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May 19, 1998


N-test fallout to hit textile industry

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C K Arora in Washington

The economic fallout of India's nuclear test continues, via a measure to withdraw most-favoured-nation trade status for the country's textiles and apparel industry.

An amendment by Congressman Edward Markey represents the first Congressional effort to punish India with import curbs, adding to the cut-off of US exports, aid and credit ordered by President Bill Clinton on Wednesday.

The daily Journal of Commerce says the provision, which could come to a House vote within days as an amendment to a defence authorisation bill, will place prohibitive tariffs on one of India's most important products. The imposition of tariffs up to 90 per cent on Indian goods is envisaged in the legislation.

Textiles and apparel sale to the US accounted for more than $ 1.8 billion in 1987.

The proposed legislation is worded retrospectively, to apply to any non-nuclear state that conducts tests after January 1,1998.

An aide of Congressman Markey further said the legislation is intended to deter Pakistan from going in for nuclear testing.

US Association of Importers of Textiles and Apparel executive director Laura Jones, however, came out strongly against Markey's legislation. ''What they are proposing is a totally knee-jerk, protectionist measure," she said.

Brenda Jacobs, the association's Washington counsel, said the legislation would also violate the terms of the World Trade Organisation, of which India is a member.

As officials from state, commerce and treasury departments hold marathon meetings to devise means of implementing the sanctions law, industry groups are lobbying hard for a break, according to sources.

In the high-tech sector, a group representing the major organisations of computer makers, including the American Electronics Association and the Electronic Industries Association, wrote to National Security Advisor Sandy Berger, seeking to limit the application of discretionary sanctions on dual-use exports under law.

The industry coalition on technology transfer argued that terms of the complex law, written by Senator John Glenn, would only allow dual-use licences to be barred for goods that also have nuclear uses, such as computers operating at speeds over 2,000 million operations per second.

It says industry insiders are concerned that the administratiion will not buy the interpretation, and that less sophisticated products will be affected as well. The commerce department has already frozen all licence applications for India. Some licences that have already been approved may also be recalled, it is learnt.

It says the coalition is seeking another important break for many US companies in India -- the right to export goods and spare parts for US facilities and items of US origin that are already in place. It is not, however, clear whether the exemption is allowed under the language of the law.


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