Blog: Leonie BarrieIndian cotton curb sparks protectionist stance

Leonie Barrie | 13 December 2010

India's restrictions on raw cotton and cotton yarn exports have given the country the advantage of lower material costs – at least for a while. But its actions have also sparked a round of aggressive trade protection, especially by other textile exporters in the region.

India's initial reaction was to limit raw cotton exports, which meant its cotton prices grew more slowly than elsewhere. But now the country has also extended the restrictions to cotton yarn too – a move that should widen the yarn price gap that has given Indian garment factories a competitive advantage.

Angered by India's stance, other textile exporters are also attacking each others' trade policies. India, Bangladesh, Vietnam and Peru have forced the WTO to reject EU concessions for Pakistani apparel and textile products. And Pakistani weavers are now lobbying their government to ban cotton and yarn exports.

But a landmark trade deal between the United States and South Korea has been welcomed by apparel and footwear importers after negotiators finally agreed outstanding issues. The US-Korea Free Trade Agreement (KORUS FTA) will boost US exports to Korea by nearly $11bn according to US government estimates, with nearly 95% of all goods traded between the two countries becoming duty-free within three years.

Meanwhile, in Lesotho, Levi Strauss has published an update on its efforts to improve conditions in the developing African country after damaging reports a year ago of chemical dumping and pollution by some of its suppliers there. The denim giant and its manufacturers have worked with the local community to clean up local rivers and cut access to a municipal landfill.

While a stellar fourth quarter and full-year performance at Gildan Activewear Inc was overshadowed by its warning that higher cotton costs in the year ahead are likely to eat into margins, the T-shirt and sock maker is confident it is well-positioned to weather the “new paradigm” taking place in global manufacturing. The company manufactures in the western hemisphere, where it believes it will benefit from soaring production costs in Asia.

Retailers selling "inappropriate" products for children such as such as padded bras, high heels and T-shirts with suggestive slogans, could face new restrictions under plans being mulled by the British government. Responding to concerns that children are being pressured into growing up too quickly, an investigation was launched last week, with recommendations due in May 2011.

And a trademark spat has broken out over the use of the Ugg brand, after Deckers Outdoor filed a lawsuit against Emu Australia to try to prevent it from using the term. But Emu has hit back, claiming Ugg is a generic word in Australia, and that over 70 registered trademarks include the word.


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