The Indian government is to allow cotton exports from the country again, after a decision to reverse nearly two-months of restricted shipments.
A meeting by a group of ministers “decided that suspension of new registrations for cotton exports be revoked and exports be permitted.”
However, the situation is set to be reassessed in three weeks’ time. The government-controlled Cotton Corporation of India has also been mandated to build a buffer stock of 1m bales to meet any emergency during June, July and August.
The move comes after Indian authorities imposed a ban on exports early March in a bid to ensure supplies for domestic mills and manufacturers India is the world’s second largest producer of cotton – accounting for around 22% of the world’s output – and its stance provoked outrage from domestic farmers and overseas cotton buyers, including its largest customer China.
The decision to ban shipments came after India exported almost 9.4m bales of cotton (at 170kg each) in the current marketing year, which began on October 1, exceeding an estimated exportable surplus of 8.4m bales.
However, a partial U-turn saw the shipment of another 1.9m bales of cotton that had already been registered before the ban on raw cotton exports was imposed.
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The free trade agreement between the US and Colombia is due to take effect in the middle of May, after the two countries this week completed the necessary legal requirements for the pact to come into force.
In particular, they have “successfully implemented” the key elements of an action plan on labor rights that was deemed necessary before the trade deal could come into force.
“[This] agreement is a win for both our countries,” said President Barack Obama. “It’s a win for the United States by increasing our exports by more than $1bn, supporting thousands of US jobs and helping to achieve my goal of doubling US exports.
“It’s a win for Colombia by giving you even greater access to the largest market for your exports – the United States of America. And I’d add that this agreement is a win for our workers and the environment because of the strong protections it has for both – commitments we are going to fulfill.”
However opponents, including Representative Mike Michaud, chairman of the House Trade Working Group, believe “the fight to improve workers rights in Colombia – which has the highest rate of violence against unionists in the world – is a long-term effort and should have been prioritized over implementation of the agreement.”
Once the free trade agreement with Colombia goes into effect on May 15, over 80% of US exports will become duty free immediately, with remaining tariffs phased out over 10 years. Colombia will immediately eliminate duties on products including cotton.
The Indian government is allowing the shipment of another 1.9m bales of cotton after reviewing applications that had already been registered before it introduced a ban on raw cotton exports last month.
Up to April 12, the registration certificates of around 1m bales had been revalidated for export, with another 0.9m bales due to be cleared by April 17, at the latest.
India, the world’s second largest producer of cotton, accounting for around 22% of global output, introduced a surprise ban on raw cotton exports on 5 March.
This was followed by a partial U-turn a week later to allow the shipment of pending orders. Initial priority was given to cotton that had been pending for export into Bangladesh, Myanmar, Pakistan, Nepal and Bhutan. The next priority was given to cotton that had been handed over to customs.
The government said exports of the 1.9m bales “would give a fresh impetus to cotton prices and would benefit both farmers and exporters.”
However, no plans have so far been made to release new export registration certificates to allow further cotton exports.
Unconfirmed reports say ministers have decided not to allow fresh exports in the 2011-12 marketing year, which ends in September, to ensure adequate domestic supplies. But this could depend on the latest production figures, which are due to be reviewed next week.