Earlier, New Delhi had made its submissions to the panel on October 30. [Quotes from textile expert and secretary-general, Indian Cottton Mills Federation (ICMF).] Terming the US move as incompatible with the provisions of the agreement on Rules of Origin signed under the WTO aegis on January 1, 1995, textiles ministry officials told FE that it had resulted in disruption of global trade in textiles, especially those exported from India. Exports of fabrics and made-ups were getting debited against the utilisation of quotas granted by the US under the pact on it, they added. The debiting of exports of fabrics and made-ups implied reduced level of quotas for these items under the bilateral textile agreement signed between New Delhi and Washington, officials pointed out. They also reiterated that the pact on Rules of Origin required that they shall not themselves create restrictive, distorting or disruptive effects on global trade, shall not be discriminatory and shall be administered in a consistent, uniform, impartial and reasonable manner.
The panel was set up following the failure of formal consultations between the two countries held earlier this year in February and March on the subject, officials said and pointed out that Washington had amended its Rules of Origin more than six years ago from July 1, 1996 primarily to benefit the European Union (EU).
Explaining the implications of the US action on textile industry, ICMF secretary-general and an expert on the matter DK Nair said the Rules of Origin was applied liberally in respect of those countries with which Washington has preferential trade arrangements and tough in cases of others, including India, Pakistan, Malaysia and Indonesia .
The process of harmonising the Rules of Origin Agreement began on January 1, 1995 but one and a half years . Washington introduced its own Rules of Origin on July 1, 1996, Mr Nair pointed out. Again, the US had brought in the trade objective element in Rules of Origin which it should have avoided during the harmonisation process, Mr Nair further stated.
Citing several instances to prove that India was gradually losing its quotas, Mr Nair said that if grey fabrics exported to Italy were later converted and exported in the form of bed sheets to the US, the products would be deemed to have been supplied from India resulting in debiting of the quota under the bilateral agreement with the EU.
And there would be another debiting of the quotas for bed sheets by the US which too had similar agreement with New Delhi, resulting in double debiting for the same item.
After the complete phase-out of the export quotas under WTO Agreement on Textiles and Clothing by December 31, 04, Indias exports would be regulated by import tariffs both by the US and EU, Mr Nair said.