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WTO to probe textile exports to US

BS Economy Bureau

The World Trade Organisation has agreed to create a panel to look into the complaints made by India against the US blocking its textiles and clothing exports with complicated new rules.

The European Commission and Bangladesh have put in requests to join the consultations.

India says the new rules, adopted because of earlier complaints made by the European Union, have created "extraordinarily complex rules of origin for textiles and apparel products".

The request for the establishment of a panel by India states: "The structure of the rules of origin, their implementation and administration, the circumstances under which they were adopted and their effect on the conditions of competition for textiles and apparel products demonstrate that they are used as instruments to pursue trade objectives."

Moreover, it adds, they create restrictive, distorting and disruptive effects on international trade, pose unduly strict requirements, require the fulfilment of certain conditions not related to manufacturing or processing as a pre-requisite for the determination of the country of origin, and are more stringent than the rules applied by the US to determine whether a good is domestic.

In addition, they discriminate between WTO members, and are not administered in a consistent, uniform, impartial and reasonable manner.

It, therefore, considers that the US rules of origin for textiles and apparel products are inconsistent with paragraphs (b), (c), (d) and (e) of Article 2 of the Agreement on Rules of Origin.

The US applies these rules to textiles and apparel products under the legislations adopted in 1994 and 2000.

India had requested consultations with the US in January. Meetings were held in February and March, but the dispute was not settled.

India has sought the establishment of a panel under Article XXIII of the General Agreement on Tariffs and Trade, 1994, and Article 8 of the Agreement on Rules of Origin.

Domestic rules of origin are a frequent source of dispute among WTO members, especially between rich and poor nations. Customs authorities determine the level of duties to be paid on imports on the basis of the domestic rules of origin.

The panel is expected to be set up within a month, and will have to come up with a ruling in six months.

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