FW
Pakistan and Uzbekistan are working on increasing bilateral trade and instituting joint ventures between the two countries. Uzbekistan is the biggest and the fastest growing economy in Central Asia, particularly advanced in agriculture and a major cotton producer with a very well developed indigenous production of cotton related machinery. And this also happens to be one of Pakistan’s primary economic sectors.
Pakistan and Uzbekistan have been enjoying cordial bilateral relations since the independence of Uzbekistan in 1991. The two countries are looking at the establishment of joint production facilities. They see significant potential for cooperation in areas such as fertilizers and the agro-chemical industry.
Uzbekistan is interested in investing in renewable energy projects in Pakistan, especially solar energy. The current volume of bilateral trade is $40 million. The countries are looking for enhancing bilateral cooperation in the fields of climate change, agriculture and science and technology.
Pakistan and Uzbekistan share affinities of culture, faith and customs. Pakistani ports offered the shortest land route to Uzbekistan for access to the Arabian Sea and the unique geographical locations of Pakistan and Uzbekistan are mutually advantageous for the two countries. Pakistan wants to build an energy infrastructure corridor to enhance connectivity with the Central Asian states.
India’s cotton output is estimated to be 341.50 lakh bales for the 2015-16 season, which began October 1. The total output for the 2014-15 crop year stood at 382.75 lakh bales.
The lower crop estimate is mainly due to crop damage in the northern region due to the white-fly attack this year. The total output estimated in the northern zone during the season 2015-16 is 41 lakh bales, down from 53.50 lakh bales last year. The arrival of cotton during April is estimated at 22.25 lakh bales compared to 27.05 lakh bales arrived during the same month last year.
Total cotton arrivals this season up to April are estimated at 302.40 lakh bales, which constitute around 89 per cent of the total estimated crop. The estimated total supply for 2015-16 is estimated at 429.10 lakh bales while domestic consumption is estimated at 305 lakh bales, thus leaving an available surplus of 124.10 lakh bales.
Cotton plays an important role in the Indian economy as the country’s textile industry is predominantly cotton based. India is one of the largest producers as well as exporters of cotton yarn and the Indian textile industry contributes about 11 per cent to industrial production, 14 per cent to the manufacturing sector, four per cent to the GDP and 12 per cent to the country's total export earnings.
Germany and Pakistan will work together for the development of a sustainable textile industry across the value chain. Germany is one of the most important trading partners of Pakistan in Europe. It is the fourth largest importer of Pakistani products and the seventh largest supplier of goods to Pakistan. Trade between Pakistan and Germany is conducted in freely convertible currency in terms of the trade agreement signed in 1957.
Germany is a good market for Pakistani textile products especially readymade garments, bed linen cotton fabrics and knitwear. Germany accounts for 20 per cent of Pakistan’s total exports to the EU and 21 per cent of Pakistan’s total imports from the EU. Germany is the eighth largest investor in Pakistan and several German multinationals are operating in Pakistan.
Germany also imports a variety of other products from Pakistan, which include leather clothing, leather gloves, sports goods and surgical instruments, textiles and other products. In turn Germany exports textile machinery, spinning machinery, finishing machinery, knitting and hosiery machinery and weaving machinery to Pakistan.
Germany is also helping Pakistan overcome its energy related issues. German companies are making big investments in Pakistan particularly in the energy sector.
According to analysts, with India’s domestic consumption of cotton yarn advancing at its slowest pace in three years and exports witnessing only a moderate increase, profits of textile spinning mills would be under stress. Domestic consumption is estimated to have advanced by only 1.4 per cent for cotton yarn and 3.1 per cent for spun yarn in 2015-16, the lowest since 2012-13. Consumption has increased by a robust 7.6 per cent for cotton yarn and 6.3% for spun yarn in 2014-15.
Incidentally, the growth in cotton yarn exports has also been slow in 2015-16 compared to previous years. Exports are estimated to have topped 1,300 million kgs (mkgs) in 2015-16, a 3.7 per cent increase compared to the previous year. Cotton yarn exports declined 4 per cent in volume terms and 14 per cent in value terms in 2014-15.
Cotton yarn production is estimated to have grown by about 2 per cent to around 4136 mkgs, the lowest increase in the last four years, data compiled by ratings agency ICRA showed. Production of cotton yarn rose by 14.6 per cent, 9.6 per cent and 3.2 per cent in 2012-13, 2013-14 and 2014-15 respectively. Slow growth in domestic consumption and export is leading to lower growth in production, ICRA said.
Pakistan cotton production has declined by 5,100,000 bales during the current season which has caused a loss of Rs 200 billion to the national kitty. The prime concern now is to ensure the interests of farmers besides boosting textile exports. A campaign will be launched for educating farmers so that they can grow more cotton in a proper manner. A meeting of all stakeholders will be convened to prepare a holistic strategy to address the issues of cotton production, a support price, quality of cotton and its import mechanism.
Ginners will be urged to work like a team to motivate growers/farmers for cultivation of cotton on the maximum area. The ginning sector wants a bailout package.
Cotton producers say that as the national cotton policy is being delayed, sugar mills are being shifted to the core cotton zone. They stress the need to impose a complete ban on the import of cotton and its thread from neighboring countries till the end of the cotton season and the disposal of bales lying in ginneries as unsold stock.
Steps will be taken to enhance the production of cotton in the country. Pakistan has a target of reaching 20 million cotton bales.
"The proliferation of major regional trade agreements, including the recently agreed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) being negotiated by the US and the European Union, has undeniably played a critical role in expanding global trade and the exports of member countries."
According to the supporters of WTO, everyone is making trade deals these days, but in the long term such arrangements could weaken the world trading system. The proliferation of major regional trade agreements, including the recently agreed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) being negotiated by the US and the European Union, has undeniably played a critical role in expanding global trade and the exports of member countries.
Critics say such regional agreements pose a threat to multilateral trading system by discriminating against non-member countries, many of which are smaller and poorer. At the same time, they sap the energy of the multilateral negotiations carried out under the World Trade Organization (WTO), which in recent years has progressed slowly in delivering substantial results.
As per the figures from the Geneva-based organisation 265 regional trade agreements (RTAs) are in force. More than one third of these pacts involve the Asia-Pacific region. All of WTO's current 162 members are involved in at least one such agreement.
Said Karl Brauner, the WTO's deputy director-general, so far there are a lot more activities on the bilateral level than multilateral. WTO is in situation where the members have focused their activities on bilateral or regional agreements. He is confident that regional trade deals can help strengthen the multilateral system in the long term. But he expressed optimism that regional agreements can help the global trading system in the long run.
However, Xavier Carim, the South African ambassador to the WTO, has concerns about the growing number of regional agreements.
Achievements
WTO executives say the organisation has achieved some big breakthroughs in the past few years, despite well-publicised differences among developed and developing country members. Most noticeable was the agreement in Nairobi last December to abolish agricultural export subsidies.
As of January 2016, export subsidies in developed countries are prohibited for all forms of agricultural products. Developing country members are to eliminate export subsidy entitlements by the end of 2018, though they have until 2030 for specific types of products.
Replacing the General Agreement on Tariffs and Trade (GATT), the WTO officially came into being in January 1995 to regulate trade among participating countries by providing a framework for negotiating trade agreements and a dispute resolution process.
Another recent signature achievement by the WTO has been the Information Technology Agreement. It will eliminate tariffs on 201 new-generation IT products involving trade worth around US$1.3 trillion, a value bigger than the global automotive sector.
Two and a half years ago in Bali, the WTO also completed a trade facilitation agreement which independent economists believe will contribute more than $1 trillion to the global economy with the majority of the benefits going to developing economies, he added.
By streamlining, simplifying and standardising customs procedures, the trade facilitation agreement can help cut the time and cost of moving goods across borders.
Supporters of the WTO also believe it deserves more credit for its dispute settlement mechanism. Before the organisation's inception, there was no international dispute settlement system but in the past 20 years, more than 500 disputes have been brought to the WTO.
Economic gains
Free trade alone is not an automatic ticket to prosperity unless it is accompanied by reforms in other areas, the International Labour Organization (ILO) has pointed out. In that respect, bilateral and regional deals sometimes do more in areas such as labour and environmental protection than multilateral deals can accomplish.
As per the ILO figures, the number of trade agreements has been growing steadily since 1995. As of 2014, there were 260 agreements in force, up from around 50 in the mid-1990s.
Trade agreements have also been steadily increasing in depth, not just cutting tariffs but also covering other issues such as services, investment, intellectual property rights, human rights, environmental protection, public procurement and labour standards.
Trade agreements with labour provisions are on the rise, said Christian Viegelahn, an economist with the ILO's research department.
Said Eveline Herfkens, a senior fellow at the Johns Hopkins School of Advanced International Studies (SAIS) that the trade preference schemes under large regional agreements, in particular the TTIP, had the potential to damage exports from low-income economies such as many in Africa.
World Trade Organization (WTO) Director-General Roberto Azevedo pointed out that RTAs are important in expanding global trade but ‘cannot substitute’ for the multilateral trading system.
Apart from RTAs, other regional networks, such as the China-backed New Silk Road economic belt are rebuilding traditional links by concentrating on connectivity, such as improved road and rail links as well as port facilities. The initiative will also try to connect Asia with Europe.
Azevedo attends a news conference on the launch of the World Trade Report 2015 in Geneva, Switzerland, October 26, 2015. The benefits of a treaty that will cut red tape at borders and standardise customs procedures are much larger than previously thought and could add $3.6 trillion to annual global exports, the World Trade Organization (WTO) said in a report recently.
A bigger consideration is that such initiatives sometimes touch on areas that are not currently covered by the WTO. This creates a potential scenario where different RTAs deal with the same issues in different ways, he said.
Meanwhile the WTO forecasts that world trade will remain sluggish in 2016 with volume increasing by 2.8 per cent, on par with 2015, as economic growth eases in developed economies and picks up in developing ones.
Trade growth is forecast to rebound to 3.6 per cent next year but that would still be below the average of 5 per cent since 1990. Downside risks remain in terms of further slowing in emerging economies and financial volatility.
Over the years Zimbabwe’s production of cotton has fallen.At one time cotton farming was a major foreign currency earner. A large number of farmers have since abandoned the crop, which was at one point ranked Zimbabwe’s top agricultural export, and they opting for more viable ones such as tobacco and soya beans.
There are challenges related to production, pricing, marketing and late provision of inputs. Price wars have become the norm.
About 106 cotton buying points will be set up across the country, up from 98 last year. Free inputs are being provided to farmers in a bid to revive the sector.
Farmers are in favor of buyers visiting each farmer and buying the cotton right from the farmer’s doorstep. Farmers are expecting a price of 63 cents per kg to remain in business.
The price is negotiated between farmers and buyers, and farmers will be paid according to the grade or quality of their seed cotton. Only registered buyers would be allowed to buy the crop from farmers from areas which they supported growers with inputs.
The cotton firm, Cottco, once a major player in the sector, is aiming to revive production.
The country’s cotton buying season opens on June 1.
Vietnam has improved its business opportunities by signing free trade agreements with some key global players like the EU, US, Japan, Korea, and Asean. While these agreements would bring global market access to Vietnamese businesses, it also means that Vietnamese manufacturers have to comply with more stringent quality and safety regulations.
International government safety and quality regulations on textile and garment products are changing constantly, especially in today’s free trade business landscape.
Global buyers, especially those in Europe and the US, are increasingly demanding with respect to the kind and quality of products they want.
Quality and safety control are essential for companies in Vietnam, especially those looking to take their products to international markets.
Tuv Sud, an international service provider in testing, inspection, audit and certification, has signed a memorandum of understanding (MoU) with garment, textile, embroidery and knitting units in Vietnam.
Under the MoU, the two sides will co-organise quality and safety workshops and awareness programs related to the textile and garment industry.
The in-house training sessions would aim to provide local manufacturers an updated and more in-depth understanding of stringent international quality and safety standards.
The agreement is expected to immensely benefit member companies and take their business to the next level.
Turkmenistan aims to further raise foreign investments and introduce new technologies, creating the most favorable conditions for investors in its textile industry. Over the years of independence, cotton fiber processing has increased from three per cent to 51 per cent in the country.
Currently more than 70 enterprises produce cotton yarn, cotton, terry, denim, knitted fabrics and knitwear in Turkmenistan.
Cotton yarn production in the country increased 2.4 times from 2000 to 2015, cotton production rose four times, and export of textile products 3.2 times.
Turkmenistan features in the world’s top ten cotton producing countries. A problem Turkmenistan has not been able to vanquish is that the country’s textile sector has not been able to establish strong and stable textile export relations with European countries. More than 70 per cent of the country's textile products are exported to the US, Europe, Russia, Ukraine, Turkey, China and Baltic countries. Turkey is also a significant investor in Turkmenistan.
Turkmenistan’s textile industry mainly centre on cotton production. Out of the more than 70 textile enterprises, 32 are cotton spinning and weaving mills, seventeen are garment factories, followed by seven silk enterprises and a few wool processing, knitting and other companies.
Exporters of the textile value-added sector in Pakistan have warned of street agitations if sales tax refunds are not done on time. Apparently sales tax, custom rebates, and DLTL claims of exporters have been held up for years. Exporters say a sum amounting to Rs 350 billion has yet to be disbursed.
They also say any further increase in sales tax on the export sector will ruin the nation’s exports. They want a speedy disbursement of all held up payments of exporters, revival of the zero rated tax regime, the no payment no refund system, and an incentive package for the export sector.
Exporters want the tax net to be broadened and to include retailers, shopkeepers and many others who earn huge amounts of money but pay no taxes. They say the aim should be to work toward revenue generation than to punish and penalise already registered taxpayers like exporters who already pay taxes at all levels.
On September 11, 2015, the prime minister had committed to announcing an incentive package for exporters in his meeting with them in Islamabad.
Finance minister Ishaq Dar, in his budget speech 2015-2016 at the National Assembly, had promised disbursing the export oriented sectors’ refunds till the May 31, 2015 period, by August 31, 2015.
