Apparel Trade

The formal signing of Trans Pacific Partnership is a milestone in international trade, with textiles playing a major part in the ongoing negotiations.

The agreement would certainly have an immense impact on the global trading patterns for textiles.

The process of ratification by the member countries has begun, and two years hence, the member countries, after detailed analysis of the deal document, will be ratifying it, in their respective parliaments. There are some major issues that has to be negotiated within the stipulated time.

RoO (Rules of Origin) is one such hurdle, which is being discussed by Vietnam, as the country is against this clause that mandates all members countries to stop sourcing its yarns and fabrics form non-TPP members, like China and India. Until now, Vietnam has been sourcing its raw materials from China, a non-TPP member.

Talking about India, we can only say that protecting India’s trade interest should be the government’s imperative, given that it is not part of the world’s biggest trade deal so far, a deal that has the potential of governing the world’s trading activities. It is apprehended that India not being a signatory of such a massive deal could its interests, effecting its exports in various sectors, including textiles.

Vietnam is a prospective market for India in terms of yarns and fabrics. With the RoO clause coming into effect, TPP may well prove to be detrimental for the non-TPP member countries like India, drying up its potential markets and bringing down its exports.

In a bid to counter TPP agreement, India should continue, on a priority basis, its ongoing free trade negotiations, including the India-EU Bilateral Trade and Investment Agreement and the mega Regional Comprehensive Economic Partnership with the Association of Southeast Asian Nations, China and other countries.

Diversifying in other untapped markets like Africa and Latin America would also help mitigate the trade diversion due to TPP.

A cohesive trade policy approach on the international as well as domestic front might help mitigate the ill-effects of TPP on this country.