US cotton trade sees red over Indian subsidies

American Industry Says India Has Violated WTO Norms; Seeks Obama Administration's Help

THE US cotton industry has expressed its concern over subsidies being provided by the Indian government to its cotton growing farmers, alleging it is in violation of the World Trade Organization's (WTO) norms. Testifying before the US International Trade Commission hearing on India: Effects of tariffs and non-tariff measures on US agricultural exports, the National Cotton Council — the central organisation of the US cotton industry — has sought the administration's help in this regard.
    "The lack of transparency in the operation and scope of India's subsidy programme is a major impediment to trade. Despite India's membership in the WTO, it has repeatedly failed to notify its support levels to WTO," Gary Adams of the National Cotton Council said. The special hearing was convened by the US International Trade Commission at the direction of the US Senate committee on finance in this regard. Mr Adams urged the US government that it should continue to press India to make these submissions.
    "The export subsidy to cotton farmers will support India's internal prices while artificially increasing its competitiveness in the world market," he argued.
    "The addition of an export subsidy to 3-5% discount allows India to increase this discount relative to their competitors," Mr Adams said. He alleged India has chosen to increase its own internal subsidy levels and expand export subsidised cotton. "India has apparently never filed any export subsidy schedules as part of the Uruguay round commitments within the WTO," he said.
    Observing that US' cotton production has dropped significantly along with its growth, Mr Adams said countries like India have stepped into the void with increased production exports and even increased subsidy tariff programmes. The representative of the National Cotton Council said: "Though India does not administer any quota restrictions on cotton imports, but does impose tariffs. Further, India maintains import tariffs on most cotton textile products."
    "Like many textile industries around the world, India is heavily supported by governmental industry policy," he said. In addition to the Textile Upgradation Funds Scheme (Tufs), India continues to maintain several duty drawback programmes, tax holidays for export products and preferential export financing, he added.
    "With a highly competitive and subsidised textile industry, the US remains concerned about preferences extended under the generalised system of preferences programme," Mr Adams said.
TRADE OFF
The special hearing has been convened by the US International Trade Commission
US cotton production has dropped significantly, which creates a void in global markets
Many cotton producing countries like India have stepped into the void with increased production and exports