India loses textile case against U.S. in WTO

Monday, 23 June 2003, 07:00 Hrs
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WASHINGTON: India has lost a case in the World Trade Organisation (WTO) challenging U.S. rules on determining the country of origin for textiles.

U.S. Trade Representative (USTR) Robert B. Zoellick said here Friday that India has a right to appeal the panel ruling, which rejected each of India's arguments.

"This is an important victory for American trade laws and American textile trade. Detailed U.S. rules of origin for textiles help make sure that everyone plays by the rules, and we are very pleased that the panel rejected India's complaints," said Zoellick.

Rules of origin are used to determine the country of origin of imported goods.

He said: "(Friday's) report reaffirms that U.S. rules are consistent with our WTO commitments, and it shows that countries do have flexibility under the WTO to develop accurate rules of origin. The administration is fully committed to enforcing fair, predictable rules that ensure fair trade."

The panel findings are significant because they uphold rules of origin that ensure that textile and apparel products imported into the U.S. reflect their country of origin, and not where minor finishing operations take place.

A press release issued by USTR said among the arguments rejected by the WTO panel were that U.S. rules of origin improperly differentiate between textile and apparel products and other industrial products, and that the U.S. rules were adopted to protect the U.S. textile industry from competition.

The panel agreed with the U.S. that the rules of origin are entirely consistent with U.S. obligations under the WTO Agreement on Rules of Origin.

The dispute related to section 334 of the Uruguay Round Agreements Act of 1996, the so-called "Breaux-Cardin rules", which established statutory rules of origin applicable to textile and apparel products based on standards set out in the law. Section 405 of the Trade and Development Act of 2002 amended Section 334 by providing further rules of origin for specific products.

On January 11, 2002, India requested WTO dispute settlement consultations with the U.S. regarding Section 334 and Section 405.

Consultations were unsuccessful, and a panel was established on June 24, 2002. India alleged that sections 334 and 405 were inconsistent with various provisions of the WTO Agreement on Rules of Origin.
Source: IANS
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