The countries had alleged that the stipulation preventing the use of fabric or yarn of non-US origin in the apparel exported under the Caribbean Basin Economic and Recovery Act (CBERA) and the Andean Trade Preference Act (ATPA) preference schemes may lead to non viability of exports for the beneficiaries due to difference in costs of the procured fabric or yarn of US and third party origin.
India had asked whether this would not be a constraining factor in the exports to be made by the beneficiaries under the preference schemes. It had further asked whether this would not be in violation of the commitment of the US at the WTO wherein it is stated that duty free treatment shall be designed not to raise barriers or create undue difficulties for the trade of other members.
In its response, the US said that the CBERA and ATPA contain provisions that provide benefits to apparel assembled using regional inputs. The success of the programmes was evident from the trade data available and the large increases in apparel imports from beneficiary countries do not support Indias premise that cost differences between US and third parties are a constraining factor, it said.
The US added that India was presuming that the duty-free treatment provided raises barriers or creates undue difficulties for the trade of other members.