Home > Oped > Full Story

Crucial India-EU talks on textiles soon
Agencies - New Delhi

India and the European Union are expected to hold crucial third and final round of negotiations next week on granting of duty-free concessions for textiles to New Delhi at par with Pakistan.

Commerce ministry officials said that informal negotiations on granting of benefits under EU’s Generalised System of Preferences (GSP) for textiles would be held in Brussels on July 9.

The talks assume significance as India has threatened to take EU to the Dispute Settlement Body under the WTO should the talks fail. Officials said India would seek constitution of a panel for adjudication if the talks fail. The Indian delegation at the talks would comprise senior officials of the commerce and textiles ministry.

Textiles ministry officials said India’s exports of clothing and made-ups to the EU had come under pressure with granting of concessions to Pakistan on account of its efforts at combating drug trafficking. In fact, preliminary data collected by the Apparel Export Promotion Council and others for the purpose indicate that there has been some trade diversion on account of the granting of duty-free access to Pakistan. The data which is now being fine-tuned will be submitted by India at the meeting.

India is concerned that Pakistan may dramatically improve utilisation of the GSP coverage following concessions given by the EU under the Drug Control Window of the GSP. There are also apprehensions that India would stand to lose trade substantially in the clothing sector where the applicable duty for the items is around 10 per cent, officials said.

The zero-duty market access under this special arrangement makes it cheaper for the EU importers to buy certain products from Pakistani sources than from Indian exporters on which customs duty is applicable, they added. Provision of a separate trade package to Pakistan by EU provides a 15 per cent quota hike with the textiles sector and zero-duty facility for all non-graduated products under the EU’s GSP scheme.

Pakistan’s utilisation of the EU GSP in the textile sector was 78.8 per cent. Further, of Pakistan’s total exports to the EU in 2000, trade worth Euro 1.4 billion had already graduated out of the GSP. In contrast, India’s share in EU’s textile imports had shown a minor decline from 10.24 per cent in 1995 to 10.13 per cent in 2000.

The GSP scheme for Pakistan covers the period January 2002 to December 2004. India held the last round of consultations with the EU on this issue on March 25, 2002.