India seeks cut in tariffs on textile exports

India has sought a reduction in peak tariffs maintained by developed countries on its textile exports, in line with the phasing out of the quota regime on December 31 this year.

Countries such as the US and the European Union continue to maintain high tariffs on textiles. While peak tariffs in the US are around 30 per cent, those in the EU are between 12 per cent and 14 per cent.

Senior government officials told Business Standard that the issue of lowering tariffs was raised by India during the meeting of the Council for Trade in Goods at the World Trade Organisation last week. The meeting was significant as it was the last opportunity for countries to press for the continuation of the quotas beyond December.

Officials said India also emphasised that no new trade protection measures or rules of origin should be introduced to prevent or deny the legitimate benefits of trade liberalisation in the textiles sector to developing countries.

Studies have projected that countries like China and India could be major gainers from the phasing out of the quota regime.

Nearly 34 smaller developing countries from Africa, the Caribbean, Latin America, and South Asia expressed concerns over the phasing out of the quota regime.

These countries said there could be an erosion of preferences, as least developing countries at present get duty-free access to markets like the EU and US, which otherwise had high tariffs. This provision gave LDCs a huge margin over other developing countries.

The countries also raised the issue of job losses resulting from trade shifting to countries like China and India and sought technical assistance from the more developed countries. They also suggested that the WTO should undertake a study to identify the problems arising from the phasing out of textile quotas.

India, in its intervention, pointed out that there was a lot of apprehension over the fact that developed countries had backloaded items of interest to developing countries towards the fag end of the quota period, which had led to several items being bunched towards the end.

Trade analysts said there was a possibility that the US and EU could take the high moral ground and not reduce high tariffs in order to protect the margins of LDCs.

Alternatively, there was also a fear that developed countries could invoke special safeguards against China as the clause existed in the entry conditions at the time of its joining the WTO, they said.