkart for engagement with state-owned affiliated enterprises and undertakings that work with local artisans, weavers and crafts producers to provide market access, training and support,” said Handlooms, Textiles and Handicrafts Minister Padmini Dian. “This initiative will open national market access for the weavers and artisans of the state for Pan-India customer base of over 150 million while empowering them to leverage the benefits of e-commerce model,” said Secretary of the department Shubha Sarma. The Minister also launched a composite automation system named ‘Boyan Sparsha’, an end-to-end enterprise resource planning software for effective management of Boyanika, the State Handloom Weavers Cooperative Societies Limited which records an annual turnover of Rs 150 crore at present. Managing Director of Boyanika Jyoti Prakash Das said the software which was launched at the head office here on a pilot basis will be integrated with all 42 Boyanika stores by December 31. “From receiving indents to maintaining accounts and managing human resource at the organisation, everything was being done manually for which we were not able to improve our system effectively. However, use of new technology and software will prove to be a game-changer. It will help making our administrative system more organised,” Das said.

Source: The New Indian Express

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No alternative to multilateralism in global commerce: Ex-EU trade official

 “The European Union is the biggest trader and the biggest importer, and as a bloc, we are the biggest exporter as well as the biggest investor. As the most important trading bloc, we are convinced that we should show the way, through a rule-based approach, on the need to remove trade barriers,” said Karel De Gucht, a former EU Commissioner for Trade. Taking part in a conversation with R Srinivasan, Editor, BusinessLine, on ‘Overseas trading and doing business with Europe after Brexit,’ the Belgian Minister of State said, “There is no alternative to global trade and going about it through multilateralism. Countries need to open up and that is the way to go.” They were speaking at a discussion on the theme ‘Your pharma and life sciences hub in Europe, Belgium,’ in Hyderabad. “Europe is still in the forefront of free trade. We have been making important FTAs and have concluded one with Japan and ratified it in five months. In the past, it would have taken about five years. We are convinced that this is the only long-term solution. There is no other alternative. Hope others will understand this and join. The basic approach that you need to develop global trade is unquestionable. The problem with China is they want to go global their way,” he said.

India-EU trade

Setting the discussion in the context, Srinivasan said, “India-EU trade is about €92 billion, the EU accounts for about 13 per cent of all of India’s trade and is an important trading partner. It accounts for about 18 per cent of India’s exports. India is the EU’s ninth biggest trading partner and trade has the potential for improve. China accounts for 15.3 per cent of trade with the EU and for the US it is 16.9 per cent. India’s trade in goods with the EU is Karel De Gucht, former EU Commissioner for Trade, in a conversation with R Srinivasan, Editor, BusinessLine very strong and has been growing substantially.” “Trade is picking up speed. Services are becoming an increasingly important component of economic relations between India and the EU. The EU investment in India through FDI accounts for 18 per cent. There are plenty of opportunities and challenges. Everybody is talking about Brexit .What if Brexit actually happens?” Srinivasan wondered. Gucht said, “I think Brexit will happen by the end of January. There is an election in December. Each election throws up surprises. I think they will leave. If they leave by January, they have two years during which they have to live up to the decision taken earlier. It is like divorcing and then deciding that you will have to live together for two years, stick to all the decisions already taken and those that will be taken later.”

Growing protectionism

 “It is difficult to predict the outcome. I have been negotiating with the US for the past four years and have learnt that in practice the US is a very protectionist country. I have negotiated with India for four years, including in the area of parts for cars, data exchange, etc. I don’t think all of a sudden Modi will make an agreement. I don’t see any willingness on the part of the Indian Government to have far-reaching trade agreements in the near future,” he said. “Modi wants swift industrial development of the country. To do so, he has to open up the economy. He is thinking too much about infant industry. In a number of sectors, you are really on top. For instance, in IT, you are the No 2 hub after the Silicon Valley, and though 60 per cent of the population is engaged in agriculture, it is still at the subsistence level. Modi is not alone in this approach. Donald Trump wants to do the same with Germany. He can’t do it. China is doing the same. China has a yearly meeting with East European countries and Balkan States. We decided that this cannot happen with the presence of the EU,” he said. “Trump has tried to destroy the multilateral-rule based system. If he gets re-elected, it will get difficult. If he loses, things could be brought around,” he said. On US-China trade issues, he said “while some believe they will be resolved soon. I don't think this can happen overnight. Might even take a decade.”

Source: Press Reader

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Rs 1,03,492 crore gross GST revenue collected in the month of November, 2019

The gross GST revenue collected in the month of November, 2019 is Rs 1,03,492 crore of which CGST is Rs 19,592crore, SGST is Rs 27,144crore, IGST is Rs 49,028crore (including Rs 20,948crore collected on imports) and Cess is Rs7,727 crore (including Rs 869 crore collected on imports). The total number of GSTR 3B Returns filed for the month of Octoberup to 30th November, 2019 is 77.83 lakh. The government has settled Rs 25,150crore to CGST and Rs 17,431crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of November, 2019 is Rs 44,742 crore for CGST and Rs 44,576 crore for the SGST. After two months of negative growth, GST revenues witnessed an impressive recovery with a positive growth of 6% in November, 2019 over the November, 2018 collections. During the month, the GST collection on domestic transactions witnessed a growth of 12%, highest during the year. The GST collection on imports continued to see negative growth at (-)13%, but was an improvement over last month’s growth of (-)20%.This is the eighth time since the inception of GST in July 2017 that monthly collection has crossed the mark of Rs one lakh crore. Also, November 2019 collection is the third highest monthly collection since introduction of GST, next only to April 2019 and March 2019collections.

Source: Press Information Bureau

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Bengal is gearing up for the reverse buyer seller meet on textiles, apparel & jute

West Bengal will witness first ever 'reverse buyer seller' meet this year between December 6 and 8, in Eco Park at New Town. The meet is being organised by the Indian Chamber of Commerce (ICC). In all, some 50 international buyers across more than 19 countries from the textile sector are coming to Kolkata to attend the meet, said a press statement issued by the chamber. Big names such as TT Ltd, National Jute Board and Biswa Bangla is expected to be part of the event along with a gamut of MSMEs from the textile, apparel, fashion, home textiles, yarn and jute industry. The Kolkata meet will become a game changer for the Bengal textile sector, the release said. It will also help revive sustainable fabrics such as jute, canvas and cotton as well as the long stagnant knitting industry through partnership with Garknit Exhibition. The ICC release further added, motivation for the event came from the state minister for finance & industries Amit Mitra so that the MSME industry could benefit and look to move global. ICC National Expert Committee on Textiles chairman Sanjay Jain elaborated that the idea behind the meet is to give global exposure to small players lacking the fund to go and invest outside the country. The meet will bring international buyers from countries such as UAE. Australia, Saudi Arabia, Egypt, Morocco, China, Thailand, Sri Lanka, Myanmar, Poland, Mauritius, Malaysia, Iran, Jordan, Palestine, Rwanda. Apart from international buyers, the event will also have few industry captains across the country to support their buyers, Jain said. Karnataka is the partner state for the event.

Source: Economic Times

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Companies will soon be required to pay for re-skilling retrenched workers

The fund will be formed through contribution from employers equivalent to '15 days of wages last drawn' by workers being retrenched. Companies will soon be required to pay for re-skilling workers — a sum which will go directly into their bank accounts within 45 days of their retrenchment. The Industrial Relations Code Bill, 2019, introduced by Labour and Employment Minister Santosh Kumar Gangwar in the Lok Sabha on Thursday, has proposed that the government set up a re-skilling fund for workers affected by retrenchment or closure of units. The fund will be formed through contribution from employers equivalent to ‘15 days of wages last drawn’ by workers being retrenched. “The fund shall be utilised by crediting 15 days’ wages last drawn by the worker, who is retrenched, within 45 days of such retrenchment,” according to the Bill. In a major step towards improving harmony between workers and employers, the Union government has proposed to empower trade unions with bargaining powers to negotiate with companies in case of an industrial dispute. A trade union, which has the formal support of 75 per cent workers in an establishment, will act as the ‘negotiating unit’ within the establishment to resolve disputes. In case unions fail to get 75 per cent workers as their members, a negotiating council will be formed, which will have a member representing all trade unions. This is important in case an establishment has multiple trade unions. In many establishments, workers are associated with various trade unions and there have been many cases in which unions have protested against non-recognition by the management. Currently, there is no provision for recognition of trade unions in India’s central labour laws at the establishment level while resolving an industrial dispute. However, some experts found the proposal to be stringent. “The objective of the Bill says that it wants to promote the concept of a sole bargaining agent. But the condition of getting 75 per cent membership is so stiff that the idea is self-defeating in nature. No trade union in the world will be able to garner that level of support,” K R Shyam Sundar, professor of human resource management at XLRI-Jamshedpur, said. Though there is a fundamental right to form unions and a statutory right to get it registered, there is no corresponding legal obligation on employers to recognise a particular trade union, even if it meets the terms of registration. Typically, managements refuse to recognise small or regional trade unions. The refusal of employers to recognise trade unions has been a trigger for many industrial disputes in India. In 2009, there was a long stand-off between the workers and management of MRF’s Tiruvallur plant in Tamil Nadu over recognition of a trade union. In 2011, Maruti Suzuki’s Manesar plant had witnessed a 13-day stand-off, with the workers demanding recognition of a new trade union. The workers complained the trade union recognised by the company wasn’t representative of them. In the Industrial Relations Code Bill, the government has gone back on its 2015 proposal to allow factories with up to 300 workers to retrench, lay off or shut shop without seeking the government’s permission. At present, factories with up to 100 workers can do so. However, it has proposed to give executive powers to the state governments to ease retrenchment norms. By doing this, the Bill has proposed to ensure both Centre and state governments do not have to go through Parliament or legislative assemblies, respectively, to increase or decrease the threshold for providing flexibility to employers. This provision, which was a part of the Industrial Disputes Act of 1947, was one of the contentious provisions in the present law. It further has a provision to safeguard the amendments brought in by various states to ease retrenchment norms. States such as Rajasthan, Haryana, Madhya Pradesh, Andhra Pradesh, Uttar Pradesh, and Jharkhand have increased threshold of retrenching workers or shutting shop without seeking official permission from 100-300 workers. In a bid to avert flash strikes, the government has proposed that unions in all establishments will have to give a notice period of 14 days. At present, workers employed in ‘public utility services’ units are required to do so. Sundar said that the proposal to give states to frame its own rules for easing retrenchment norms ‘can be whimsical’ as the law-making process will be weakened from a democratic set-up to an executive power.

KEY PROPOSALS

  • Centre has enabled state governments to ease retrenchment norms through executive order
  • The state governments’ move to ease retrenchment norms will be safeguarded
  • Legal framework to hire workers on a fixed-term contract by introducing fixed-term employment across the country
  • Fixed-term workers to get equal rights as a regular worker in an establishment
  • Re-skilling funds to be set up for retrenched employees; employers to contribute 15 days of wage for each retrenched worker
  • Trade unions to get bargaining power as these will be recognised at the level of establishment for the first time

 

Source: Business Standard

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Politics of US-China trade war point toward de-escalation

A recent IMF study found that GVCs accounted for fully 73% of the rapid growth in global trade that occurred over the 20-year period from 1993 to 2013. For the last two years, the conflict between the US and China has dominated the economic and financial-market debate—with good reason. After threats and accusations that long predate the US president Donald Trump’s election, rhetoric has given way to action. Over the past 17 months, the world’s two largest economies have become embroiled in the most serious tariff war since the early 1930s. And the weaponisation of US trade policy to target perceived company-specific threats such as Huawei has broadened the front in this battle. I am as guilty as anyone of fixating on every twist and turn of this epic struggle between the world’s two economic heavyweights. From the start, it has been a political conflict fought with economic weapons, and is likely to remain so for the foreseeable future. What that means, of course, is that the economic and financial-market outlook basically hinges on the political dynamic between the US and China. In that vein, the so-called phase one “skinny” trade deal announced with great fanfare on October 11 may be an important political signal. While the deal, if ever consummated, will have next to no material economic impact, it provides a strong hint that Trump has finally had enough of this trade war. Consumed by domestic political concerns—especially impeachment and the looming 2020 election—it is in Trump’s interest to declare victory and attempt to capitalise on it to counter his problems at home. China, for its part, would also like nothing more than to end the trade war. Politics is obviously very different in a one-party state, but the Chinese leadership is not about to capitulate on its core principles of sovereignty and its aspirational mid-century goals of rejuvenation, growth, and development. At the same time, there can be no mistaking downward pressures on the economy. But, with Chinese policymakers determined to stay the course of their three-year deleveraging campaign—an important self-inflicted source of the current slowdown—they should be all the more eager to address the trade-related pressures brought about by the conflict with the US. Consequently, the political calculus of both countries is coming into closer alignment, with each looking for some face-saving truce. There is always a risk that other complications will arise—recent events in Hong Kong and revelations of developments in China’s Xinjiang Province come to mind. But, at least for the time being, the politics of the trade war are now pointing more toward de-escalation rather than a renewed ratcheting up of tensions. If that is the case, and if a phase one accord is reached, it behooves us to ponder what the world will look like after the trade war. Several possibilities are at the top of my list: deglobalisation, decoupling, and trade diversion. Deglobalisation is unlikely. Like the first wave of globalisation that ended ignominiously between World War I and the Great Depression, the current wave has generated a mounting backlash. Populism is rearing its ugly head around the world, and tensions over income and wealth inequality—aggravated by fears that technological innovations such as artificial intelligence will undermine job security—are dominating the political discourse. Yet the climactic event that underscored the demise of the first wave of globalisation was a 60% collapse in world trade in the early 1930s. Notwithstanding the current political dysfunction, the odds of a similar outcome today are extremely low. Global decoupling is also unlikely. Reflecting the explosive growth in global value chains (GVCs) over the past 25 years, the world is woven together more tightly than ever before. That has transformed global competition away from the country-specific paradigm of the past to a far more fragmented competition between widely distributed platforms of inputs, components, design, and assembly functions. A recent IMF study found that GVCs accounted for fully 73% of the rapid growth in global trade that occurred over the 20-year period from 1993 to 2013. Enabled by irreversible trends of plunging transportation costs and technological breakthroughs in logistics and sourcing, the GVC linkages that have come to underpin global economic integration are at little risk of decoupling. Trade diversion is another matter altogether. As I have long argued, bilateral trade conflicts—even a bilateral decoupling—can do nothing to resolve multilateral imbalances. Putting pressure on one of many trading partners—precisely what the US is doing when it squeezes China in an effort to reduce its merchandise trade deficits with 102 countries—is likely to backfire. That is because America’s multilateral trade deficit reflects a profound shortfall of domestic saving that will only get worse as the federal budget deficit now veers out of control. Without addressing this chronic saving problem, targeting China will mean pushing the Chinese piece of the multilateral deficit on to America’s other trading partners. Such diversion will shift trade to higher-cost foreign sourcing—the functional equivalent of a tax hike on US consumers. Trade truce or not, a protracted economic struggle between the US and China has already begun. A cease-fire in the current battle is nothing more than a politically expedient pause in what is likely to be an enduring Cold War-like conflict. That should worry the US, which is devoid of a long-term strategic framework. China is not. That is certainly the message from Sun Tzu in The Art of War: “When your strategy is deep and far-reaching … you can win before you even fight”.

Source: Financial Express

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View: Fiscal stimulus not enough, monetary easing needed to revive growth

After months of suspense on the macroeconomic front, the wait is finally over. Our worst fears have come true. Friday’s data release by the Central Statistical Organisation (CSO) shows the economy in dire straits. GDP growth for the second quarter of 2019-20 has come in at a dismal 4.5%, the slowest in over six years. Worse, if core sector growth in October 2019 (data for which was released the same day) is any indication, growth is nowhere near bottoming out. Add to that fiscal data released by the Controller of Government Accounts also on Friday, and the macroeconomic scenario couldn’t be gloomier. Rewind to May 31, 2019, when GDP data for the first quarter came in at a 25-quarter low of just 5%. The broad consensus then was that this was as bad as it could possibly get. After all, the last time the Indian economy grew at less than 5% was in January-March 2012-13, during the scam-tainted last months of the UPA government when growth touched 4.3%. We’ve come a long way since then. Or so we thought. Alas. As evident from the latest data, our macroeconomic troubles are far from over. And, as is often the case, when troubles come, they seldom come singly. Not only has GDP growth for June-September 2019 dipped to a six-year low, the slowdown seems set to continue. Manufacturing, the sector that’s supposed to provide jobs and is the focus of GoI’s ‘Make in India’ programme, has contracted 1%; core sector growth has contracted 5.8% in October 2019. Growth in non-food credit is lacklustre, even as the fiscal deficit (the excess of government expenditure over revenue) for April-October 2019 has overshot the budget estimate for the entire year. In a nutshell, the scope for remedial measures is limited. Factor in October inflation at a 16-month high of 4.62% — well over the midpoint of RBI’s target of 4-6% and food inflation at 7.9% — and both fiscal and monetary policy (repo rates have been cut 135 basis points since February 2019) are fast approaching their limit. It’s no consolation that growth at 4.5% is a tad better than some estimates made in the run-up to the data release (4.2-4.5%). The reality is, it’s a far cry from GoI’s and RBI’s original estimates, and RBI’s successive revisions of growth for the year — from 7.2% in April, to 7% in June, to 6.9 % in August, to 6.1% in October.

Silver Lining

The only silver lining in the gathering storm clouds is the stock market, where the Sensex is on a tear, seemingly heedless of underlying fundamentals. Sure, the surge in global liquidity and retail investors continued fascination with mutual funds provides fuel for markets. In a scenario where global interest rates are ridiculously low, in some cases even negative, it is but natural that some money will find its way into riskier emerging market assets. But that is not good enough. Unlike the primary market, the Sensex does not reflect fresh investment, but only secondary market activity, or money passing from one hand to another. But all is not lost. The combination of subdued credit offtake and monetary easing has resulted in India’s 10-year benchmark yield falling to a close to-five-year low of 6.5%. Hence anxiety about a spike in government bond yields if the fiscal deficit target is breached can be put on the backburner.

Enthusiasm Remains

Sure, rating agencies will be outraged. They might even lower our rating. Moody’s has already lowered its outlook for India from stable to negative. But that has not dimmed the enthusiasm of foreign institutional investors (FIIs), who after a selloff bout from July to midSeptember, have resumed their buying. Net purchases stood at $12.49 billion in the year to early November. That’s not surprising. With monetary easing being the order of the day, worldwide, global capital is hunting for yields. Money will come. And it will stay invested, provided growth picks up. But that will happen only if the government steps into the breach, reverses the steady decline in capital formation seen during the past many months — capital goods output contracted for the ninth consecutive month in October — by opening up its purse to capital expenditure (read: spending aggressively on infrastructure). This will create jobs, increase consumption and, once the virtuous cycle kicks off, spur private investment and growth. The 80s rock band Dire Straits seems to have had a better understanding of macroeconomics than our policy wonks. Their 1982 song, ‘Industrial Disease’, which describes when the British economy in the early 1980s was facing a situation similar to ours today, puts it well: “And everyone's concerned about Industrial Disease/… [that] these are ‘classic symptoms of a monetary squeeze’/On ITV and BBC they talk about the curse/ Philosophy is useless, theology is worse/ History boils over, there’s an economics freeze.” It would be wrong, however, to call out only RBI. Monetary policy cannot do the heavy lifting alone. Monetary easing can only work in tandem with fiscal easing. Central banks know their policy tool kits are asymmetric -- monetary policy is far more effective in dealing with rising the inflation than with a growth slowdown. Do governments know likewise?

Source: Economic Times

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Global Textile Raw Material Price 01/12/2019

Item

Price

Unit

Fluctuation

Date

PSF

952.61

USD/Ton

0%

12/1/2019

VSF

1450.24

USD/Ton

0%

12/1/2019

ASF

2181.75

USD/Ton

0%

12/1/2019

Polyester    POY

981.04

USD/Ton

0%

12/1/2019

Nylon    FDY

2090.05

USD/Ton

0%

12/1/2019

40D    Spandex

4080.57

USD/Ton

0%

12/1/2019

Nylon    POY

2317.53

USD/Ton

0%

12/1/2019

Acrylic    Top 3D

1094.79

USD/Ton

0%

12/1/2019

Polyester    FDY

2374.41

USD/Ton

0%

12/1/2019

Nylon    DTY

5374.40

USD/Ton

0%

12/1/2019

Viscose    Long Filament

1222.75

USD/Ton

0%

12/1/2019

Polyester    DTY

1990.52

USD/Ton

0%

12/1/2019

30S    Spun Rayon Yarn

2048.81

USD/Ton

-0.07%

12/1/2019

32S    Polyester Yarn

1556.87

USD/Ton

0%

12/1/2019

45S    T/C Yarn

2402.84

USD/Ton

0%

12/1/2019

40S    Rayon Yarn

2317.53

USD/Ton

0%

12/1/2019

T/R    Yarn 65/35 32S

1905.21

USD/Ton

0%

12/1/2019

45S    Polyester Yarn

1748.81

USD/Ton

0%

12/1/2019

T/C    Yarn 65/35 32S

2289.10

USD/Ton

0%

12/1/2019

10S    Denim Fabric

1.26

USD/Meter

0%

12/1/2019

32S    Twill Fabric

0.69

USD/Meter

0%

12/1/2019

40S    Combed Poplin

0.96

USD/Meter

0%

12/1/2019

30S    Rayon Fabric

0.54

USD/Meter

0%

12/1/2019

45S    T/C Fabric

0.67

USD/Meter

0%

12/1/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14218 USD dtd. 1/12/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

 

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Nigeria: Right strategy for textile industry revamp

Quite rightly, the Senate has reminded the Nigerian authorities of the need to focus greater attention on the resuscitation of the textile industry if the country’s desire to boost manufacturing and create jobs is to become a reality. With unemployment rate hovering at 23.1 per cent, reactivating the textile industry, once a major employer of labour, second only to the civil service, becomes an imperative. However, the Senate seems to be going about its noble quest the wrong way, by calling for a five-year ban on imported textile materials so that local production would bloom. The question is: when the local textile industry was booming, was there any form of restriction on imported materials? Agreed that unbridled imports of goods could be detrimental to the growth of the local industry, yet, in the case of the textile industry in Nigeria, there was more to its dramatic collapse than unrestrained imports of foreign textiles. This is where the phenomenon of smuggling comes in. With normal imports, it is easier to monitor and control what comes legally into the country through the imposition of appropriate import duties and implementation of other relevant measures. But the failure to adequately police the country’s borders has paved the way for the massive smuggling of cheap goods, sometimes of doubtful quality, thus killing incentives for local manufacturing. It has unsurprisingly sounded the death knell of many otherwise promising local industries, including textile. Besides, lack of regular power also played a major role in the collapse of Nigeria’s erstwhile flourishing textile industry, contributing to the high cost of production, which rendered the final products comparatively expensive and unaffordable. According to the Manufacturers Association of Nigeria, in its 2018 performance review, the absence of constant electricity supply drove up the cost of production by 40 per cent. A report quoting data from MAN shows that manufacturers spent N43 billion on private power generation in the first half of 2018. Senators, while debating a motion sponsored by Kabir Barkiya of Katsina State, demonstrated sufficient awareness of the importance of the textile sub-sector of the manufacturing sector to the overall well-being of the economy and called for ample measures to guarantee its protection. Unfortunately, many of them do not patronise local goods. In the past, during the military regime of Murtala Muhammed and Olusegun Obasanjo, every government official was mandatorily required to patronise Peugeot vehicles, then assembled in Nigeria. But now, the taste of public officials is conditioned for foreign vehicles and imported textile materials. When Jerry Rawlings, Ghana’s iconic former leader, was at the helm of affairs, he never wore anything other than local materials. His patronage of local textile materials resulted in a boom, in the domestic textile sector, as every highly placed official decided to imitate the leader. In fairness to the former Minister of Finance, Ngozi Okonjo-Iweala, there was never a time she was seen in foreign attire; as a minister, she was always in outfits made from local fabrics. But most senators and other political office holders do not wear local fabrics. The taste for foreign materials has to give way to patronage of local products. At the height of the boom in the textile industry, Nigeria boasted over 180 companies, directly employing close to 450,000 people, according to the Central Bank of Nigeria Governor, Godwin Emefiele. Imagine the impact that 450,000 people in employment would have on the economy. Not only will the tax net be widened and disposable income increased, the impact on lives of the immediate and extended families across the country would be immeasurable. But reviving the moribund industry is going to be very challenging; it means trying to reverse more than two decades of consistent decline, which has seen the number of textile companies plummet from 180 at its peak to just 20 now. It will test the mettle of officials at the highest level of government, including the President, Muhammadu Buhari. This is why the interest shown by the CBN has been very encouraging. The CBN, at a stakeholders’ meeting in Abuja, had said that reviving the sector was vital to the country’s growth objectives and job creation. This also falls into line with Buhari’s promise to lift 100 million Nigerians out of poverty in 10 years. “We have decided to implement a few steps which we believe will support the revival of the textile sector,” the CBN governor said. Gone with the textile factories has been the culture of cotton growing in the country, which was a source of livelihood to many rural Nigerians. It is, therefore, heartening to hear Emefiele promise to extend the Anchor Borrowers’ Programme, which has been used to encourage interest in rice growing, to cotton farming. Aside from efforts to source high-yielding seedlings for the farmers, the apex bank, very importantly, is working on the creation of designated areas where electricity would be guaranteed for textile companies. While not adopting the Senate model of banning textile imports, the CBN boss has restricted access to foreign exchange for the import of foreign textiles. This means whoever wants to import would not be stopped, but would not get foreign exchange from the CBN. These are laudable measures which, if implemented religiously, are capable of resuscitating the comatose industry. This will save Nigeria the N4 billion that is reportedly spent on imports of foreign textiles annually. The direct consequence of job creation is a reduction in the level of crime, especially kidnapping, armed robbery, banditry and terrorism, that is currently rocking the very foundation of the country. Currently estimated at $920 billion, the global textile industry is expected to grow by 4.4 per cent and reach $1.2 trillion by 2024, according to Mordor Intelligence, a market research outfit. Nigeria stands a chance of being a part of this growth if the government can provide an enabling environment for the revival of the textile industry.

Source: The Punch

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Pakistan: Policy shifts mar textile exports

With its share fluctuating between 55 per cent and 60pc in the country’s exports for several decades, the textile and clothing industry is the dominant source of foreign exchange earnings. There are examples where the textile and clothing sector was used as a ‘starter’ industry by countries pursuing export-oriented industrialisation. However, Pakistan has utterly failed to use this opportunity for sustained economic growth because of ineffective and inconsistent government policies, which are required to build on this investment. Another reason is the unwillingness of investors to become more efficient and diversify their products to meet demand. In comparison, other low-income countries like Bangladesh, Cambodia and Vietnam have successfully developed their textile and clothing industries to create jobs and rapidly increase their export receipts. For instance, Pakistan’s textile and clothing exports have stagnated at $13-13.5bn as opposed to Bangladesh’s $37bn although the latter has a relatively young industry. Bangladesh, in fact, is targeting $50bn in textile and clothing exports over the next few years. We are far ahead of Chinese companies in technology. We have more efficient European and Japanese machines. Chinese companies depend on huge subsidies for survival’ Why is Pakistan left far behind in the race? “The reason is very simple: inconsistent government policies that pull investments away from the manufacturing industry into the real estate sector and stock exchange, regional political and security situation that keeps our foreign buyers from visiting Pakistan, energy shortages for the industry in the past and so on. On top of that, the people who have never exported anything are called to advise the government to formulate policies to boost value-added exports,” says Umer Mansha, chief executive of Nishat Mills Ltd (NML), the country’s largest textile and clothing — exporting company. NML Executive Director Ahmed Jahangir adds that value addition requires a lot of effort. “When you move from basic textiles into value-added textiles, you feel returns are not commensurate with the kind of effort you have to put in. But once you are in value-added manufacturing, you realise you can get much high returns with a better strategy and efficiency.” The Nishat Group has invested heavily in value-added textiles — fashion apparel, home textiles and technical textiles, which form a big portion of its $341 million textile and clothing exports — for top American and European brands. The continuous upgrade of technology has allowed the group to cut its labour cost by 20-30pc and electricity expense by 30-40pc. Mr Mansha points out that only the large groups that have been in the textile business for a long period are investing in capacity expansion and increasing their footprints in the downstream, value-added textile industry. “Such companies learned the tricks of trade because of the textile quota protection and were able to establish close, enduring relationships with their foreign buyers. New investors are reluctant to invest in the value-added segments because they are scared of competition with larger companies already in this business. “The Sept 11 terror attacks and the ensuing war on terror in our region further deteriorated the environment for our value-added industry and made it difficult for new players to enter into it. Buyers don’t visit Pakistan and feel more comfortable to deal with companies with whom they have worked in the past. How can you expect a buyer to do business with a supplier whose factory he hasn’t ever visited or seen?” Mr Mansha says. Mr Mansha is not very optimistic about the promised Chinese investment in Pakistan’s textile and clothing industry. “I don’t see Chinese firms relocating their manufacturing units to Pakistan. If they wanted to relocate here, what could possibly have stopped them until now? And why would they invest in Pakistan? What do we have to offer them? On top of that, there are cultural and social differences, political unrest etc. Then we do not have enough quality raw material or variety. We are far ahead of Chinese companies in technology. We have European and Japanese machines, which more efficient. They sell volumes and depend on huge subsidies from their government for survival.” China went to Vietnam and Bangladesh to take advantage of cheaper labour and market access these countries enjoyed in the United States, according to Mr Jahangir. “China invested in Vietnam in the hope of taking advantage of the now defunct Trans-Pacific Partnership (TPP) agreement. Then there’s also the factor of close proximity and cultural and social similarities.” He believes the Chinese are successful because of massive subsidies they enjoy. “Their objective is to create jobs; exports are the by-product of that policy. In Pakistan, on the other hand, we have to work in an uncertain business environment. For example, the government gave us subsidised power and gas but withdrew the zero-rating regime for export-oriented units and imposed sales tax. If the refunds are not disbursed quickly, most of our liquidity will remain stuck with the government. What will be the use of cheaper energy then? “Because of tax issues, exporters are diverting their businesses to the domestic market. This is why local textile and clothing market has grown so fast in recent years. I see a 30pc loss in exports by February if we don’t fix our export refund system. Much of our time is spent on fulfilling unnecessary documentation, which adds to our costs and affects our competitiveness. If the government wants to boost exports, it should get out of the way of exporters.”

Source: The Dawn

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Is Vietnam the Next China: Myth vs. Reality

The ongoing US-China trade war has brought a renewed urgency in recent months resulting in my crisscrossing this tiny nation from the northern capital of Hanoi to the country’s economic epicenter to the south, Ho Chi Minh City, formerly known as Saigon and every stop in between. Once viewed as an emerging market with potential, Vietnam today is considered the hottest “go-to” sourcing destination as supply chains uproot from China while President Trump and President Xi continue to work out their disagreements. However, despite logging thousands of miles of travel and spending days upon days conducting factory audits in the remotest corners of the country I am discovering that Vietnam’s manufacturing industry and export products may not live up to the hype as China’s best alternative.

Myth #1: Vietnam manufacturing is on par with China.

One striking difference I noticed immediately is that Vietnam’s manufacturing is at least 10-15 years behind China. On my factory tours, I witnessed outdated machinery, lack of modern equipment and saw few signs of the latest supply chain best practices, including LEAN certification standards and supply chain manufacturing principles in action. In my daily research on vetting manufacturers, I consistently come across poorly designed websites, if I am lucky to find one at all, sales pages listing professional contact using Gmail and Yahoo accounts and often encounter few staff who can converse and speak English well. These deficiencies contribute to the challenging task of sourcing products meeting global export standards.

Myth #2: Vietnam’s pricing is cheaper than China.

With labor about one-third of China, cost of living and land much cheaper than its northern neighbor, many falsely believe that Vietnam-made products automatically translate into big savings. There are three contributing factors: One, in nearly every industry Vietnam lacks quality raw materials and must import them from China, thereby, increasing costs; Two, as new foreign direct investments set record highs, industrial park land costs have increased dramatically to coincide with this boom; Third, manufacturers, well aware that the US-China trade war has put American buyers in a corner, have raised their prices accordingly. These all contribute to the drowning out of any major cost savings. In my experience, several times North American buyers have responded that my Vietnam price offer is wildly off the mark and not competitive with their current China suppliers, China tariff included.

Myth #3: In Vietnam, you can expect to find everything as in China.

In the world of manufacturing and supply chain, I constantly hear: “Just start sourcing from Vietnam.” That would be all fine and dandy assuming an apples to apples comparison but Vietnam is anything but China. Over the past two decades, China has perfected their manufacturing and supply chains to the point of employing robotics and automation churning out sophisticated products by the millions. Just take a trip to the hugely popular Canton Fair or attend one of the hundreds of trade shows and expos throughout the year; you will find every product imaginable, in every variant and color, too. Furthermore, China has the most up-to-date and modern infrastructure—from container ports, highways, railways, and warehouses—to deliver goods globally. In contrast, Vietnam only in recent years has started to emerge onto the manufacturing scene, known mostly for light furniture, textiles, sewing, and electronics parts. Exasperated by the US-China trade war, Vietnam’s manufacturing industry has been red hot, though, is not an equivalent China replacement. Buyers can expect less-than-stellar quality products and choices than China, met with challenging business practices and frustration due to the lack of manufacturing transparency, data, and information. While Vietnam may be a manufacturing dream destination for many your gains maybe, in the end, just that: a pipe dream.

Source: Global Trade Magazine

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WTO: 163 countries agree to make changes in rules governing trade dispute resolution

In an unusual development on Friday, 163 countries agreed to make comprehensive changes to the rules governing the resolution of trade disputes merely to placate one member — the US — for keeping the Appellate Body afloat, trade envoys said. The Appellate Body, which is the highest adjudicating court for global trade disputes will become dysfunctional on December 11 when it will be reduced to one member from the mandatory minimum of three members. The US has blocked the selection process for filling six vacancies at the AB for the past two years. To appease the US, a draft General Council decision with comprehensive changes in the rules governing dispute settlement understanding was finalised on Friday. The draft decision makes several amendments to the rules in the DSU as per the US’ demands. At the informal meeting of trade envoys on Friday, the chair for the dispute settlement body Ambassador David Walker presented the draft GC decision that states unambiguously, as per the US’ demand, that “the Appellate Body has, in some respects, not been functioning as intended under the Understanding on Rules and Procedures Governing the Settlement of Disputes (the DSU)”. The three-page restricted draft decision, if approved at the upcoming GC meeting on December 9, can be used by the US to claim that the WTO members have finally agreed to its long-stated complaint that the AB has failed to adhere to the DSU provisions in some trade disputes, said a trade envoy, who asked not to be quoted.

Central importance

The draft decision emphasises that “the central importance of a properly functioning dispute settlement system in the rules-based multilateral trading system, which serves to preserve the rights and obligations of members under the WTO Agreement and ensures that rules are enforceable.” More important, it contains several amendments as per the US demands on what ought to be “transitional rules for outgoing Appellate Body members”, “the 90-day rule for completing the AB reports” (including positive consensus that any member to the dispute can decide whether to go ahead or not), “scope of appeal”, “advisor opinions”, “precedent”, “overreach” and “regular dialogue between the DSB and the Appellate Body.” The US managed to secure sweeping changes in the functioning of the Appellate Body as per its demands for free and without paying any price to other 163 countries, said a trade envoy. Yet, there is no guarantee that the US would approve the draft GC decision when it comes up at the GC meeting as Washington insists that there has to be a discussion as to how the Appellate Body committed these mistakes from the beginning, said a trade envoy from an industrialised country.

Filling up vacancies

The US is not ready to lift its blockage for launching the selection process for filling the six vacancies at the AB despite securing the substantial changes in the AB’s functioning, the envoy suggested. The AB will become dysfunctional on December 11 when it would be reduced to one AB member, who will retire in November 2020. 117 countries had appealed to the US last week to lift the blockage for launching the selection process for filling the six vacancies. Last week, the WTO Director-General worked out an arrangement that would limit the expenses for the three AB members at CHF 100,000 for adjudicating a trade dispute concerning plain package tobacco dispute between The Dominican Republic and Honduras on the one side, and Australia on the other. However, members disapproved the Director-General’s arrangement on grounds that it would amount to “differential” and “discriminatory” treatment.

Source: Business Line

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