Round one to USA
India has lost in the initial stage of the textile trade battle with the US. A dispute settlement panel of the World Trade Organization (WTO) decreed on June 20 that US laws on "rules of origin' for textile products were consistent with WTO agreements. India had challenged the US over these regulations. They recognise a textile product as having originated from a country where it is manufactured, and not where it has undergone minor finishing processes like dyeing and printing. India now has 60 days to appeal against the order.
The rules are significant because each country has a specific quota (which expires at the end of 2004) for exporting textile products to the US. The US could, however, impose quota restrictions even after 2004 to protect its industry from a surge of cheaper imports. While the Indian government has made no official comment on the development yet, US trade representative Robert Zoellick has hailed the decision as an important victory for American trade laws and the textile business.
India raised the issue in the WTO in January last year, after the US introduced the new rules of origin. India argued that these laws changed the criteria used to determine the source of textile products in such a way that its exports, which had previously been quota-free, were subjected to quantitative limits.
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