INDIA’S TRADE NEWS AND VIEWS 12 September to 26 September 2013

Services exports grow 15%, rupee depreciation helps

India’s services exports in the April-July period grew by a healthy 14.5% as the rupee's sharp depreciation

boosted the competitiveness of exports…

World economy to grow at 2.1% in 2013: UNCTAD report

Emerging market economies may need to relook their export-led growth strategies and put controls on

capital inflows to ensure macroeconomic stability…

WTO scales down global trade growth projection in 2013

The World Trade Organisation (WTO) has lowered growth projections for global trade in 2013 for the

second time, but added that the conditions for improved trade were already falling into place…

Government weighs trade with some nations in local currencies

In an attempt to contain a bloated CAD that puts pressure on the rupee, the government is considering

making it mandatory for trade with a few countries to take place in local currencies…

Govt brings more items under duty drawback

The government on Saturday rationalised the duty drawback and brought more items under the scheme

for tax refund to exporters to give a boost to overseas shipments…

PM-Sharif meet to focus on trade

While the situation on the Line of Control in Jammu and Kashmir will definitely be discussed

when Prime Minister Manmohan Singh meets his Pakistani counterpart, Nawaz Sharif, in New York…

G20 must find ways of cooperation on issues of emerging economies Finance minister P Chidambaram has made a strong case for encouraging growth in emerging economies

at international forums such as the G20…

Trade minister on India visit sells Costa Rica as ally for IT, services Expecting India to become a significant source of foreign direct investment (FDI) in coming years, Costa

Rica is inviting Indian businesses in IT, knowledge and services fields to set up base there…

India, a headache for US IT firms

The influential American IT and telecom industry sought intervention of the Obama Administration

against what they alleged are “discriminatory” Indian policies…

Russia to review decision on allowing buffalo meat from India

Russia has agreed to hold a review on allowing import of buffalo meat and egg powder from India next

month and has assured a satisfactory resolution of the issue…

Agri exports fall 19% in Q1

In the first quarter of the current financial year, India’s agricultural export was down 19% …

To curb onion exports, minimum price hiked

With wholesale and retail price of onions rising sharply, the government increased minimum export price

(MEP) to $900 per metric ton, up $250 per metric ton, to curb export…

Tea exporters losing out to Kenyan rivals

Bumper Kenyan tea production, coupled with the quality issues faced by Indian tea, have hampered

exports…

Vegetable oil imports fall 15.5% in August

Vegetable oil imports fell by 15.52% during the last month to 7.57 lakh tonnes due to volatility in the

rupee’s value…

Indian apparel exports to touch $17 bn: AEPC

The Indian apparel industry is witnessing an upswing and the exports are likely to go up from $13 billion

last year to $17 billion in the next two years on the back of economic recovery in the US and Europe…

Gold jewellery exports nearly halve in August

Exports of gold jewellery from India nearly halved in August to $561 million…

Steel exports get push from weaker rupee, new markets

Indian steel makers are tapping new markets, creating more value-added products and selling directly to

clients as they try to export more to take advantage of a weaker rupee…

Panel recommends complete ban on iron ore exports

The parliamentary standing committee on coal and steel has recommended a ban on iron ore exports,

arguing mineral reserves would be exhausted within 25 years if exports continued…

India may slap safeguard duty on sodium nitrite imports

India may impose safeguard duty on import of sodium nitrite, a chemical used by textiles and pharma

industries, to protect domestic producers from "serious injuries" caused by the rising inward shipments…

Japan to soon resolve chemical issue in Indian shrimp

Indian shrimp exporters would soon be able to enhance their shipments to Japan as the later has agreed to

resolve the issue pertaining to the chemical used as feed and preservative for the marine product…

US not to impose countervailing duty on Indian shrimp exports

The United States has said it will not impose countervailing duty on imports of frozen warm water shrimp

from India and six other countries…

WTO Members Make Progress On Bali Package, But Deal Not A Sure Thing

World Trade Organization members are narrowing their differences in newly invigorated discussions over

a package of trade concessions for a December ministerial meeting in Bali…

Negotiations for a deal at WTO’s Bali meet stuck over food security

Negotiations for a deal at the Bali ministerial meeting of WTO members scheduled for December are stuck

over the tenure of an interim resolution to the demand by G-33 developing countries on food security…

India demands changes in WTO trade facilitation agreement

Even as the government is collating inputs from industry to chalk out its negotiating strategy in a trade

ministers’ meet during December 3-6 in Bali, Indonesia, it has demanded some immediate changes to the

Trade Facilitation Agreement (TFA) being discussed at the World Trade Organization (WTO)…

WTO members are talking of trade-offs

It's only been a few weeks since Roberto Azevedo took charge as the director general of the WTO. But

Brazil's former trade negotiator is sensing a new urgency to get derailed talks back on track…

Disclaimer: India’s Trade News and Views is a fortnightly e-bulletin that compiles and disseminates India-specific

trade related news and featured articles. The stories covered do not necessarily represent the views of the Centre for

WTO Studies (CWS) and have been put together solely for informational and outreach purposes.

Centre for WTO Studies, 7th Floor, IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi - 110016

Tel: 91-11-26965124, 26965300, 26966360 Ext-725,710 Fax: 91-11-26853956 Email: cws@iift.ac.in

The Centre for WTO Studies was set up by the Department of Commerce, Government of India in 1999. The intent

was to create an independent think tank with interest in trade in general and the WTO in particular. The Centre has

been a part of the Indian Institute of Foreign Trade since November 2002. The Centre provides research and

analytical support, and allied inputs to the Government for WTO and other trade negotiations. The Centre also has

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Services exports grow 15%, rupee depreciation helps

Financial Express

Mumbai, 14 September 2013: India’s services exports in the April-July period grew by a healthy 14.5%

as the rupee's sharp depreciation boosted the competitiveness of exports.

Services exports totalled $50.93 billion during April-July, up from $44.44 billion a year ago, provisional

data from the Reserve Bank of India showed. The rupee had depreciated by a massive 11.25% in this

period and had eventually hit an all-time low of 68.85/$ in August.

In July alone, services exports showed a growth of 16.75% compared with the corresponding month last

year. This growth is faster than the growth of 11.64% in merchandise exports.

According to RBI, the provisional data may undergo revision in the balance of payment data, which the

central bank releases with a lag of two quarters. Data for April-June will be released by end of this month.

Services exports have remained largely unchanged even when merchandise exports had slumped every

month in the April-June peiod. This slump in mercandise exports, and a corresponding surge in imports,

especially that of gold had widened the trade deficit sharply during April-June quarter. Merchandise

exports have since then picked up and the trade deficit has narrowed to $10.9 billion in August.

Consequently, the current account deficit (CAD) is also expected to narrow in the coming quarters.

CAD had touched an unprecedented 6.7% of GDP. Mercandise exports at that time had grown by a

modest 6% to $84.8 billion while services exports had remained flat at $37.8 billion.

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World economy to grow at 2.1% in 2013: UNCTAD report

Remya Nair, Mint

New Delhi, 13 September 2013: Emerging market economies may need to relook their export-led growth

strategies and put controls on capital inflows to ensure macroeconomic stability, a report released by the

United Nations Conference on Trade and Development (UNCTAD) warned at a time when India is taking

steps to attract more foreign investment to bridge the current account deficit and support a weakening

rupee.

In its Trade and Development Report 2013, released on Thursday, the arm of the United Nations warned

that contracting demand for imports from the US could affect export growth in emerging market

economies and potentially impact the trade balance.

“An export-oriented growth model is no longer viable in the current context of slow growth in developing

economies,” the report said.

The world economy is expected to grow at 2.1% in 2013 as against 2.2% in 2012, with countries like the

US expected to grow at a slower rate of 1.7% in 2013 against 2.2% in 2012.

The report said that emerging market economies are importing much more now than before 2008. A large

trade deficit may become unsustainable for developing economies and these countries should focus on

domestic demand and ways to generate employment and improve wages to support growth, it suggested.

The report also says that developing economies should adopt a “cautious and selective” approach towards

foreign capital inflows as these tend to create macroeconomic instability, currency appreciation and fuel

asset-price bubbles. It suggested “pragmatic exchange rate policies and capital account management” to

reduce vulnerability to external financial shocks.

The report sounds a warning bell for India, said Jayati Ghosh, professor of economics at Jawaharlal Nehru

University. “India should look at reducing its current account deficit through reducing imports of gold and

other non-essential items, including luxury goods. There are a lot of items under the import list that we

can produce domestically,” she said.

Ghosh also highlighted the risks of encouraging hot money flows into the country. “A small change in

interest rates by the United States or even a remote hint about some action can lead to such a huge flight

of capital. India should take steps to ensure that the short-term flows are not encouraged. Either they

should be taxed at a higher rate or restrictions should be placed with regards to how and when it can exit,”

she said.

India’s current account deficit rose to 4.8% of gross domestic product in 2012-13 from 4.2% in 2011-12.

The rupee fell to a record low of 68.85 against the dollar on 28 August before recovering after steps were

announced by the new Reserve Bank of India governor Raghuram Rajan. On Thursday, the rupee ended

at 63.54 to a dollar, down 17 paise from Wednesday’s close of 63.37.

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WTO scales down global trade growth projection in 2013

Business Line (The Hindu)

New Delhi, 19 September 2013: The World Trade Organisation (WTO) has lowered growth projections

for global trade in 2013 for the second time, but added that the conditions for improved trade were

already falling into place.

WTO economists now predict growth in 2013 at 2.5 per cent against 3.3 per cent in April and the initial

forecast of 4.5 per cent, an official release said on Thursday. The projection is still higher than the two per

cent growth in world trade achieved in 2012.

The multilateral body blamed developing economies for the lower projections, stating that slower revival

in imports was harming trade. It also expressed concerns about India’s economy still being in the midst of

a sharp contraction.

The slow revival in demand for imports in developing economies has hindered growth of exports from

developed and developing countries in the first half of 2013, and was the reason for the lower forecast, the

economists said.

On a positive note, the WTO believes that the conditions of improved trade are already falling into place

as encouraging data coming from Europe, the US, Japan and China suggest that the economic slowdown

has bottomed out and a tentative recovery is underway. This is expected to be reflected in rising quarterly

growth in the months ahead, the economists said.

While China’s industrial production suggests that the country may be regaining some of its dynamism,

India’s economy is still in the midst of a sharp contraction, according to composite leading indicators

calculated by the Organisation for Economic Co-operation and Development (OECD), the release added.

WTO has also lowered growth projections for 2014 to 4.5 per cent from five per cent predicted in April.

Although the trade slowdown was mostly caused by adverse macroeconomic shocks, there are strong

indications that protectionism also played a part and is now taking new forms, which are harder to detect,

said WTO Director-General Roberto Azevêdo in the release.

“Fortunately, there is something we can do about this. Negotiations underway in Geneva can address

these problems, facilitating greater trade and opportunities to spur economic growth,” he said.

The WTO’s Doha Round of negotiation, in limbo for the past four years, may see some movement in the

Ministerial Meeting scheduled in December in Indonesia, as members are trying to work out a limited

pact on food security and trade facilitation.

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Government weighs trade with some nations in local currencies

Asit Ranjan Mishra, Mint

New Delhi, 18 September 2013: In an attempt to contain a bloated current account deficit (CAD) that puts

pressure on the rupee, the government is considering making it mandatory for trade with a few countries

to take place in local currencies to reduce dependence on the dollar.

The commerce ministry constituted a task force in August to explore the possibility of India trading in

local currencies with some key trading partners. The panel is expected to submit its report in the first

week of October.

India’s CAD touched a record high of 4.8% of gross domestic product (GDP) in 2012-13 and the finance

minister has promised to limit it within 3.7% of GDP, or $70 billion, in the current fiscal.

The high deficit has led to an increase in demand for dollars, contributing to the rupee’s 13% depreciation

against the dollar since January—the most among all Asian currencies except the Indonesian rupiah. The

rupee closed at 63.3750 to the dollar on Wednesday.

The finance ministry released norms for trade in local currencies in August last year, but this did not take

off because it was voluntary. “Unless we make it mandatory, the proposal under discussion will face the

same fate,” a commerce ministry official said on condition of anonymity.

An expert in international finance who did not want to be identified said export lobbies will be against

trading in rupees as they prefer receipts in dollars. “Demand for such arrangements should come from the

industry. It will also be politically difficult to defend,” he said.

India should enter into such arrangements only with countries with which it has a sizable trade deficit and

if they are eager to invest in India, said Ajay Sahai, director general of the Federation of Indian Export

Organisations (FIEO). “Otherwise, the remittances have to be in dollars,” he said.

Sahai said FIEO will prefer such arrangements to be voluntary, but agreed that they may not yield the

desired results if they are optional.

The task force set up by the commerce ministry has been assigned to examine various types of trade in

goods in local currencies and their implication for India’s trade and financial system to study the cost and

benefit of such arrangements and to explore their possibility with trading partners.

The commerce ministry official said one meeting of the task force has been held and it has sought a

response from stakeholders by 25 September. “We will finalize the draft by end of this month and the

group will submit its report in the first week of October. After that, the cabinet has also to clear the

proposal,” the official said.

Unlike currency swap arrangements, trading in local currencies is not backed by central banks. However,

to put such a system in place, both the trading partners should agree. To work, “it should lower the

transaction cost and increase efficiency of the system; paperwork should not increase for traders which

may delay the transaction process”, the commerce ministry official added.

The official said the task force is currently exploring whether to seek trade in local currency with

countries with which India has a deficit, surplus or balanced trade. “While the possible trading partners

with whom India could seek such arrangements are yet to be finalized, countries like China and Japan

have already shown interest,” he said.

For such trading, an exporter invoices in rupee and gets paid in rupees. “For example, if an exporter

exports to China, the State Bank of India branch in China, which has rupees, will settle the payment in

rupees through its Indian branch. Similarly, in the case of an Indian importer from China, a yuan account

has to be maintained here from which the Chinese supplier will be paid in yuan,” the official explained.

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Govt brings more items under duty drawback PTI

New Delhi, 15 September 2013: The government on Saturday rationalised the duty drawback and brought

more items under the scheme for tax refund to exporters to give a boost to overseas shipments.

The revised All Industry Rates of duty drawback, which have been notified, will come into effect from

September 21, a finance ministry statement said.

"Apart from the rate changes, to assist exporters, a large number of rationalisation measures have also

been undertaken to realign entries, provide rates on more items...," it said.

The rationalisation measures is to better differentiate all industry rates for export products with higher

duty incidence and to address classification issues on export products, it added.

"With the revised rates, the central government will continue to support exporters with substantial total

drawback," it said.

The government had taken into account the recommendations of the committee headed by Planning

Commission Member Saumitra Chaudhuri. He is also a member of the Prime Minister's Economic

Advisory Council.

Moreover, the statement said, for expeditiously addressing exporters concerns, the term of the Committee

has been continued for another three months.

The panel was set up to promote exports with "fair and representative" rebate of the incidence of customs

and central excise duties and service tax related with the manufacture of export goods.

India's exports rose to a two year high of 13 per cent in August on account of the improved global

situation.

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PM-Sharif meet to focus on trade

Mihir S Sharma, Business Standard

New Delhi, 26 September 2013: While the situation on the Line of Control in Jammu and Kashmir will

definitely be discussed when Prime Minister Manmohan Singh meets his Pakistani counterpart, Nawaz

Sharif, in New York on the sidelines of the United Nations General Assembly, it was emphasised by

high-level sources on Wednesday that progress on trade would be made, as there is a concrete agenda to

be followed for that.

The sources, who spoke on the condition of confidentiality, said that a significant step forward in

exporting electricity to Pakistan could happen as early as next week. It had been held up, they claimed,

not for political reasons but because the Pakistani side was evaluating its technical and commercial

viability. However, it is believed that process is close to conclusion, and Pakistan may express formal

interest in cross-border electricity trade, sending a delegation on the subject, within a week. Sharif and

Singh are likely to meet on Sunday.

In another significant development, the Nuclear Power Corporation of India Limited, or NPCIL, will

likely move forward within a few days on evaluating the terms of a possible contract with nuclear

supplier Westinghouse. A limited exploratory agreement might be in place between the two companies,

according to the highly-placed sources, before Singh meets US President Barack Obama on Friday. This

is in spite of concerns expressed domestically that US companies, including Westinghouse, wish to dilute

the nuclear liability legislation passed by the Parliament beyond recognition.

A lack of progress in transforming the US-India civil nuclear agreement of 2008 into real projects on the

ground is often cited as a major cause for a chill in bilateral relations. However, officials close to the

prime minister strongly denied that the United States had any ground for disappointment, and suggested

that such claims may just be an American negotiating tactic.

Singh will also make a pitch for more US investment in India. Although the recent diplomatic coolness

between India and the US has been driven in large part by the souring of US business on the India story,

officials insisted that the outreach was not unusual. Reporters were told that a ramped-up pitch for

investment will be the one consistent theme of all major upcoming foreign visits, including to China. The

PM is scheduled to meet a group of US CEOs in New York City later this week.

Fears that this was a lame-duck visit by a PM ending his term in office were rubbished by officials, who

said that regardless of elections or political transitions, there has always been continuity to what New

Delhi has done on national security.

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G20 must find ways of cooperation on issues of emerging economies

ENS Economic Bureau

New Delhi, 19 September 2013: Finance minister P Chidambaram has made a strong case for

encouraging growth in emerging economies at international forums such as the G20.

"Since growth in emerging markets is crucial to the strength of the global economy, it is critical that G20

find ways to develop strong links of coordination and cooperation and take up issues of importance to

emerging economies," he said on Wednesday at a conference organised by ICRIER, warning that

otherwise, G20 may evolve as a loose forum instead of a powerful steering wheel of global governance.

The issue was also taken up at the recently concluded G20 Summit in St Petersburg where emerging

economies raised concerns over the impact of withdrawal of quantitative easing measures by the US on

their growth.

Pointing out that the agenda setting for the G-20 summit has been largely from the viewpoint of advanced

economies, Chidambaram said that emerging markets have accepted this. But given the weak global

recovery, he said, "We should be careful that the pro-cyclical bias should not be a stumbling block in

developing countries."

Chidambaram was also critical of the unwillingness of developed economies to push IMF quota reforms

and stressed that decisions taken at the G20 meeting should be implemented expeditiously to ensure

credibility of the organisation. "Most advanced countries have now clearly indicated their unwillingness

to move ahead on International Financial Institutions (IMF, World Bank) governance and capital reform.

This has hampered the credibility of G20 and makes it difficult to progress on other issues as well," he

said.

Prime Minister Manmohan Singh had emphasised the need for early completion of the International

Monetary Fund (IMF) quota reforms to increase representation of the developing countries in the multi-

lateral body at the G20 summit. Chidambaram also said that to be able to play a meaningful role in the

global governance, the G20 agenda should be sharper and focused only on those issues on which it can

make a distinctive contribution, particularly, on economic and financial matters. "Finally, it is important

to ensure that the decisions taken in G20 meetings are carried forward expeditiously," he said.

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Trade minister on India visit sells Costa Rica as ally for IT, services

Huma Siddiqui, Financial Express

New Delhi, 19 September 2013: Expecting India to become a significant source of foreign direct

investment (FDI) in coming years, Costa Rica is inviting Indian businesses in IT, knowledge and services

fields to set up base there as it tries to strengthen its services sector.

Costa Rica’s minister of foreign trade, Anabel González, along with representatives of the Costa Rican

Coalition for Development Initiatives (CINDE), was in India to launch ‘Essential Costa Rica’ and to

invite Indian companies to the third edition of the ‘Latin America Outsourcing Summit’ in the first week

of December.

In an exclusive interview to FE, Gonzalez said, “The visit was aimed at presenting the advantages of

Costa Rica as a number of major companies offer value-added services, for which they require an ally in

the Americas.”

“There is great potential for strategic alliances between Costa Rica and India in areas of business process

services, knowledge process operations, digital animation and software development, among others,” she

said.

According to the visiting minister, "The new country brand, well-positioned and managed, will allow us

to express a consistent and articulate central idea of the country, differentiating it from its competitors.

This is key to enhancing foreign direct investment and promoting exports and tourism”.

"The December summit aims to educate vendors, buyers, c-levels, decision-makers, consultants and

multinationals looking for either captive or outsourcing solutions in Latin America on the opportunities,

trends, best practices and, more specifically, IT innovation, process standardisation, human resource

retention, increasing business value, quality improvement, creativity and user experience," she pointed

out.

"Over the past four years, we have made a significant effort to diversify sources of FDI. In case of India,

we have sought to position the country as the best option for Indian companies looking to start operations

in the Americas. "

"In fact, five of the largest ‘service sector’ Indian companies, including Infosys, CSS, Aegis, WNS and

Amba Research, are currently considering expansion in the Costa Rican market. The companies are

attracted because of our proximity to and time zone compatibility with the US as well as the quality of

human resources and the positive business climate."

"Their success stories in Costa Rica allow us to demonstrate better the country's capacity and help attract

other Indian companies," Gonzalez pointed out.

According to Gonzalez, "The IT companies in Costa Rica are into multilingual operations, such as in

English, Portuguese and Spanish."

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India, a headache for US IT firms

PTI

Washington, 26 September 2013: The influential American IT and telecom industry on Wednesday

sought intervention of the Obama Administration against what they alleged are “discriminatory” Indian

policies, which they claimed has resulted in several hundred millions of dollars of losses in the last

quarter.

“In discussions with our member companies, we have quantified the potential Q4 losses at several

hundred million dollars, with billions of dollars of lost exports and sales at risk in 2014 if these

requirements remain in place. If left in place, these policies could shut out US technology companies from

a critical emerging market,” information technology industry council said in a letter to Obama

Administration.

The letter dated September 24 against India’s “compulsory registration order” which goes into effect on

October 3, has been jointly written to the US commerce secretary, Penny S. Pritzker; the US trade

representatives, Mike Froman, and the Caroline Atkinson, the deputy national security advisor to the

United States President for international economic affairs.

Under the new “compulsory registration order” issued last year by the department of electronics and

information technology, the ITIC alleged that the new equipment cannot be imported into or sold in India

after April 3, 2013, which now has been extended to October 3, unless it is tested and registered with

Bureau of Indian Standards-approved testing labs in India.

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Russia to review decision on allowing buffalo meat from India

Business Line (The Hindu)

New Delhi, 20 September 2013: Russia has agreed to hold a review on allowing import of buffalo meat

and egg powder from India next month and has assured a satisfactory resolution of the issue.

The issue, discussed between Commerce and Industry Minister Anand Sharma and his Russian

counterpart Denis Manturov in St Petersberg, is important as Russia is a large importer of bovine meat

and India is one to the top exporters of the same.

Russia recently lifted a temporary ban on import of rice/rice cereals and peanuts that was placed after

traces of khapra beetle was found in some rice and peanuts consignments.

Sharma pressed for regulatory simplification for supply of Indian generic medicines to Russia. He said

that as Indian pharma companies are keen to establish manufacturing facilities in Russia, it is imperative

that the Government addresses their concerns in an expeditious manner.

Both sides agreed that that there was considerable scope of cooperation in modernisation of steel

manufacturing facilities. Sharma was informed that Russian companies in power sector are keen to

participate in modernisation of old power plants and heavy engineering units based in India.

While acknowledging India’s efforts in opening up the economy further, the Russian Minister said it was

important to maintain regulatory certainty and stability in policy regime.

He was alluding to the problems faced by Russian telecom company Sistema in India after the Supreme

Court cancelled its licences as a fallout of the 2G scam.

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Agri exports fall 19% in Q1

Namrata Acharya, Business Standard

Kolkata, 13 September 2013: In the first quarter of the current financial year, India’s agricultural export

was down 19 per cent in terms of value over the last year, primarily on the back of lower exports to the

US and Bangladesh.

India’s total agri-export in the first three months of the last financial year was $6.36 billion, which

tumbled to $5.18 billion in the present financial year, data from Agricultural and Processed Food Products

Export Development Authority showed.

Exports to the US were down by 59 per cent, at about $ 793 million between April-June this year over the

last year. A price crash of guar gum, the highest exported agri-commodity to the US from India, has been

one of the biggest reasons for the decline in exports. Guar gum exports to the US fell 63 per cent in terms

of value, but remained flat in terms of quantity, over a year’s time. Last year saw an unexpected spurt in

guar gum prices due to bulk purchase from US shale gas companies in the beginning of the year and very

low demand by the end of the year. The prices fell from about peak prices of Rs 1,025 a kg in April-May

2012, to Rs 200 per kg by October-December 2012.

Apart from the US, India’s exports to Bangladesh also saw a substantial fall in value, 66 per cent over a

year’s time at $87 million. Last year, India exported jaggery and confectionery worth $150 million to

Bangladesh, against nil in the first quarter of the present financial year.

However, the positive news for India comes from Iran, which saw a 140 per cent jump in export value in

the first three months of the financial year at $682 million. The export growth was driven by exports of

Basmati rice to the country, which saw a 160 per cent or three fold rise in realisation over a year’s time.

Iran accounts for 40 per cent of India’s Basmati exports, which were dented by the payment crisis last

year.

In terms of product mix, Basmati has emerged as India’s top export commodity from India, followed by

buffalo meat and guar gum, in the first quarter of the this financial year. India’s Basmati rice export

increased by 62 per cent, while that of guar gum fell by 59 per cent in the first quarter. Buffalo meat

exports, currently, India’s second largest agri-export commodity in terms of value, increased by 20 per

cent in a year’s time.

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To curb onion exports, minimum price hiked

ENS Economic Bureau

New Delhi, 20 September 2013: With wholesale and retail price of onions rising sharply, the government

today increased minimum export price (MEP) to $900 per metric ton, up $250 per metric ton, to curb

export.

"Export of onion...classification of export and import items shall be permitted subject to a minimum

export price of $900 per metric ton or as notified by DGFT from time to time," the government said in a

notification.

The current MEP of $650 per metric ton was imposed on August 14. After the MEP was imposed, onion

exports declined to 29,247 ton in August from 1,56,283 ton in the same month last year. In value terms

too, export declined to Rs 125.46 crore from Rs 164.92 crore in the review period. During the April-

August period this fiscal, onion exports fell to 6,97,028 ton against 8,50,634 ton in the year-ago period.

However, in value terms, the outbound shipments rose sharply to Rs 1,341 crore from Rs 844 crore in the

said period. The government had abolished MEP in May 2012, allowing traders to take advantage of

rising prices in global markets.

However, despite the measure, the retail price of onion has not softened, hovering at Rs 70-80 per kg in

Delhi. The state government has announced it will again start selling the vegetable at Rs 60 a kg, at 1,000

points across the city through vans. The Centre has also asked all state governments to come down

heavily on hoarders and speculators, who, it suspects, are keeping price of the vegetable artificially high.

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Tea exporters losing out to Kenyan rivals

Rutam Vora, Business Standard

Vadodara, 18 September 2013: Bumper Kenyan tea production, coupled with the quality issues faced by

Indian tea, have hampered exports. According to trade estimates, tea exports from India during the first

half of the current financial year dropped 15-20 per cent as compared to the same period last year.

Exporters have expressed concern over losing market share to Kenyan tea, while traders maintain that

stricter compliance norms set by the Indian government for tea exports are also a factor. “Kenya is

encroaching on India’s export market. It is time to boost our exports to fight competition from Kenya,”

said Chetan Patel, Secretary of the Federation of All India Tea Traders Association (FAITTA).

However, with exports slowing, domestic tea prices have started showing signs of softening. “Prices may

start falling as more tea will be available in the second half of the year,” said Patel. Experts see a silver

lining as demand from overseas markets will help exports gain momentum in the second half. “The

business is driven by demand-supply economics. We see more demand coming up over the next few

months, so we are hopeful of exports rising,” said Azam Monem, Director, McLeod Russel India Ltd.

India exports 210-215 million kg every year. In 2011-12, the country exported 214.35 million kg, while in

2012-13 the figure was six million kg more at 220.5 million kg.

Traders and exporters have raised the issue of strict quality compliance for exports. “It is difficult for

some of the finest tea gardens to pass all the 20 criteria set by the government. This has adversely affected

exports, and it is visible from the data,” said a tea exporter from Mumbai. “Many companies are failing to

meet the required quality norms. The 20-point quality compliance schedule is tough to meet,” said a

member of the FAITTA.

Tea exporters find the exercise unnecessary as many countries are ready to accept Indian tea

consignments without having been certified under the new norms. However, experts note that strict

compliance is in the interest of the industry as it will ensure better quality.

According to Monem Indian tea’s image was suffering due to poor quality. “There are some cases of

rejection. But that is in the interest of the industry as a whole,” he said.

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Vegetable oil imports fall 15.5% in August

PTI

New Delhi, 14 September 2013: Vegetable oil imports fell by 15.52% during the last month to 7.57 lakh

tonnes due to volatility in the rupee’s value, according to the trade data released Friday.

Imports of vegetable oils, comprising edible oil and non-edible oils, stood at 8.97 lakh tonnes in the same

month last year.

"Import during August decreased due to rupee volatility," Solvent Extractors' Association said in a

statement.

However, the total import of vegetable oils during November 2012-August 2013 increased by 8% to

87,92,383 tonnes compared to 81,62,545 tonnes in the year-ago period. The oil year runs from November

to October.

"The rupee has suddenly fallen in the last few days and touched R68.36 a dollar on August 28, 2013 and

now rested at R63.59 (September 12), putting pressure on import of vegetable oils," SEA said.

The association also noted that during the last one year, RBD Palmolein has fallen by $195 (19%), CPO

by $171 (17%), crude soybean oil by $326 (26%) and crude sunflower oil by $202 (16%). Total stock,

both at ports and pipelines, is estimated at 16,85,000 tonnes compared to 19,90,000 tonnes in the previous

month.

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Indian apparel exports to touch $17 bn: AEPC

PTI

New York, 19 September 2013: The Indian apparel industry is witnessing an upswing and the exports are

likely to go up from $13 billion last year to $17 billion in the next two years on the back of economic

recovery in the US and Europe, according to Apparel Export Promotion Council.

"Indian apparel exports have picked up in the last six months compared to negative growth in the previous

two years," A Sakthivel, Chairman of Apparel Export Promotion Council (AEPC), said on the sidelines of

the Buyer-Seller meet inaugurated by Indian Consul General in New York Dnyaneshwar Mulay at Penn

Plaza Pavilion in Manhattan.

About 30 apparel manufacturers from across India are showcasing their readymade garments to American

buyers at a two-day Fashion Buyer-Seller Meet, which began on Wednesday. The event is being

organised by AEPC of the Ministry of Textiles in New York.

The orders that went to neighbouring countries came to India due to industry compliance issues in those

nations, resulting into huge business, he said.

"The Indian apparel industry is compliance-oriented and we follow all the rules of the game. The

atmosphere looks good now and these factors have helped a lot besides depreciation of rupee that is

helping the industry to a certain extent," Sakthivel said.

At the same time, the manufacturing cost is also going up simultaneously due to the depreciation of rupee,

he said.

The coming years will be a boom period for the Indian apparel manufacturers amid the industry growing

by 14 per cent till August this year, AEPC chairman said.

On competition from China, he said Beijing is one of the biggest competitors for India but the cost of

manufacturing has gone up over the years in that country.

"We also see a shift in workers interest who does not want to stick to the garment industry. Labourers are

moving away from the garment industry to sectors like IT. All these factors are pushing up the cost of the

final product.

"India is known for value added exports like embroidery sequence and especially ladies wear. The

country has always been a key player in cotton apparel exports. The neighboring countries are not very

competitive in this segment, he said.

Besides, traditional centres like Tirupur and Jaipur, units in Delhi, Noida, Ludhiana, Bengaluru and

Chennai are doing well. The units in Mumbai are moving towards South especially to Bengaluru due to

high cost.

Sakthivel, also a prominent exporter from Tirupur in Tamil Nadu, said Tirupur has seen increase in

exports to the tune of 15 per cent in the last six months and the city's USP still remains knit wear, which is

being sold to all the major retail stores and outlets in the US and Europe.

On the issue of power shortage in Tamil Nadu, he said the industry does not need much power and

moreover the situation has improved now.

Tamil Nadu is improving in power and there is no concern in that front, he said.

On up-gradation of skill sets of workers, he said AEPC has started 175 training centres all across the

nation to impart training.

These Apparel Training and Designing Centres not only train workers and supervisors but impart latest

knowledge, he added.

Sakthivel, who was made Chairman of the Prime Minister Special Sector Skill Council in apparels, said

the Government of India gives top priority to industry upgradation and knowledge improvement.

He said universities and engineering colleges play a key role in providing trained manpower and also

assist the industry in honing up the skill set of workers.

"For instance, there are 12 colleges in Coimbatore that impart various courses in textiles, fashion design,

machinery and tools and graduates are absorbed immediately.

"The pollution of textile units has no longer been an issue in the last two years as all the units are

upgraded to the satisfaction of the government and the industry," he added.

Indian apparel manufacturers have become global players and most units are global compliance-oriented.

The American and European buyers have expressed utmost satisfaction as we are WRAP and ISO 9000

certified to meet the stringent needs of the industry.

Indian exporters are in touch with US buyers and have traditional understanding as we are good in

deliveries and adherence to compliance, he said.

Sakthivel, who took over as AEPC Chairman for the third time in 2012, said he helped shape the direction

of the industry from doing business with traditional players to venturing into new markets.

"We went to Japan, South Africa, South America, Israel and Australia to name a few with a view to

improving business in non-traditional markets," he said.

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Gold jewellery exports nearly halve in August

Reuters

Mumbai, 24 September 2013: Exports of gold jewellery from India nearly halved in August to $561

million, a leading industry body said on Tuesday, although they picked up from July, when the Reserve

Bank of India (RBI) tied imports by the world's biggest bullion buyer to its overseas shipments.

The amount of gold jewellery India exports now directly impacts gold imports by the world's biggest

buyer of bullion, as the government tries to curb a bulging current account deficit.

Exports fell in August to $561 million, the Gems and Jewellery Export Promotion Council said in a

statement, after a fall of 70% in July to $441.4 million. Efforts to stem buying of gold, the second-biggest

item in its import bill, include a rule that 20% of all imports must be turned around and sold for export as

jewellery.

But confusion over how the rule would work had virtually stopped imports since the end of July. They are

expected to resume soon after a high level meeting of government officials last week to clarify the rules.

India shipped $2.68 billion worth of gold jewellery in value terms from April to August, down 59.4% on

year.

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Steel exports get push from weaker rupee, new markets

Ruchira Singh, Mint

Mumbai, 15 September 2013: Indian steel makers are tapping new markets, creating more value-added

products and selling directly to clients as they try to export more to take advantage of a weaker rupee that

is making Indian steel products more competitive in the global market.

India has traditionally exported only a miniscule portion of its 78 million tonne (mt) annual steel

production. With the domestic market seeing lower demand, steel makers have made bigger inroads

overseas and analysts are forecasting a substantial rise in exports this fiscal year.

“If we see the actual destinations where the stocks are going, India can cover nearly the entire world

map,” said Prakash Duvvuri, head of research at metal and mining information website OreTeam. “Indian

steel is in good demand, mainly due to its quality and competitive price.”

Duvvuri forecast a 25% jump year-on-year in steel exports at 6-7 mt in the year to March.

The rupee closed at Rs.63.495 to a dollar on Friday, a 13.39% fall from the beginning of 2013.

While steel companies said they had been selling steel at prevailing global prices, Duvvuri said 3-5%

discounts were being offered on major orders.

One of the biggest gainers of the exports push is Essar Steel India Ltd with its port-based 10 mt steel plant

in Hazira in Gujarat, where it also owns a bulk port to facilitate the import of raw materials and export of

steel.

“There are three or four interesting opportunities that are emerging. One of them is Iraq where there is

bound to be focus on infrastructure growth,” said Alok Gupta, president, sales and marketing, at Essar

Steel. “The second market is the oil and gas segment. We are now approved by GASCO (Abu Dhabi Gas

Industries Ltd). We are in the process of getting all the critical approvals and, therefore, one of the

markets we are very focused on is the API (American Petroleum Institute) market for oil and gas.”

API provides standards for steel products that are used in the hydrocarbons industry.

Essar Steel is aiming to increase its exports by 20-25% this fiscal year from 1.1 mt in the year-ago period.

“Although steel demand is generally subdued in most major markets, some products have a relatively

good demand in some countries,” said C.S. Verma, chairman of Steel Authority of India Ltd (SAIL). The

state-owned firm is aiming to almost double its exports this fiscal year to 700,000 tonnes. Worldwide,

hot-rolled steels, plates, cold-rolled coils and galvanized steels constitute the bulk of the products traded,

according to Verma.

India’s GDP is seen growing at 5.3% in 2013-14 from the actual growth of 5% in the preceding fiscal

year. For the steel industry, where growth mirrors GDP, this means fiscal year 2014 may be another year

of muted local demand. Export markets, therefore, may provide some comfort, despite the competition

from Chinese and Taiwanese steel makers.

Moreover, the weak Indian currency has also raised the cost of importing coking coal for steel companies,

and exports are helping clear some inventory that has resulted from the big capacity expansions.

Steel makers said the mantra for success in the exports market, other than new segments (such as Iraq and

oil and gas), is value-added steel that fetches higher margins and direct contact with buyers that ensures

stickiness.

“Fifty per cent of our exports go directly to customers and the rest goes to trading houses that buy from us

and sell to users,” said Jayant Acharya, director, commercial and marketing, JSW Steel Ltd.

JSW Steel, with clients in 90 countries, expects to export more than 3 mt of steel in this fiscal year from a

total targeted sale of 11.55 mt, Acharya said.

Current international prices of steel range from $570-$580 a tonne, higher than $525 last year in

September, according to Gupta of Essar Steel. Value-added steel, he said, fetched 1.5 times more on base

steel prices and, therefore, the company is exporting more of these.

While India’s traditional steel markets have been in the neighbourhood—Sri Lanka, Middle East and Far-

East Asia—the new markets have stretched up to Australia and Central America, Essar’s Gupta said.

“Our focus is to own the last mile by building a relationship with the end user,” Gupta said, underscoring

the strategy to reduce dependence on agents.

While the move to increase exports is a good one, it may not necessarily lead to a significant boost in the

net profit of the companies, said an analyst at Centrum Broking Ltd.

“The rupee’s depreciation has helped exports, but costs have also been increasing because coking coal is

imported. Plus globally, steel prices have been under pressure,” said Abhisar Jain, vice-president,

institutional research at Centrum Broking. “Steel export is an opportunistic kind of a trade at this time…it

may have a mitigating impact on volumes (inventories).”

SAIL said the bigger role of the exports was to hedge the company against the volatility of the currency.

“Exports’ contribution in terms of turnover was 2.4% of total turnover of SAIL during 2012-13. Based on

the export plan for the current year, this is likely to go up to more than 4% of our turnover during 2013-

14,” SAIL’s Verma said. “Keeping in view the weak rupee, and our exposure to imports of coal, higher

export turnover is likely to insulate us better from the vagaries of currency volatility.”

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Panel recommends complete ban on iron ore exports

Dilip Kumar Jha, Business Standard

Mumbai, 18 September 2013: The parliamentary standing committee on coal and steel has recommended

a ban on iron ore exports, arguing mineral reserves would be exhausted within 25 years if exports

continued.

The committee, chaired by Kalyan Banerjee, a Trinamool Congress Member of Parliament and

comprising 22 other members from both Houses of Parliament, was mandated to give a report on iron ore

export policy to the steel ministry. It met on August 26 to overview the status of mining and iron ore

exports in the country.

“In view of the free trade of iron ore (up to 64 per cent Fe content) and export of higher grade of iron ore,

the government should take immediate necessary policy measures not only to ban the export of iron ore

reserves of higher grade, but also of the ore with up to 64 per cent Fe content, currently allowed freely. In

view of the limited benefication agglomeration facilities in the country, the committee feels high grade

iron ore with Fe content of more than 64 per cent from Bailadila, Chhattisgarh, which can be used by

existing steel plants, should not be permitted for export and be made available to meet the requirement of

the domestic steel industry,” said the panel’s report.

R K Sharma, Secretary General of the Federation of Indian Mineral Industries, says the recommendation

is one-sided. “The committee has not taken views from all interested parties, including the ministries of

commerce and mines, and mining industry representatives. The report is purely based on the one-sided

view of the steel ministry. Therefore, the recommendation does not have any meaning.”

The committee said against the 28.52 billion tonnes (17.84 billion tonnes of haematite and 10.64 billion

tonnes of magnetite) of iron ore resources in the country, 37 per cent of the magnetite resources, of the

total iron reserves, weren't available for mining due to the Supreme Court-imposed prohibitions in

Western Ghats and other sensitive environmental zones. Also, only about 18 billion tonnes (less than half

the proved reserves) are economically exploitable. The committee said currently, steel production in the

country was more or less commensurate with the demand, but a working group on the steel industry for

the 12th Plan had projected a requirement of 206.2 million tonnes by 2016-17, against the total iron ore

requirement of 135.7 million tonnes in 2012-13.

Pointing to the fact that millions of tonnes of iron ore were being exported and iron ore in India wouldn't

last more than 25 years and considering the production and demand projections, the committee

recommended there was an immediate need to reduce iron ore exports for the sake of India's steel

industries.

“When the rupee depreciated, iron ore exports become viable at the current 30 per cent levy and four

times the increased railway freight. But now, exports aren't viable. If the ban on exports continues, mining

would suffer, leading to immediate repercussions on the steel industry and employment generation, which

the committed didn't look into,” Sharma said.

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India may slap safeguard duty on sodium nitrite imports

PTI

New Delhi, 22 September 2013: India may impose safeguard duty on import of sodium nitrite, a

chemical used by textiles and pharma industries, to protect domestic producers from "serious injuries"

caused by the rising inward shipments.

Acting on a complaint of domestic producers of the chemical, the Directorate General of Safeguards

(DGS) in the Finance Ministry carried a probe and concluded there has been a significant increase in

imports and recommended levy the of the safeguard duty.

"Increased imports of sodium nitrite into India have..., caused and threaten to cause serious injury to the

domestic producers...and it will be in the public interest to impose safeguard duty on imports of Sodium

Nitrite...for a period of one year and three months," said the DGS in its 'Final Findings'.

It has recommended the duty at the rate of 30 per cent ad valorem for the first year and 28 per cent ad

valorem for last three months, which is "considered to be the minimum required to protect the interest of

domestic industry".

Sodium nitrite is imported from several countries, and primarily from China and Germany. China

constituted 81 per cent of total imports in India in 2012-13.

Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain time-frame to

avert any damage to domestic industry from cheap imports.

The final findings and the recommendations of DGS is considered by the Standing Board on Safeguards

headed by Commerce Secretary. Then the views of the Board are placed before the Finance Minister for

approval in respect of safeguard duties and to the Commerce Minister for imposition of quantitative

restrictions.

The chemical is mostly used in pharmaceutical, dye, meat processing and textiles industries, among

others.

The imports increased from 14,290 MT in 2009-10 to 22,162 MT in 2012-13. The domestic producers

had a market share of 55 per cent in 2010-11 which declined to 41 per cent in 2012-13. On the other hand,

the market share of import increased from 35 per cent in 2010-11 to 45 per cent in 2012-13.

The domestic producers of the chemical include Deepak Nitrite Ltd (Pune), Punjab Chemicals &

Pharmaceuticals Ltd (Chandigarh), National Fertilizers Ltd (Noida), and Rashtriya Chemicals and

Fertilizers (Sion, Mumbai). Deepak Nitrite Ltd is the last producers of the chemical in the country.

The DGS used data for the period 2009-10 to 2012-13 for the investigations.

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Japan to soon resolve chemical issue in Indian shrimp

PTI

New Delhi, 12 September 2013: Indian shrimp exporters would soon be able to enhance their shipments

to Japan as the later has agreed to resolve the issue pertaining to the chemical used as feed and

preservative for the marine product by end of the year.

The matter was raised by Commerce and Industry Anand Sharma during his meeting with Japan Minister

of Economy, Trade and Industry Toshimitsu Motegi here yesterday.

"Japan has agreed to resolve the issues facing Indian marine exporters regarding the level of Ethoxyquin

in shrimps by the year end," on official statement said.

Sharma has conveyed the Japanese Minister that Indian products meet the standards of sensitive markets

like the EU.

Sharma has asked Motegi, who is leading a business delegation, to expedite the matter within a specific

time frame.

"We have received the request. The concerned agencies are engaged with the same. They have been asked

to look into a solution by year end," the statement quoting Motegi said.

Shrimp exports to Japan, one of the major buyer countries of the seafood, has been severely hit after the

Japanese authorities said they detected ethoxiquin in the shrimps, an antioxidant used as a preservative

and also used in shrimp feed.

Japan, which has lowered the acceptable level of ethoxyquin in shrimps, had rejected several Indian

consignments of the seafood.

Odisha and West Bengal are the major shrimp exporters. In 2012-13, export of frozen shrimp has declined

by 11 per cent in quantity terms and 22 per cent in dollar terms mainly due to the ethoxyquin issue.

Prime Minister Manmohan Singh too had raised the issue in light of the fact that the move has severely

affected the marine export from India.

Further, the statement said India and Japan has yesterday charted out a roadmap to boost investment.

"Japan has shown tremendous interest that will lead not only to foreign investment flows, but also bring

in a culture of quality and high-end management practices in Indian industry along with creation and

strengthening supply chains," Sharma said.

Bilateral trade between the two countries was USD 18.51 billion in 2012-13. Besides, India has received

USD 14.75 billion FDI from Japan between April 2000 and June 2013. The Japanese investment accounts

for 7 per cent of India's total FDI.

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US not to impose countervailing duty on Indian shrimp exports

PTI

New Delhi, 23 September 2013: The United States has said it will not impose countervailing duty on

imports of frozen warm water shrimp from India and six other countries.

The United States International Trade Commission (USITC) has said that the US industry is "neither

materially injured nor threatened with material injury" by reason of imports of frozen warm water shrimp

from countries including India, China, Ecuador, Malaysia, and Vietnam.

As per the WTO Agreement on Subsidies and Countervailing Measures, a country can launch its own

investigation and ultimately charge extra duty (countervailing duty) on subsidised imports which it finds

are hurting domestic producers.

"As a result of the USITC's negative determinations, US Commerce will not issue countervailing duty

orders on imports of these products from India. The decision brings a great relief to Indian shrimp

industry and its exports," an official statement said today.

According to an industry estimate, India's seafood exports including frozen shrimp stood at USD 3.5

billion in 2012-13. About a fifth of the exports were to the US.

The decision comes ahead of Prime Minister Manmohan Singh's scheduled visit to Washington later this

week.

The USITC imposed a 5.85 per cent countervailing duty on Indian shrimp exports last year in response to

alleged price advantages enjoyed by Indian exporters due to government subsidies.

The final decision of the USITC came in favour of India and six other countries and negate the US

Department of Commerce's (USDOC) decision.

"Due to this, none of the seven countries including India need to pay duties for their shrimp exports to

US," it said.

In December 2012, the Coalition of Gulf Shrimp Industries filed a petition claiming that subsidies

provided by the Indian government to its shrimp industry gives an unfair advantage to the country's

shrimp exports to the US, resulting in Indian exporters selling their products at lower prices.

It also said that if countervailing duty was imposed, it would have helped Thailand and Indonesia to

monopolise the US shrimp market, and market access of Indian shrimp would have been affected.

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WTO Members Make Progress On Bali Package, But Deal Not A Sure Thing

Matthew Schewel, Inside U.S. Trade

20 September 2013: World Trade Organization members are narrowing their differences in newly

invigorated discussions over a package of trade concessions for a December ministerial meeting in Bali,

but sources said it is still too early to tell whether this progress will be enough to deliver a deal in time.

In particular, key WTO members are moving toward a potential compromise on several of the proposed

agriculture and development components of the Bali package, according to Geneva sources. The third

pillar of the package is a trade facilitation agreement, although developing countries have made clear that

they will not let a trade facilitation agreement come to fruition unless their priorities in agriculture are

addressed.

On agriculture, key WTO members -- including the U.S. and India -- have coalesced around the idea of a

temporary "peace clause" as a way to handle a controversial food security proposal championed by India,

according to Geneva sources. This peace clause would shield certain food security programs from being

challenged under the WTO, although the details are still under negotiation, sources said.

The food security proposal has been controversial since it was introduced last November by the G-33

group of developing countries, of which India is a member. The U.S. has argued it would undermine

WTO agricultural subsidy disciplines because it would provide an exemption from domestic subsidy

commitments for food security programs, under which governments buy food from local farmers at

higher than normal prices in order to distribute it to vulnerable populations.

Other parts of the agriculture pillar of the Bali package are separate proposals by the G-20 group on

export subsidies and on the administration of tariff-rate quotas (TRQs). One outstanding issue on the

TRQ administration proposal is the political decision on whether its obligations apply to both developed

and developing countries, sources said. The U.S. has pressed for the proposal to apply to all WTO

members, which is a controversial position, according to one Geneva source.

Sources said negotiators are still divided over the export subsidies proposal, which would require

developed countries to reduce their scheduled export subsidy commitments by 50 percent by the end of

this year. The U.S. and EU are strongly objecting to that proposal, even though the amount of export

subsidies they currently offer is probably already below the 50-percent target, according to one Geneva

source. But these countries want to ensure that they have the space to offer export subsidies again if

commodity prices go down, this source said.

Another source backing the G-20 proposal said all WTO members appear to have agreed that there needs

to be some sort of outcome on export subsidies in Bali, although they still disagree about whether it

should be a binding outcome or a nonbinding political commitment to seek reforms in the future.

These advances have come over the past two weeks in a series of meetings set up by newly appointed

WTO Director-General Roberto Azevedo involving roughly 30 key WTO members. The meetings have

been at the Geneva ambassador level with the exception of a September 19 session of senior-level capital

officials. The process is expected to continue next week, during which the Trade Negotiations Committee

is also slated to meet.

One Geneva source said that although WTO members are working towards landing zones on the various

agriculture issues, it remains to be seen if this progress will be enough to unlock the negotiations on trade

facilitation.

Several sources said all WTO members agree that the negotiations have to be concluded before the Bali

meeting -- meaning there can be no last-minute negotiating by ministers. Two sources said Azevedo

wants the final tradeoffs for the deal identified by the end of October, and another source said the deal

needs to be completed and sent to capitals by mid-November.

In an interview this week, South African Trade Minister Rob Davies said that Azevedo has "got time

against him" in trying to cobble together the Bali package. The negotiations taking place now should have

taken place in April after a meeting of trade ministers in Paris on the margins of the Organization for

Economic Cooperation and Development ministerial, he said.

But Davies stressed that a deal can be done if WTO members show the right kind of flexibility. If that is

the case, "I have no doubt it can be done," he said. "Whether it will be done, I am not prepared to bet on."

The peace clause was one of three options endorsed by the G-33 in a new paper on the food security issue

it presented last week during the ambassador-level meetings convened by Azevedo. The other two

options, which involved changing the way subsidies commitments are calculated, were dropped after

being branded by some WTO members as too ambitious to achieve in the limited time remaining ahead of

the Bali meeting.

The details of the peace clause that are now being hashed out include how long it would last, what

conditions these programs would have to meet to be protected, and what reporting and transparency steps

would be required of governments undertaking them, according to these sources. Also under discussion is

whether a country's food security program will be automatically able to use the clause, or whether the

country would have to request approval from the WTO members to use it.

The G-33 paper tabled last week proposed the peace clause as a temporary solution that would stay in

place until WTO members reached a more permanent agreement to address worries by India and other

developing countries that their public stockholding programs aimed at promoting food security could put

them over their limits for trade-distorting "amber box" subsidies.

Some WTO members have balked at the idea of an indefinite duration of the peace clause, arguing that

this would remove the incentive for its users to pursue a permanent solution on food security. These

critics have sought a narrower timeframe for the peace clause, and officials are continuing to discuss what

would be an appropriate duration, sources said.

Another point of discussion is what conditions public stockholding programs would have to meet in order

to qualify for safe harbor under the peace clause. Among the conditions being discussed are that these

programs would have to be minimally trade distorting and actually be related to food security, as opposed

to being a disguised measure to help domestic farmers, according to one Geneva source.

The components of the development package have been significantly scaled back, according to Geneva

sources. One of the main development proposals still under consideration is a mechanism to monitor how

the special and differential treatment obligation in specific WTO agreements is being applied.

The other is a proposal tabled this week by least developed countries (LDCs) that would simplify rules of

origin to allow them to more readily access developed country markets. One Geneva source said this

proposal is viewed as a good basis for conversation, although another source maintained that it is way too

complicated to be implemented in the short time remaining before Bali.

Other elements that had been discussed as part of the development pillar appear to have fallen by the

wayside. For instance, the African group of countries has pulled back its demand that the Bali deal

include a decision on specific language laying out flexibilities for developing countries in 28 WTO

agreements, sources said.

The LDC group has also failed to move forward with proposals on cotton subsidies and implementing

duty-free, quota-free access for LDC exports in developed country markets due to internal disagreement,

sources said. Sources have said that Haiti and Lesotho oppose the DFQF proposal, which they fear would

undermine unilateral trade preferences currently granted to them by the United States.

One source said that with nothing moving on cotton subsidies, it will be important to ensure that technical

assistance continues to the four West African cotton producers hurt by the U.S. and other subsidizers.

[Back to top]

Negotiations for a deal at WTO’s Bali meet stuck over food security

Asit Ranjan Mishra, Mint

New Delhi, 25 September 2013: Negotiations for a deal at the Bali ministerial meeting of World Trade

Organization (WTO) members scheduled for December are stuck over the tenure of an interim resolution

to the demand by G-33 developing countries on food security.

While the 33 developing countries (G-33) led by India are demanding the tenure should be 10 years,

developed countries like the US are ready to accept an extension only by two or three years.

In the absence of a broad-based agreement on the Doha round of trade talks that started in 2001, member

countries are making a last-ditch attempt to work out areas where a consensus could be reached.

India has been demanding a balanced outcome from the WTO ministerial in Bali with the interest of the

so-called least developed countries (LDCs) and developing nations at its core.

While developed countries are projecting trade facilitation as a sure thing at the Bali ministerial meeting,

developing countries want a deal to allow them to increase their ceiling on food subsidies above what is

permissible at present.

“Developed countries are saying they are ready for a peace clause for a period of two to three years.

Developing countries are saying if there has to be a peace clause, it should be an interim solution till a

permanent solution is found, so that there is pressure on the developed countries to find a permanent

solution,” a government official said speaking on condition of anonymity.

A so-called “peace clause” in WTO parlance gives legal security to member countries and protects them

from being challenged under other WTO agreements.

The official said the G-33 countries are of the opinion that if the peace clause has to be time bound, it

should be for 10 years. “In the Uruguay round also, the peace clause was implemented for eight years,” he

added.

Developing countries also think the proposal on table at present on trade facilitation only increases the

burden on developing countries by forcing them to upgrade their export infrastructure without any

reciprocal commitment on the part of developed countries for financial assistance or technology transfer.

“The G-33 has been saying that don’t only look at trade facilitation from your export point of view. The

second pillar of trade facilitation is about special and differential treatment to developing countries.

Developed countries do not want to talk about that,” the official said.

He added that even section 18.4 of the Agreement of Agriculture under WTO rules has a provision to give

due consideration to excessive inflation while calculating subsidies. “If you adjust for excessive inflation,

then our food subsidy is nothing,” he said.

If the ceiling for food subsidy is not increased, then at its present level, India may cross the ceiling within

three-four years. Subsidy cannot extend 10% of the total value of the production of that product.

Through the newly enacted food security law, the government commits to provide subsidized foodgrain to

two-thirds of the country’s population, thus putting additional subsidy burden on the government.

India apprehends this new commitment on food subsidy may be interpreted as a violation of permitted

subsidy under WTO regulations. India argues such food procurement for the purpose of food security

should be kept out of its commitments under WTO. India has also been arguing that food subsidies help

its poor and marginal farmers to fight hunger and malnutrition, which are the key pillars of the

Millennium Development Goals.

WTO director-general Roberto Azevêdo, who is scheduled to visit India on 7 October after attending the

Asia-Pacific Economic Cooperation meeting in Bali, is also expected to try to convince Indian trade

minister Anand Sharma to push for a deal at Bali later this year.

“We will tell him that we are not being obstructionist for a deal at Bali. If developed countries agree on an

interim arrangement on the peace clause, then we should not have a major problem with trade facilitation.

You give us in one hand and take it in the other hand,” said a second government official, who also spoke

on condition of anonymity.

Azevêdo in his first statement to the Trade Negotiations Committee as chair on 23 September had said

though he is encouraged by the progress on the Bali agenda, negotiations have to be expedited. “The

absolute need for close and more political effort cannot be understated. I want capitals to continuously

engage and I will be delivering this message to ministers as well in the near future,” he said.

Abhijit Das, head and professor at the Centre for WTO Studies under the Indian Institute of Foreign

Trade, said an interim solution will be meaningful only if the peace clause is of a sufficiently long

duration. “The interim solution should not have stringent conditions attached to it that renders it of little

value. Some sort of automaticity should also be built in so that the affected developing country does not

require to seek approval every year from the WTO,” he said.

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India demands changes in WTO trade facilitation agreement

Nayanima Basu, Business Standard

New Delhi, 21 September 2013: Even as the government is collating inputs from industry to chalk out its

negotiating strategy in a trade ministers’ meet during December 3-6 in Bali, Indonesia, it has demanded

some immediate changes to the Trade Facilitation Agreement (TFA) being discussed at the World Trade

Organization (WTO).

India has clearly stated that it will not agree to TFA’s conclusion without the changes it suggested. The

commerce and industry ministry has the authority to negotiate on behalf of the country. The ministry

wants to make it compulsory for customs authorities globally to allow exporters to take back portions of

the rejected consignments at the borders before nullifying the entire shipment, officials in the commerce

department told Business Standard.

“The draft trade facilitation proposal has substantial cost implications for developing countries. Countries

will have to amend their laws. Apart from cost implications, the onerous compliance implications are also

a matter of concern,” said a senior commerce department official on condition of anonymity.

However, Indian industry is strongly batting for the deal to go through in its present form for it will

reduce industry’s cost burden. A comprehensive deal on trade facilitation will reduce transaction costs by

10 per cent in advanced economies and by 13-15.5 per cent in developing countries, says a study by

Organisation for Economic Co-operation and Development (OECD).

The TFA, which aims to reduce bureaucracy at borders, has the potential to provide a $1-trillion boost to

global economy, according to WTO chief Roberto Azevêdo who wants work on the deal to speed up

before trade ministers from all 159 member countries meet in Bali. India has also proposed that the

customs procedures be made transparent and non-discriminatory to avoid any non-tariff barriers and

encourage greater flow of goods from one country to another.

“The benefits of a trade facilitation agreement will accrue largely to the developed countries and those

developing countries which are strong manufacturer-exporters. Such an agreement based on the current

proposals would aggravate the adverse balance of trade of many developing countries,” the official, who

is involved in the talks, said.

In FY13, India witnessed an unprecedented level of trade deficit at $191 billion with exports falling by

1.76 per cent to $300.60 billion, while imports stood at $491.6 billion.

The official added that if TFA is accepted in the present form, the “burden of policy change required to

implement the deal will lie only on developing countries”. The main objective of the deal is to reduce

bottlenecks of shipments at borders by smoothening customs procedures through customs streamlining,

easing transaction costs and red tape at international borders.

According to a recent World Bank study, most of the gains in trade facilitation will come from improving

infrastructure such as ports and roads, which calls for a considerable amount of expenditure and

investment.

Developing countries such as India, China, the Philippines and Brazil have also urged agreement on food

security along with the TFA as a successful outcome of the Bali meet. TFA is only a minor component of

the entire global trade deal, which started in Doha in 2001. However, a major consensus on this is

expected to pep up the deadlocked talks for a global trade deal as countries are increasingly diverting their

attention to regional trading arrangements.

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WTO members are talking of trade-offs

Sidhartha, Times of India

24 September 2013: It's only been a few weeks since Roberto Azevedo took charge as the director general

of the World Trade Organization (WTO). But Brazil's former trade negotiator is sensing a new urgency to

get derailed talks back on track. In his first interview since taking charge, the WTO chief tells TOI that

ahead of the Bali ministerial, there is good news for India's demand to relax the cap on farm subsidies,

which has become critical in the wake of the new food security law. Excerpts:

How do you view your first few weeks in office? Is there some progress?

They have been very challenging but very positive. Before starting consultations with WTO members, I

was afraid we would end up having old-style negotiations, which was basically no consultation. But, we

are discovering a very positive mood. We haven't seen this mood since 2008. People are suddenly talking

about trade-offs and what needs to be done to take the process forward. This is happening not just inside

the room but even outside as they are trying to find flexibility for reaching an agreement in Bali. Of

course, we still have a very long way to go. The positions we are starting from are positions which are far

apart. But, the process is conducive for convergence.

Can you tell us about the progress that has been made in trade facilitation?

We are still lagging behind because the conversation is not very advanced on customs cooperation. We

need to find landing zones. When it comes to disciplines, the technical work has been done and now we

need to make a political call, and we need to do it fast.

On agriculture, what is the movement on the G-33 proposal (India's key demand) on subsidies and the G-

20's demands?

On G-33's proposal, at least now we have an agreement that we have to look for an interim solution like a

peace clause. Before the consultations started, we did not know what kind of solution we would have. We

need to work on some of the areas.

On G-20, there are two issues. The first is the administration of tariff rate quotas, which is pretty

straightforward and members should be able to do it in some shape. The second issue , export

competition, is more complex but some kind of outcome is possible although I am not sure if we will

have a complete formulation in Bali.

Is there some way forward for the least-developed countries, the fourth element of the Bali agenda?

On rules of origin, we are in good shape but we are still waiting for the text (of the agreement) for cotton

subsidies and services waiver. On duty-free quota-free (access for LDCs), we still have to do something

meaningful.

We understand you will be in India on October 7. What's the agenda?

I am planning to come but it depends on my visit to Bali for the Apec meet. The agenda is very simple —

talk to commerce minister Anand Sharma and discuss how things are moving in Geneva.

Are you also working on life post-Bali since none of the Doha Round issues — agriculture, services or

industrial goods — are being discussed?

Bali is not the end of the road. But, what happens post-Bali depends on what happens in Bali. There

seems to be some urgency. Members know that it is a very difficult conversation but we need to have that

conversation.

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