India has agreed to bind Import Duty Tariffs on 396 items under the WTO norms. This removes a major irritant in trade relations with the US, and vindicates the stand of the American Textile Manufacturers Institute (ATMI).

The US has accordingly, restored the GSP (Generalised System of Preferences) benefits for nine varieties of handloom cotton fabrics.
Handloom fabrics are woven on simple, usually wooden, man-powered looms. Handlooms were an icon of India's homegrown industry in the 40s during the Independence (from British rule) movement, and used as a potent vehicle of protest against 'tutelage to British Industry' by Mahatma Gandhi and the Congress party. In today's India, Government gives support to handlooms through tax breaks and low cost finance. Handloom fabrics have a rough texture, and are popular choices for ethnic clothing.

The Import Duty Tariff binding was one of India's obligations under a bilateral agreement signed in 1994, where India had agreed to remove import restrictions on, and reduce customs duty on textile items. The import restrictions were removed, but India was chary of binding the tariffs. In return, the US had denied GSP benefits to handloom fabrics. The restoration means lower customs duty to imports into USA from India (and other countries covered by the ATC).

In addition, the US has also agreed to consult India on the next stages of MFA dismantling. Indian exporters were complaining that lucrative categories were being backloaded in the MFA phasing out.

In August, the American Textile Manufacturers Institute (ATMI had petitioned the GSP Subcommittee of the Office of the United States Trade Representative (USTR). Seeking withdrawal of GSP duty-free benefits from the "four worst offenders." The phrase, used by ATMI president Roger W Chastain applied, besides India, to Pakistan, Egypt and South Africa. The ATMI petition protested against various barriers to US exports in these markets, which, in India's case, is high (100 per cent) import duties.

ATMI's concern of is understandable: 75 per cent of US imports under GSP from the 'worst offenders' fall under the textiles and apparel bracket.

By Navroz Havewala