US Threatens To Drag India To WTO Over Cotton Export Restrictions.

The United States has alleged that restrictions imposed by India on export of cotton has contributed to global price volatility and its appropriateness should be discussed at the World Trade Organization , but India maintains that the restrictions fall outside the purview of the multilateral trade body.

In a recent meeting of the WTO's committee on agriculture, the US said the cap on cotton exports imposed by India since last year had an impact on the global cotton market, contributing to unnecessary price volatility and affecting all cotton producers, and thus would be appropriate for discussion in the committee.

Pakistan and Canada, too, expressed their concerns about the export caps, a person tracking the development told ET. Pakistan sources cotton from India for its textile industry and has been affected by the cap, which sources cotton from India for its textiles industry, and Canada too expressed concerns about the export caps, India, however, is confident that the export restrictions are justified. "Our export restrictions on cotton fall under GATT Article XI and thus are outside the purview of the agriculture committee," an Indian government official told ET.

The government had banned export of cotton in April last year following spiralling domestic prices taking a toll on cotton textile producers. It decided in September 2010 to allow exports of 5.5 million bales following robust production estimates.

With cotton prices falling by more than 30% from .`62,500 per candy (356 kg) in Marchend this year to .`45,000 per candy in June, the cap on exports was raised by an additional 1 million bales.

The textile industry, especially in the southern belt, has warned against more exports as they say that several textile mills will be forced to close down as cotton prices go up.

The US cannot challenge India's cotton export restrictions as there has been no violation of any clause of the WTO agreement, said Sachin Chaturvedi, senior fellow, RIS for developing countries.

Source : economictimes.indiatimes.com