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Huge Turkish textile firms have urged the government to postpone plans on imposing new requirements on their imports from China.
Sources from three firms revealed that a meeting was held last week between representatives of the textile companies and state officials to discuss the government’s plan on imposing new fees.
They said the representatives asked the officials to postpone the implementation of some procedures while amending others.
The sources added that the Turkish economy ministry stressed support for production imports from China but on the condition of bringing value added to Turkey.
Turkey’s textile sector is a pillar of its economy. Ready-to-wear clothing accounted for about 18 percent of Turkey’s $157 billion exports last year.
Cüneyt Yavuz, chief executive officer of jeans retailer Mavi, said he believed the government plan was aimed partly at tackling Turkey’s widening current account deficit, which reached $47.1 billion last year.
Turkey imported a quarter of its $10.1 billion textile imports from China in 2017, more than half of which are cotton fabrics and intermediary goods.
In another context, Economy Minister Nihat Zeybekci said that economic ties between Turkey and US can’t be underestimated, knowing that the US is the second biggest investor in the country.
The commercial partnership and relations with the US are deeply rooted regardless of temporary political disputes and customs fees on Turkish steel imports, he stated.
Zeybekci added that Turkish financial firms have the ability to confront the instability of the Turkish Lira, expressing his confidence in the currency’s ability to regain its value soon.
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The global textile dyeing sector is struggling to deal with sky high prices after tougher environmental legislation in China forced the closure of intermediate factories and severely restricted the supply of key ingredient chemicals.
New information obtained by Ecotextile News reveals that some of the largest intermediate suppliers in Jiangsu province have shut down completely after a series of environmental transgressions and serious industrial accidents.
One supplier told us: “The impacts are huge, and supplies seem likely to get very, very tight. Hopefully the big brands will realise they will now have to pay more for their dyed textile goods.”
In some instances, the price of disperse dyes are significantly higher than in 2013 which was historically known as the high price point for textile intermediates – yet today’s prices for some orange shades are even said to be 70 per cent higher than they were back then.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to come into force in early 2019, which will open up numerous opportunities for Vietnamese garment-textile sector.
According to the Vietnam Textile and Apparel Association (VTAA), the industry could access many markets with huge potential, including those with which Vietnam has yet to sign free trade agreements (FTA). Under the CPTPP, import tariff on most products will reduce to zero over the course of seven years, which will help businesses achieve high economic efficiency and increase competitiveness.
Garment-textile firms will be also able to make use of raw material supply and learn about production technology and management skills from CPTPP member countries. To realise an annual export growth of 10%, the sector needs to make best use of markets of member countries of the trade deal.
The pact will provide new opportunities for businesses in both export and import. For example, currently Vietnamese apparel makers have to rely on materials imported from China, Japan and the Republic of Korea. With the CPTPP, enterprises could import material from other CPTPP countries such as wool from Australia.
In order to capitalize on opportunities presented by the CPTPP, enterprises will need strong support from State management agencies. On their part, the enterprises must spare no effort to penetrate into the markets, first of all by studying thoroughly their target markets. They should also invest in modern machines and sharpening skills for workers.
The original Trans-Pacific Partnership (TPP) was signed by 12 countries in February 2016 but US President Donald Trump pulled his country from the deal upon taking office in January 2017. The remaining 11 countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, continued to sign the pact and renamed it the CPTPP in March 2018 in Chile.
The pact, which delivers a strong message against the protectionism in the world, is expected to boost economic growth, create more jobs, reduce poverty and improve the quality of life for people in member countries.
The deal will create one of the world’s largest free trade blocs with a combined market of 499 million people and GDP of around US$10.1 trillion, accounting for 13.5% of the global GDP.
More than 2,000 foreign businesses from 16 countries and territories worldwide have invested some US$15.75 trillion in Vietnam’s garment and textile sector so far, according to the VTAA. The total textiles and garment import turnover of the CPTPP member countries exceeded US$53 billion in 2017.
Vietnam earned over US$4.8 billion from exporting textiles and garments to the other CPTPP member nations in 2017, making up 9.07% of the market share.
At the fourth governing council meeting of the NITI Aayog, PM Narendra Modi laid down a blueprint to make development more inclusive and correct economic imbalances
Prime Minister Narendra Modi on Sunday vowed to accelerate India’s GDP growth to more than 10% and laid down a blueprint to make development more inclusive and correct economic imbalances. Modi said the world expects India to almost double its GDP to $5 trillion soon.
In his opening remarks at the fourth meeting of the governing council of policy think tank NITI Aayog, Modi said that after having recorded a 7.7% growth in the March quarter, the challenge now is to accelerate the growth rate, for which many more important steps have to be taken.
The new economic growth goal follows the implemention of structural reforms such as creating a single market through the goods and services tax and a bankruptcy code to tackle bad loans.
Industry executives said it is possible to have double-digit growth with the right policy support. “Right cost of energy is essential for promoting manufacturing and boosting economic growth,” said Sudhir Mathur, chief executive of Vedanta Cairn Oil and Gas.
Modi’s message also indicated the priority of his government in its final year in office before national polls early next year—effective and quick implementation of all welfare schemes meant to benefit the rural population. The meeting also witnessed chief ministers from some non-BJP-ruled states seeking financial support for farm loan waiver schemes and some protesting at the mandate given to the 15th Finance Commission, which they claim favour states that have failed to control population growth.
Modi laid out key areas of work to achieve an inclusive and fast-growing economy by 2022—doubling farmers’ income, development of backward districts, implementing the proposed health insurance scheme that seeks to give Rs 5 lakh annual health cover to 100 million families, immunization of children and raising nutrition levels.
Modi also emphasized the need to tackle economic imbalances and suggested that all parameters of human development need to be improved upon in 115 districts identified as backward.
The prime minister said gram swaraj abhiyan, a drive to reach out to every household to enrol potential beneficiaries of welfare schemes, has become a new model for implementing schemes. This has so far been extended to 45,000 backward villages. Modi said the target is universal coverage in seven key welfare schemes—LPG connection without upfront charges, power for all households, distribution of energy efficient bulbs, financial inclusion, state-backed life insurance and accident insurance schemes and immunization of all children. He said this target was recently accomplished in about 17,000 villages.
In his closing remarks, Modi also called for a debate on simultaneous elections for Lok Sabha and state legislatures, which will lead to financial savings. Modi also urged states to make policies that attracts private investment in warehousing, transportation, value addition and food processing.
NITI Aayog is a key pillar in the federal set up that gives states and union territories a say in deciding national priorities, unlike the erstwhile Planning Commission, which was reconstituted as NITI Aayog in 2015.
Modi also assured chief ministers of central government help in dealing with the flood and landslides in certain parts of the country. Several states in North East, including Assam, Manipur and Tripura, are facing flood that caused a few deaths and damaged roads.
The clothing and footwear industry was largely spared as the Trump administration slapped tariffs on $50 billion in Chinese imports, but a looming trade war could still do damage to an apparel sector that’s more global than ever.
The actual shirts and shoes imported from China won’t get new tariffs, according to the full list of 1,102 product lines released Friday, and only some of the equipment used to make them, like textile rolling-machine parts and injection molders for shoes, were included in the final list. A host of other Chinese machinery used by American apparel companies that had been on a preliminary tariff list — like textile printing equipment, sewing machines and looms — made it through unscathed.
“We applaud the decision to remove most of the equipment and machinery used in our domestic textile, apparel and footwear manufacturing that were proposed by the administration in April,” said Rick Helfenbein, president of the American Apparel & Footwear Association, an industry trade group. “Levying a tariff on these items would have increased costs for domestic manufacturers across our industry, leading to higher prices and lower sales.”
Read More: Trump’s China Tariffs Met With Retaliation Vow From Beijing
While much of the U.S. apparel manufacturing industry has moved abroad to chase lower labor costs, the country still remains home to a multibillion-dollar textile industry. Many fashion labels and shoemakers, including L.L. Bean Inc., Allen Edmonds and American Giant, still make products domestically. The exclusion of most apparel equipment from tariffs has allayed fears that manufacturers would push higher costs on to consumers.
Retaliation Fears
But while many of the machines used for American-made apparel didn’t make the final list, the industry isn’t out of the woods yet.
“We remain deeply concerned,” Helfenbein said, citing the threat of retaliation. “China previously identified almost $1 billion worth of American cotton exports to China as a target, which will hurt American farmers and U.S. textile manufacturers, and add costs to our supply chains.”
“Ramping up tariffs doesn’t help bilateral trade talks reach a successful conclusion,” he added. “It’s hard to see how anyone benefits from this.”
However, a trade group representing the U.S. textile industry praised the actions, and said the tariffs didn’t go far enough. The National Council of Textile Organizations wants them applied to clothing, high-performance fabrics and home furnishings like carpet to slow the flow of Chinese imports that it claims have hurt the domestic industry.
‘Deterring Effect’
“It would have a greater deterring effect, however, if more textile and apparel end products were included,” NCTO President Auggie Tantillo said in a statement. “NCTO looks forward to working closely with the Trump administration to refine it.”
President Donald Trump’s administration announced the tariffs on Chinese imports early Friday and China has vowed to retaliate. Trump pledged additional tariffs if the country follows through on the threats. The first setof tariffs will total $34 billion and take effect July 6, with another $16 billion still to be reviewed, the U.S. Trade Representative said.
Related: Across the U.S., Wary Businesses Gird for a Trump Trade War
A previous study from the National Retail Federation and the Consumer Technology Association found that imposing tariffs of $50 billion on Chinese imports, coupled with any retaliation, would reduce U.S. gross domestic product by nearly $3 billion and eliminate 134,000 American jobs annually.
“Tariffs are taxes on American consumers, plain and simple,” Matthew Shay, chief executive officer of the NRF, said in a statement Friday. “These tariffs won’t reduce or eliminate China’s abusive trade practices, but they will strain the budgets of working families by raising consumer prices.”
BEIJING: Companies and trade groups in the US and China have expressed concern over how the escalating trade spat between the world’s two biggest economies could affect operations.
Beijing retaliated immediately to tariffs on tens of billions in Chinese imports imposed by US President Donald Trump on Friday (Jun 15), igniting a trade war that threatens to cut into the pair’s massive bilateral trade – potentially harming exporters and US multinationals keen on China’s huge market.
Top among American products hit with duties by China are agricultural exports, with soybeans, sorghum, oranges, pork, poultry and beef included in the US$34 billion in goods targeted for higher border taxes starting next month.
Agricultural trader Cargill, the largest US private company, called for dialogue between Beijing and Washington so businesses, farmers and consumers would not be caught up in an all-out trade war.
“Trade conflict … will lead to serious consequences for economic growth and job creation and hurt those that are most vulnerable across the globe,” said Devry Boughner Vorwerk, a vice president at Cargill.
A spokeswoman for grain trader Archer Daniels Midland also said bilateral dialogue should be pursued, adding that China “continues to be an important export market for American food and agriculture”.
Friday’s announcements cap months of sometimes fraught shuttle diplomacy between Washington and Beijing, in which Chinese offers to purchase more US goods failed to assuage Trump’s grievances over a soaring trade imbalance and the country’s industrial development policies.
Beijing has left the door open to negotiations, even as it matched Washington with tariffs and bellicose rhetoric.
“The Donald Trump administration has once again proved inconsistent and precarious,” state-run newspaper China Daily said in an editorial Saturday.
It added that given the “frequent flip-flopping” in the US, “it is still too early to conclude that a trade war will start”.
‘FIXATED WITH TARIFFS’
US trade groups also stepped up their criticism, while some large companies such as Boeing said they were beginning to evaluate the tariffs’ possible effects.
Boeing garnered about 12.8 per cent of its 2017 revenues from China and is frequently seen as among the more vulnerable US multinationals to a full-on trade war.
“We are assessing the impact these tariffs and any reciprocal action could have on our supply chain and commercial business,” said Boeing spokesman Charles Bickers.
“We will continue to engage with leaders in both countries to urge a productive dialogue to resolve trade differences, highlighting the mutual economic benefits of a strong and prosperous aerospace industry,” he added.
The American Apparel & Footwear Association – while praising the Trump administration for dropping an earlier plan to place levies on key equipment and machinery used by the industry – said Friday that China’s retaliatory measures could harm American farmers and textile manufacturers and add costs to the industry’s supply chain.
“President Trump is fixated with tariffs, which he believes he can wield freely; but there are grave consequences,” said AAFA president Rick Helfenbein. “Congress needs to step in now to end this dangerous obsession.”
Other trade groups opposing the US tariffs included the Business Roundtable and the US Chamber of Commerce.
US automakers, which have targeted China as a key growth market, are also slated to be hit by the bruising tariffs.
American auto giant Ford has sold 338,386 cars thus far in China in 2018, about one-third the number in the US, and had welcomed a Chinese plan to lower tariffs on auto imports. It had even planned to cut prices for its imported Lincoln vehicles.
That may be in jeopardy as gas-powered and electric vehicles are due to be slapped with the border tax increase.
‘Crop damage from pests contained’
The Cotton Advisory Board (CAB) estimates cotton production for this season (October 2017 to September 2018) to be 370 lakh bales.
The board had estimated cotton production to be 345 lakh bales and exports at 59 lakh bales for the season when it had met in December.
Bollworm attack
Production estimates were lower in the beginning of the season as the board expected damage to the crop from bollworm attack. However, state governments took steps to contain the damage, said J. Thulasidharan, president, Indian Cotton Federation.
He said there was not much scope for increase in cotton exports.
He also described as conservative CAB’s closing stock estimate of 43 lakh bales. This could rise when the season ends, observed Mr. Thulasidharan.
“Cotton position is very comfortable. However, domestic cotton prices are up, reflecting the international trend. There is no reason for the textile mills to panic,” he added
Hard-working Vasantamma Kumar had to pawn her jewellery and take out two loans to ensure her children were back in class when term began last week.
The seamstress, who is paid little for the eight-hour day she spends cutting cuffs for branded shirts, was forced to call on money lenders to keep her children in school.
Now she is among tens of thousands of workers in India’s $40 billion-a-year textile and garment industry who are seeking higher wages from the factories that supply global brands.
“May-June is the month that we regularly take a big loan to pay children’s fees, buy new uniforms and books,” said Kumar. “My daughter’s college also asked for a donation. It all came from borrowed money. I want them to study but there are days it looks impossible.”
Despite minimum wage laws, salaries continue to be “grossly low” for thousands of workers, many of whom are still not given pay slips or are only hired as apprentices, campaigners say.
Vasantamma has a take-home salary of Rs 7,000 and has to repay loans worth more than Rs 2 lakh.
“Everyone is indebted and it is a vicious cycle of never-ending loans,” said Sujata Mody of Penn Thozhilalargal Sangam, a Chennai-based women workers’ union. “The women in this industry are constantly borrowing money from someone to pay back someone else.”
An estimated 45 million workers, mostly women, are employed in India’s thriving garment industry, with major hubs in the southern states of Tamil Nadu and Karnataka.
The clothes they stitch are exported around the world and sold by big brands, which have long promised better conditions in their supply chain.
Promises aside, campaigners say little has changed, with low wages, verbal and sexual harassment and long hours the norm.
A year-long study of more than 500 workers in Cambodia, India and Bangladesh found women often work overtime or borrow money just to feed their families and pay rent.
Despite earning the minimum wage and logging overtime, researchers found most were still short of money.
It was a tough decision for Savita Rajesh to end her teenager’s schooling this year.
But with mounting debt and no increase in her wages or festival bonus, the seamstress said she had no choice.
For 12 years, the 35-year-old has stitched shirts and blouses for leading fashion brands and takes home Rs 8,500 a month. “My elder daughter passed out of grade 10 but will not go back for further studies this session. It’s not about whether I want it or not. It’s about not being able to afford it,” Kumar told the Thomson Reuters Foundation.
“The garment factory my husband worked in closed without notice a few months back. He is still unemployed. We took a loan of Rs 20,000 for the younger daughter’s fees and books. The interest is already mounting.”
The pressure to repay forces most workers to resign every few years so they can access their factory’s employee saving fund, union leaders said.
At present, the Central GST (CGST) Act defines RCM as the provision where the registered recipient of goods and/or services is liable to pay GST instead of the unregistered supplier.
Clarification for refunds of cess on goods to be exported, changes in the enabling provisions for reverse charge mechanism (RCM) and composition scheme and returns filing are part of about 35 amendments being finalised in Goods and Services Tax (GST)-related laws. The government is likely to amend the GST laws to introduce enabling provision of bringing in any transaction under RCM, with an aim to extend it first for the composition scheme, government officials said.
At present, the Central GST (CGST) Act defines RCM as the provision where the registered recipient of goods and/or services is liable to pay GST instead of the unregistered supplier. “Now, the definition will be modified to enable it for registered persons also under GST,” a senior official said, adding that this would enable inclusion of composition scheme under the RCM mechanism. The liability to pay tax on reverse charge basis was deferred till June 30 by the GST Council.
The final draft for amendments will be introduced in the next GST Council meeting, following which it would need to be cleared by Union Cabinet before its introduction in the Monsoon Session of Parliament, another senior government official said. One of the amendments is related to the GST (Compensation to States) Act, 2017 to provide more clarity for refunds of cess to manufacturers for goods to be exported. Explaining the proposed change, an official said: “The amendment will bring in more clarity. Say, an automobile manufacturer is selling the car to an exporter, he would have paid cess on it. But, since it is meant to be exported, cess would need to be refunded. So, certain tweaking of the law is required…”
The other proposed amendments for the composition scheme relate to inclusion of supply of services by composition taxpayer up to Rs 5 lakh per year and increase in annual turnover eligibility to Rs 2 crore from Rs 1 crore, after which the eligibility will be increased to Rs 1.5 crore per annum, as approved by the GST Council last year.
Also, amendments would be made to enable taxation of renting of immovable property by government or local authority to a registered person under RCM while renting of immovable property by government or local authority to unregistered person shall continue under forward charge, officials said.
The desi variety of cotton is also registering yields better than the national average
After a surge in the area under Bt cotton last year, cotton cultivation under this high-yielding and genetically-modified seed is set to go up further this year.
Acreage under Bt cotton declined significantly from over 95 per cent of the total area under cotton in 2013-14 to below 90 per cent in 2016-17. This happened due to stagnation in yield in the latest Bollgard variety and pest attacks on Bt cotton seeds.
Increase in the overall area, however, benefited Bt cotton more than the conventional, hybrid and desi varieties.
Of the total cotton area at 12.44 million hectares for 2017-18, the acreage under Bt was reportedly 11.07 million hectares, which works out to 89 per cent.
When compared with the total area of cotton cultivation at 10.82 million hectares, the coverage under Bt cotton stood at 81 per cent (8.77 million hectares) for 2016-17. This means the acreage under Bt cotton went up in 2017-18. “Farmers adopt Bt cotton for high yield. We expect the increase in cotton sowing under Bt to continue. In states like Rajasthan, however, farmers have chosen the desi variety, which fetched yields that are equally high under the guidance of many cotton bodies,” said Kavita Gupta, textiles commissioner, under the ministry of textiles.
Gupta had announced the cotton output estimates for 2017-18 after the second Cotton Advisory Board (CAB) meeting on Saturday.
The CAB lowered its cotton output estimates of 37.7 million bales to 37 million bales for 2017-18 on Saturday. This was largely attributed to pink bollworm attack on cotton crops in Maharashtra, Telangana and Andhra Pradesh. The estimated cotton output of 37 million for 2017-18, however, is higher by around 7 per cent from the previous year’s output of 34.5 million bales.
Meanwhile, the textiles commissioner asked the ministry to collaborate with the ministry of agriculture to help farmers follow best practices in cotton farming that are adopted globally.
Some of the proposals include intercropping of soybean with cotton, branding of cotton, production of contamination-free cotton and use of water efficient techniques for vertical growth of plants, among others.
“Soybean plant can add nutrients to the cotton crop which may boost production. Hence, we have recommended to the ministry of textiles to engage the ministry of agriculture for better cotton production in the country,” said Gupta.
Against the national average of 500 kg/hectare, some farmers in Punjab have yielded 2,000 kg/hectare. This is double the world average of 750 kg/hectare but similar to the world’s best production of 2,200 kg/hectare in Australia.
The desi variety of cotton is also registering yields better than the national average.
Gupta was also confident that the Maharashtra government’s advisory for farmers to wait for rain before sowing this kharif season is unlikely to lower cotton output this year. This is because farmers have adopted global best practices for a higher yield.
