US, EU have flexibility to shield 65 sensitive textile products from immediate formula cuts.

As members of the World Trade Organisation (WTO) are fighting out on the emerging Doha spaghetti trade deal with increasing number of flexibilities, India yesterday demanded that the existing system of preferences provided by the United States and the European Union to developing countries must be retained for 65 sensitive textile products in these two markets, trade negotiators said.

The US and the EU are given special flexibility to shield 65 sensitive textile products from any immediate formula cut as well as a longer implementation period for helping countries that are dependent on preferences under the draft Doha modalities for industrial products.

The preference-beneficiary countries, which are located in Africa and elsewhere, had all along demanded that the Doha deal must not erode their non-reciprocal preferences in respect of a limited number of tariff lines, which are important to them.

The US and the EU have successfully used the "erosion of preferences" card to protect their sensitive textile products from any tariff reduction for the first two years as well as a longer duration of seven to nine years to reduce tariffs, negotiators said.

In a move to accommodate developing countries like Pakistan and Sri Lanka "who do not benefit from these preferences and export under some of those same tariff lines to those preference-granting countries", the chair for Doha Nama (non-agriculture market access) negotiations, Ambassador Don Stephenson, had provided a condition that the tariffs on some five textile items would have reduced within five or six years.

But other developing countries like India, which are also affected by the flexibility accorded to the US and the EU under the so-called non-reciprocal preferences, want to ensure there is no erosion of market access for them under the GSP scheme, which is a soft window for exports to these two big markets.

Recently, the US had denied India the benefits of the generalised system of preferences (GSP) for gems and jewellery.

Therefore, India and other countries want to ensure that there is no such erosion for those 65 sensitive textile products under the GSP scheme and the market access rules for them are not changed, Business Standard was told.

When India raised this issue yesterday, the EU said it could not accept new demands now, while the US remained "cool" to New Delhi's request.

During the special Room D negotiating session among some 30 countries on the latest revised draft proposals, India also maintained that countries which are currently exporting to the US and the EU should be given the initial negotiating rights under Article 28 if the two trade majors decide to raise tariffs subsequently, the negotiators added.

More importantly, India pressed for a grace period and an extension in time period to reduce tariffs on 65 products of its choice.

The US and the EU did not accept India's demand saying it would amount to a special carve-out at this point, trade negotiators said.