Indian garment exporters should be the first to benefit from the agreement which the European Union? trade supremo, Peter Mandelson, reached in Shanghai last Saturday with Chinese commerce minister Bo Xilai.
The agreement limits the growth of 10 categories of textiles and garments exported by China to the 25-nation European Union (EU) from June 11. This amounts to the re-imposition of quotas on Chinese exports, six months after they had been eliminated under an international agreement concluded in the World Trade Organization (WTO).
India is a large-scale exporters of many of the 10 products covered by the agreement, including T-shirts, blouses, trousers, dresses, cotton fabrics, bed linen and table and kitchen linen. The annual growth rates set under the agreement vary from product to product, but range between 8% per annum to 12.5% per annum (for cotton fabrics and household linen). Mr Mandelson noted that the agreement gives the EU textile industry three years in which to adapt to changed market conditions.
The industry in fact has had 40 years in which to prepare for competition from Asian textile and garment exporters, starting with the long-term arrangement on cotton textiles, concluded in the early 1960s.
Despite the lukewarm response of European textile and garment manufacturers to the agreement with China, it has helped reduce the tension which had been building up in both industry and government circles since March. EU governments can be expected to adopt the revised generalised system of preferences (GSP) scheme shortly. Whether Indian textile and garment exports will receive GSP treatment under the revised scheme remains to be seen. Pakistan will continue to enjoy GSP treatment for textiles and clothing also, but not China.
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