Post on 21-Mar-2020
Cotlook A Index - Cents/lb (Change from previous day)
01-07-2019 77.00 (Unch)
02-07-2018 93.75
03-07-2017 83.55
New York Cotton Futures (Cents/lb) As on 03.07.2019 (Change from
previous day)
July 2019 66.23 (+2.46)
Oct 2019 65.76 (-0.23)
Dec 2019 66.04 (-0.05)
03rd July
2019
Scheme to rebate embedded Central, State levies may be extended to more textile sectors
Govt may impose anti-dumping duty on imports of nylon multi-filament yarn from 4 nations
Economic growth high on agenda of government: Nirmala Sitharaman
CEA KV Subramanian to table Economic Survey in Parliament
Trade talks: India, US officials likely to meet next week
Increasing Bangladesh imports worry Tamil Nadu textile firms
Cotton and Yarn Futures
ZCE - Daily Data (Change from previous day)
MCX (Change from previous day)
July 2019 21380 (-280)
Cotton 145110 (-145) Aug 2019 21120 (-300)
Yarn 22170 (0) Oct 2019 20450 (-110)
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2 CITI-NEWS LETTER
-------------------------------------------------------------------------------------- Scheme to rebate embedded Central, State levies may be extended to more
textile sectors
Govt may impose anti-dumping duty on imports of nylon multi-filament yarn
from 4 nations
Economic growth high on agenda of government: Nirmala Sitharaman
CEA KV Subramanian to table Economic Survey in Parliament
Nirmala Sitharaman assures steps being taken to revive growth
GST may become two-tier tax with merger of 12%, 18% slabs: Arun Jaitley
Export-promotion forum, trade fair to boost farm cooperatives: Govt
Trade talks: India, US officials likely to meet next week
Increasing Bangladesh imports worry Tamil Nadu textile firms
India could face productivity loss equivalent to 34 million jobs in 2030 due to
global warming: UN
UAE says approves full foreign ownership of firms
Bangladesh seeks to synergise India ties
Does India really need a direct tax code?
------------------------------------------------------------------------------- Christine Lagarde nominated as president of European Central Bank
Trade war: US manufacturing slows to a 3-year low
Pakistan: Govt allows duty-free cotton import till July 31
Apparel sector urged to develop supporting industry to optimise EVFTA
Pakistan: Razak emphasis for role of Chinese investors in local textile sector
EU-Mercosur Trade Deal Opens Opportunity For Textile And Clothing
Companies
---------------------------------------------------------------------
NATIONAL
---------------------
GLOBAL
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3 CITI-NEWS LETTER
NATIONAL:
Scheme to rebate embedded Central, State levies may be extended to more
textile sectors
(Source: Amiti Sen, The Hindu BusinessLine, July 02, 2019)
Exporters raise concerns at meeting with Textiles and Commerce Ministers
The government is considering extending the scheme to rebate embedded Central and
State levies for the garments and made-ups sector to other textile items in the light of
the urgency to do away with the popular merchandise export incentive scheme (MEIS)
which is against World Trade Organization rules.
A number of issues raised by the textiles industry, including possible extension of the
Rebate of State and Central Taxes and Levies (RoSCTL) to other sectors, expeditious
clearance of TUFS and tackling increased imports of garments from Bangladesh, were
discussed at a meeting textile exporters had with Textiles Minister Smriti Irani and
Commerce & Industry Minister Piyush Goyal on Monday, a government official said.
“The meeting was attended by all officials apart from the two Ministers. Each and every
issue raised was immediately looked into. Whatever could be addressed was addressed
with deadline while an assurance was given that the rest had been listed and would be
looked into later,” said Sanjay K Jain from the Confederation of Indian Textile Industry.
An assurance was given to textile exporters that their demand of extending the RoSCTL
to other textile sectors, including yarn and fibre, will be addressed soon, another
exporter, who did not wish to be identified, said.
“Commerce Minister Piyush Goyal had said at the recent Board of Trade meeting that
his Ministry was seriously considering the Textiles Ministry’s proposal of extending the
RoSCTL to all textiles sectors. The Minister has said that a decision on the matter will be
taken soon as the MEIS scheme for textiles needs to be withdrawn,” the exporter said.
The Cabinet, in March, approved the RoSCTL scheme to rebate all embedded State and
Central Taxes/levies for apparel and made-ups, through an IT-driven scrip system. The
scheme replaced the existing Rebate of State Levies (RoSL) scheme that provided rebate
of only certain State taxes.
The embedded taxes include Central excise duty on fuel used in transportation,
embedded CGST paid on inputs such as pesticides and fertilisers used in production of
raw cotton, purchases from unregistered dealers, inputs for transport sector and
embedded CGST and compensation cess on coal used in the production of electricity.
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4 CITI-NEWS LETTER
Now that the MEIS scheme, which offers incentives based on the markets the goods are
being exported to, has to be withdrawn as Indian textiles have graduated out of the
group of items allowed to extend export sops at the WTO, the RoSCTL is a workable
alternative.
Clearance of funds
The two Ministers also agreed to the expeditious clearance of funds for exporters under
the Technology Upgradation Fund Scheme (TUFS), address GST issues on textiles and
clothing ,including inverted duty structure in the man-made fibre sector, and reduce
hank yarn obligation from 30 per cent to 15 per cent.
The fall out of duty-free imports of garments from Bangladesh on India’s apparel
industry and the opportunities arising from Vietnam reaching saturation in textile
production were also discussed.
According to industry figures, India’s textiles & clothing exports declined from $38.60
billion in 2014 to $37.12 billion in 2018 while imports increased from $5.85 billion to
$7.31 during the same period.
India slipped to the fifth position amongst garments and textiles exporters in 2018 from
the second position it enjoyed in the 2014-17 period. China, Germany, Bangladesh and
Vietnam are the top four exporters of garments and textiles.
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Govt may impose anti-dumping duty on imports of nylon multi-filament
yarn from 4 nations
(Source: Business Standard, July 02, 2019)
The government may impose anti-dumping duty on imports of certain types of filament
yarn from China, Korea, Taiwan and Thailand as the commerce ministry has started
investigation into alleged dumping of the product following complaints from domestic
players.
The Directorate General of Trade Remedies (DGTR), under the commerce ministry, has
initiated the probe as it has found "sufficient evidence" of dumping of nylon multi-
filament yarn from these countries.
"The authority hereby initiates an investigation into the alleged dumping, and
consequent injury to the domestic industry... to determine the existence, degree and
effect of alleged dumping," the DGTR said in a notification.
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5 CITI-NEWS LETTER
If the DGTR will establish that dumping is impacting domestic players, it would
recommend imposition of a certain amount of anti-dumping duty, which if levied, would
be adequate to remove the injury to the domestic industry.
The finance ministry will take final call on imposition of the duty after considering
recommendations of the directorate.
Two firms, including Century Enka Ltd, have filed application for imposition of anti-
dumping duty on the imports.
The period of investigation covers 2018-19. However, for the purpose of injury
investigation, the period will also cover data for 2015-18 period.
Dumping occurs when a foreign company sells an imported product at an artificially low
price.
Countries carry out anti-dumping probe to determine whether their domestic industries
have been hurt because of a surge in cheap imports.
As a counter measure, they impose duties under multilateral regime of the World Trade
Organisation.
The duty is aimed at ensuring fair trade practices and creating a level-playing field for
domestic producers with regard to foreign producers and exporters.
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Economic growth high on agenda of government: Nirmala Sitharaman
(Source: Economic Times, July 02, 2019)
Sitharaman said economic growth is high on the agenda of the govt and various reforms
are being undertaken in many spheres to improve GDP growth.
India still continues to be the fastest growing economy and demonetisation has had no
effect on the Indian economy, Finance Minister Nirmala Sitharaman told the Rajya
Sabha on Tuesday.
The minister, while responding to supplementaries during the Question Hour, said the
manufacturing sector has had a certain fall, but it is not attributable to demonetisation.
She said economic growth is high on the agenda of the Government and various reforms
are being undertaken in many spheres to improve GDP growth. Sitharaman said the
moderation in growth momentum in 2018-19 is primarily on account of lower growth in
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6 CITI-NEWS LETTER
'Agriculture and allied', 'trade, hotel, transport, storage, communication and services
related to broadcasting' and 'public administration and defence' sectors," she said. "If
the impact of low growth in certain sectors has impacted growth rate, particularly in
agriculture and allied activities as also in financial and real estate and professional
services, there has been a fall, particularly in agriculture based on third advance
estimates, it is believed that there has been a 0.6 per cent decline in the output.
"If the impact on the low growth is because of outcomes from these sectors, the
manufacturing sector has had a certain fall but which is not attributable to
demonetisation,"
She said in the last quarter, there could have been a fall and steps have been taken to
improve the economy.
"But, we are still the fastest growing economy," she said. Sitharaman said if the United
States' growth has grown between 1.6, 2.2, 2.9 and 2.3 per cent in 2016, 2017, 2018 and
2019, and China's growth has also decelerated from 6.7, 6.8, 6.6 and 6.3 per cent, India
is still well above 7 per cent at 7.3 per cent growth. "While the concern of member is well
taken about the last quarter's growth having come down, it is still India which is growing
at the fastest rate and the figures are before us," she stressed in response to a query from
a member. The minister said as regards steps taken, the government has taken several
steps in order that more money goes to people and that is why the PM's Kisan Samman
Yojna, the Pension Yojna, where money goes directly through DBT in activities through
which people are getting the benefit.
"Over and above that, in order that institutions will have to extend more credit facilities
for industry and for those entrepreneurs in the ground, the credit situation and also
taking care of resolutional stressed assets through banks is also happening," she said. In
her written reply, the finance minister said, as per estimates available from Central
Statistics Office, Growth of Gross Domestic Product (GDP) at constant prices was 6.8
percent in 2018-19, as compared to 7.2 percent in 2017-18 and 8.2 percent in 2016-17.
"Economic growth is high on the agenda of the Government. Various reforms are being
undertaken by the Government in many spheres to improve GDP growth. The key
reforms in Governments new term include expansion to all farmers the cash transfer
scheme 'PMKisan' providing an income support of Rs 6000 per year, which was earlier
limited to farmers with a land holding of less than 2 hectares," she said.
Along with this, the Government has launched voluntary pension scheme for small and
marginal farmers and small shopkeepers or retail traders, she claimed. To give focused
attention to issues of growth, Government has constituted a five-member cabinet
committee on investment and growth chaired by Prime Minister.
Home
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7 CITI-NEWS LETTER
CEA KV Subramanian to table Economic Survey in Parliament
(Source: Economic Times, July 02, 2019)
The Economic Survey is an outlook of developments in the economy that is presented a
day before the Union Budget.
Chief Economic Adviser KV Subramanian will table the new Narendra Modi
government's first Economic Survey in Parliament on Thursday. "Looking forward with
excitement to table my first - and the new Government's first - Economic Survey in
Parliament on Thursday. #EcoSurvey2019" he tweeted on Tuesday. The Economic
Survey is an outlook of developments in the economy that is presented a day before the
Union Budget. The survey contains a summary of the performance on major
development programmes, as well as the policy initiatives of the government and the
prospects of the economy. Subramanian was appointed as the Chief Economic Adviser
in December last year, nearly six months after Arvind Subramanian stepped down from
the post at the end of his term owing to "pressing family commitments."
The first full-fledged budget of the Union Government will be tabled on Friday by
Finance Minister Nirmala Sitharaman.
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Nirmala Sitharaman assures steps being taken to revive growth
(Source: Gireesh Chandra Prasad, Live Mint, July 02, 2019)
The government will take immediate steps to arrest
the slowdown in economic growth and encourage
manufacturing, finance minister Nirmala
Sitharaman said in a written reply to questions by
lawmakers on Tuesday, just days before she
presents the Union budget.
Sitharaman’s statement indicates the National
Democratic Alliance government is likely to announce measures to boost business
confidence and attract private investments that the economy needs to accelerate growth
in the budget to be presented on Friday. She may also offer incentives that will
encourage job creation, especially in labour-oriented sectors such as textiles and real
estate.
The Modi administration, which had drawn criticism in its previous term for disruptions
in economic activity caused by the 2016 currency ban and the initial glitches in the roll-
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8 CITI-NEWS LETTER
out of the goods and services tax, is consulting economists and chief ministers before
drawing up a road map for economic reforms for the next five years.
“Economic growth is high on the agenda of the government. Various reforms are being
undertaken by the government in many spheres to improve GDP growth... Further, to
give focused attention to issues of growth, government has constituted a five-member
cabinet committee on investment and growth chaired by the Prime Minister,"
Sitharaman said in her written reply to a question in the Rajya Sabha.
Sitharaman said the moderation in economic growth momentum in FY19 was primarily
on account of slower growth in the farm and allied sectors.
She, however, denied that demonetization has had any harmful effect on the Indian
economy. Growth in the manufacturing sector has slowed, but it is not attributable to
demonetization, news agency PTI said, citing Sitharaman.
India’s economy expanded at 5.8% in the March quarter, its slowest pace in nearly five
years, according to data from the statistics ministry.
The minister said the economy was still growing faster than the US and China.
In response to another question on the economy, the minister said the aim was to create
a conducive environment for the manufacturing sector by streamlining regulations and
processes.
India’s businesses are hoping for a cut in the corporate tax rate from the budget and
expect banks to pass on the reduction in the Reserve Bank of India’s benchmark policy
rates.
They are also hoping for easier land and labour policies.
According to the latest government data, India’s factory output picked up in April to hit
a six-month high.
Data released by the National Statistical Office on 12 June showed the index of
industrial production expanded at 3.4% in April from 0.3% a month ago.
Sitharaman also said in response to another question that state-run banks had
classified ₹1.5 trillion worth of loans as “wilful defaults" in FY19, with the biggest
lender, State Bank of India (SBI), accounting for nearly a third of the amount.
SBI recorded wilful defaults worth ₹46,158 crore, while Punjab National Bank
reported ₹25,090 crore and Bank of India₹9,890 crore, Sitharaman said in her
reply, Reuters reported.
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GST may become two-tier tax with merger of 12%, 18% slabs: Arun Jaitley
(Source: Economic Times, July 02, 2019)
Jaitley said that most items of consumer use have been brought in the 18 per cent, 12 per
cent and even 5 per cent category.
Former finance minister Arun Jaitley said policymakers could merge the 12% and 18%
slabs under the goods and services tax going forward as revenue increases, thereby
effectively making it a two-tier tax. Jaitley made the suggestion in a Facebook post on
the second anniversary of the GST roll out. He had opted out of the new government due
to health reasons. The former finance minister, who had led the GST talks with states,
said as many as 20 states were already showing more than a 14% increase in their
revenue. These states no longer require the Centre to compensate them for revenue loss
arising out of the GST implementation, he said. Under the GST framework, most items
of consumer use have been brought in the 18%, 12% and even 5% category, Jaitley said.
The GST Council, chaired by the union finance minister and comprising finance
ministers of states, has reduced tax rates over the last two years, leading to a revenue
loss of more than Rs 90,000 crore, he said. “Except on luxury and sin goods, the 28%
slab has almost been phased out. Zero and 5% slabs will always remain,” he said.
Observing that a sudden reduction of tax rates on all categories of goods could lead to a
massive loss of revenue for the government leaving it without resources to spend Jaitley.
After the roll out of the tax system in July 2017, the average monthly GST collection in
that fiscal year was Rs 89,700 crore. In the next year (2018-19), the monthly average
increased by about 10% to Rs 97,100 crore. “The fear of the states today is that for the
first five years they get a guaranteed 14% increase. The lurking doubt is as to what will
happen after five years? Every state has been paid its share of tax as also from the
compensation fund, if necessary. We have just completed two years of GST,” Jaitley
said. A single-slab GST is possible only in extremely affluent countries where there are
no poor people, he said, adding that it would be inequitable to apply a single rate in
countries where there are a large number of people below the poverty line. “In the pre-
GST regime, the rich and the poor, on various commodities, paid the same tax. The
multiple slab system not only checked inflation, it also ensured that the aam aadmi
products are not exorbitantly taxed,” he said, adding: “A hawai chappal and a Mercedes
car cannot be taxed at the same rate.” This, however, is not to suggest that the
rationalisation of slabs is not needed, he said. “That process is already on.” The GST
system currently has four slabs — 5%, 12%, 18% and 28%. On top of the 28% slab, a cess
is levied on automobiles, luxury, demerit and sin
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Export-promotion forum, trade fair to boost farm cooperatives: Govt
(Source: Subhayan Chakraborty, Business Standard, July 02, 2019)
The international trade fair will be held by the agriculture ministry and will be
supported by the commerce and external affairs ministries
The government has announced that an export-promotion forum for the cooperative
sector will be created soon. An international trade fair will also be organised on October
11-13.
The forum will be set up under the National Cooperative Development Corporation
(NCDC), after consultations with 20 states and three Union territories, said Commerce
and Industry Minister Piyush Goyal and Agriculture Minister Narendra Singh Tomar on
Tuesday.
The government hopes this will work as an exchange platform for the cooperatives. Both
ministries have committed to establish a framework to double farm exports from Rs
2.75 trillion to about Rs 7 trillion by 2024-25.
There are more than 800,000 cooperative institutions in India; 94 per cent of 1.5
million farmers in the country are members of at least one cooperative.
Along with this, a trade fair will be held by the agriculture ministry and will be
supported by the commerce and external affairs ministries. The latter is expected to ask
India’s diplomatic missions abroad to get foreign participants for the fair.
While cooperatives from the farm sector will be the primary participants, cooperatives
from other fields such as textiles and leather may also be allowed.
The trade fair, to be organised jointly by commerce, agriculture and external affairs
ministries with support of cooperative bodies such as the NCDC and the Agricultural
and Processed Food Products Export Development Authority, will provide direction to
exporting value-added agriculture products.
Goyal said the fair will be instrumental in disseminating global demand and engaging
with industry players from other nations. “Technology has not yet comprehensively
reached our farm sector. The fair will provide our cooperatives ways to do this,” he
added.
Last year, the government had unveiled an ambitious agriculture export policy that
seeks to double agriculture exports to $60 billion by 2022 and do away with arbitrary
curbs on exports. However, the policy found little support from experts who termed the
target “highly ambitious”, given how exports had fallen from nearly $40 billion five
years back to $36 billion in 2017-18.
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11 CITI-NEWS LETTER
Despite India occupying a pole position in global trade of these products, its total
agriculture export basket still accounts for only a little over 2 per cent of world agri
trade, estimated at a $1.37 trillion.
Aiming to push India into the list of the top 10 agri export nations, the policy has been
backed by the Prime Minister’s Office.
The aim to remove curbs on exports also had not found much traction among experts. If
previous experience is any indication, the government tends to clamp down on exports
at the slightest hint of rising inflation, they said.
The commerce department has suggested tying the policy to logistics support, a better
trade regime, and states-led product development to connect farmers to global markets.
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Trade talks: India, US officials likely to meet next week
(Source: Business Standard, July 02, 2019)
Senior officials of India and the US are likely to meet next week here to discuss trade
related issues, sources said Tuesday.
A team of US Trade Representative (USTR) is expected to hold the meeting with senior
officials of the commerce department, they said.
This would be the first meeting on trade issues after the meeting of Prime Minister
Narendra Modi with US President Donald Trump in Japan at the sidelines of the G20
summit.
The trade talks between the two countries slowed down after the US rolled back export
incentives from India under their GSP programme. India too has imposed additional
customs duties on 28 US products.
There are certain irritants which both the countries wants to sort-out to push the
bilateral trade. The US wants greater market access for its dairy products and cut in
customs duties in ICT products. The American companies have also raised concerns
over price cap on certain medical devices by India.
Stating that the US has taken a "unilateral position" in rolling back export incentives
from India, the government has asserted that it would not allow trade negotiations to
overtake issues of national interest.
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Increasing Bangladesh imports worry Tamil Nadu textile firms
(Source: Bharani Vaitheesvaran, Economic Times, July 02, 2019)
The companies are worried because the increasing imports of readymade garments are
hurting them in the local market even as they grapple with tepid growth in exports.
Concerned about increasing imports from
Bangladesh, garment makers from the industrial
clusters of Coimbatore and Tirupur in Tamil Nadu
have approached the central government, seeking
its assistance in getting supply contracts from
Indian retailers and brands.
The Indian Texpreneurs Federation (ITF), an association of more than 560 textile
establishments with a combined turnover of over Rs 40,000 crore, wrote to textile
minister Smriti Irani in early June, seeking her ministry’s intervention.
The companies are worried because the increasing imports of readymade garments are
hurting them in the local market even as they grapple with tepid growth in exports.
“Indian clusters can better serve the sourcing needs of both Western and Indian brands
than products sourced from Bangladesh, Sri Lanka or Indonesia,” the federation said in
the
According to data collated by ITF, textile imports from Bangladesh jumped 53% in fiscal
year 2018-19 to $1.07 billion (Rs 7,500 crore). Local entrepreneurs fear neighbours like
Bangladesh will edge them out in the Indian market due to the advantages they enjoy
such as lower manufacturing costs and free-trade agreements (FTAs) that create a duty-
free expressway for their products into this country.
The challenge from Bangladesh is also affecting India’s prospects in the international
market. According to an ITF survey of more than 320 participants in the Indian textile
industry, cost ineffectiveness, narrow focus on target countries and labour shortage are
top reasons Indian exporters are unable to pip those from the neighbouring country in
the export markets.
“We are hoping that the Indian government will help us engage with brands, retailers
who might look at sourcing from India,” said Prabhu Damodharan, the convenor for ITF
and a mill owner in Coimbatore.
After the implementation of GST, India had removed a 12% countervailing duty on
imports from Bangladesh.
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13 CITI-NEWS LETTER
India could face productivity loss equivalent to 34 million jobs in 2030 due
to global warming: UN
(Source: Economic Times, July 02, 2019)
Accumulated global financial loss due to heat stress is expected to reach $2,400 billion by
2030
India is projected to lose 5.8 per cent of working hours in 2030, a productivity loss
equivalent to 34 million full-time jobs, due to global warming, particularly impacting
agriculture and construction sectors, a report by the UN labour agency said. The
International Labour Organization (ILO) released its report 'Working on a Warmer
Planet - The Impact of Heat Stress on Labour Productivity and Decent Work' which said
that by 2030, the equivalent of more than two per cent of total working hours worldwide
is projected to be lost every year, either because it is too hot to work or because workers
have to work at a slower pace. "Projections based on a global temperature rise of 1.5°C
by the end of the twenty-first century, and also on labour force trends, suggest that, in
2030, 2.2 per cent of total working hours worldwide will be lost to high temperatures - a
productivity loss equivalent to 80 million full-time job," the report said. It said that the
accumulated global financial loss due to heat stress is expected to reach USD 2,400
billion by 2030. "If nothing is done now to mitigate climate change, these costs will be
much higher as global temperatures increase even further towards the end of the
century," the report said. Countries in Southern Asia are the most affected by heat stress
in the Asia and the Pacific region and by 2030, the impact of heat stress on labour
productivity is expected to be even more pronounced.
In particular, up to 5.3 per cent of total working hours (the equivalent of 43 million full-
time jobs) are projected to be lost, with two-thirds of Southern Asian countries facing
losses of at least two per cent. In a dire warning, the report said that the country most
affected by heat stress is India, which lost 4.3 per cent of working hours in 1995 and is
projected to lose 5.8 per cent of working hours in 2030. Because of its large population,
India is in absolute terms expected to lose the equivalent of 34 million full-time jobs in
2030 in productivity as a result of heat stress. "Although most of the impact in India will
be felt in the agricultural sector, more and more working hours are expected to be lost in
the construction sector, where heat stress affects both male and female workers," it said.
National-level GDP losses are projected to be substantial in 2030, with reductions in
GDP of more than five per cent expected to occur in Thailand, Cambodia, India and
Pakistan due to heat stress. Heat stress is defined as generally occurring at above 35
degrees Celsius, in places where there is high humidity. Heat stress affects, above all,
outdoor workers such as those engaged in agriculture and on construction sites. Excess
heat at work is an occupational health risk and in extreme cases can lead to heatstroke,
which can be fatal, the UN agency said. The report also noted that the western Indian
city of Ahmedabad incorporated a cool roofs initiative into its 2017 Heat Action Plan,
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14 CITI-NEWS LETTER
notably by providing access to affordable cool roofs for the city's slum residents and
urban poor, ie those who are most vulnerable to the health effects of extreme heat. The
initiative aims to turn the roofs of at least 500 slum dwellings into cool roofs, improve
the reflectivity of roofs on government buildings and schools, and raise public
awareness. "The impact of heat stress on labour productivity is a serious consequence of
climate change," said Catherine Saget, Chief of Unit in the ILO's Research department
and one of the main authors of the report. "We can expect to see more inequality
between low and high-income countries and worsening working conditions for the most
vulnerable." With some 940 million people active in agriculture around the world,
farmers are set to be worst hit by rising temperatures, according to the ILO data, which
indicates that the sector will be responsible for 60 per cent of global working hours lost
from heat stress, by 2030. Construction will also be "severely impacted", with an
estimated 19 per cent of global working hours lost at the end of the next decade, ILO
says. Other at-risk sectors include refuse collection, emergency services, transport,
tourism and sports, with southern Asian and western African States suffering the biggest
productivity losses, equivalent to approximately five per cent of working hours by 2030
The report noted that a labour market challenge pertains to the high rates of informality
in the region, particularly in Southern Asia and South-East Asia. As many as 90 per cent
of all workers in India, Bangladesh, Cambodia and Nepal work informally. Although the
prevalence of informality can to a great extent be explained by the high share of
employment in agriculture, informality is also pervasive in other sectors, including
construction, wholesale and retail trade, and the accommodation and food service
industries. "Temperatures exceeding 39°C can kill. But even where there are no
fatalities, such temperatures can leave many people unable to work or able to work only
at a reduced rate. Some groups of workers are more vulnerable than others because they
suffer the effects of heat stress at lower temperatures," the report said. Older workers, in
particular, have lower physiological resistance to high levels of heat and represent an
increasing share of workers - a natural consequence of population ageing.
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UAE says approves full foreign ownership of firms
(Source: Business Standard, July 02, 2019)
The United Arab Emirates said Tuesday it had decided to lift a decades-old cap on
foreign ownership and allow full foreign control of business ventures.
"In a cabinet meeting I chaired in Abu Dhabi, we approved 100 percent foreign
ownership in 122 economic activities," UAE vice president and prime minister Sheikh
Mohammed bin Rashed Al-Maktoum said on Twitter.
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15 CITI-NEWS LETTER
The decision abolishes a decades-old law that limits foreign ownership to just 49 per
cent.
The move covers "fields including agriculture, manufacturing, renewable energy, e-
commerce, transportation, arts, construction and entertainment," Sheikh Mohammed
added.
The seven Sheikhdoms that comprise the UAE will have the discretion to specify their
own ceilings for foreign ownership of key business sectors, a government statement
said.
To dodge the 49-percent limit, some emirates led by Dubai have long established free
trade zones where foreigners can own up to 100 percent of their business.
Sheikh Mohammed said Tuesday's decision opens the UAE economy to all nationalities
so as "to make it one of the best destinations for global investments."
The cabinet decision essentially opens up 13 major economic sectors in the Arab world's
second largest and most diversified economy.
The capital Abu Dhabi sits on the majority of the UAE's vast oil reserves and pumps
close to three million barrels per day.
The UAE is already the Arab world's top recipient of foreign direct investment,
attracting more than USD 11 billion last year.
But economic growth was lacklustre last year, registering 1.3 per cent.
To counter the slowdown, authorities have introduced a range of measures, including
permanent residency schemes.
Expatriates, mostly Asians, form some 90 per cent of UAE's population of 10 million.
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Bangladesh seeks to synergise India ties
(Source: Asian Age, July 03, 2019)
Syed Muazzem pointed out trade, investment, connectivity and energy as the three key
areas of immediate focus.
Bangladesh high commissioner to India Syed Muazzem Ali listed security, fight against
terrorism, energy cooperation, bilateral and sub-regional connectivity, water sharing,
trade and investment, lines of credit, defence cooperation and people-to-people contact
as key features of India-Bangladesh relations.
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16 CITI-NEWS LETTER
“We need to combine our synergies in different areas for mutual benefits of both the
countries as well as of the region,” he said on Tuesday while speaking at an event.
Syed Muazzem said Bangladesh looks forward to taking full advantage of the high
growth of the Indian economy to further her own economic development. “A fast
developing Bangladesh also offers opportunities to India to further deepen its economic
relations,” he said.
He pointed out trade, investment, connectivity and energy as the three key areas of
immediate focus.
Quoting the Indian Prime Minister Narendra Modi, Mr Syed Muazzem said Bangladesh-
India relation is passing through a “Golden Chapter” or “Sonali Adhyay” and has
presently emerged as a “role model” for “neighborhood diplomacy” and countries in
other parts of the world should follow this model of “neighborhood relations”.
Referring to the Rohingya refugees in Bangladesh, the ambassador said Bangladesh
seeks continuous support of India and international community to put pressure on
Myanmar for taking back their citizens.
“The ultimate solution to the crisis can come only when Myanmar recognizes Rohingyas
as their citizens and takes over a million of refugees back home. We are working on safe
repatriation of the Rohingyas,” he said.
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Does India really need a direct tax code?
(Source: Sanjay Sanghvi, Economic Times, July 03, 2019)
A new law is certain to consume precious time and energy for all stakeholders.
The Union Budget may be around the corner. But the task force set up by the finance
ministry on the new direct taxes code (DTC) is scheduled to submit its draft by July 31.
The task force was mandated to draft a new law to bring income tax in line with global
best practices, while also addressing India’s economic needs. Recently, the terms of
reference was expanded to include faceless tax assessments, introducing amechanism
for cross-verification of financial transactions, reduction in compliances, litigation and
sharing of information among various economic agencies of the govt. While its stated
objective is worth appreciating, the odds against introducing DTC are high, compared to
ensuring that the existing income-tax law is administered rationally and with fairness. A
new law is certain to consume precious time and energy for all stakeholders —
taxpayers, tax authorities, tax advisers, the judiciary — in their need to unlearn the
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existing law and to learn the new code from scratch. Having said that, the Income-Tax
Act has been amended several times to keep up with changing business dynamics.
Whether these amendments have been measures to counter base erosion and profit
shifting (BEPS), or to instal ‘place of effective management’ (POEM) guidelines in
corporate taxation, the legislature has kept pace with the country’s economic needs. But
one is left unsure as to what specific change is being sought to be brought in by having a
new tax law altogether, instead of bringing it under the existing Income-Tax Act. It is
well-known that tax administration has been the biggest litigator in this country. While
GoI has taken steps towards doing away with litigation of small tax amounts where cases
are in favour of taxpayers at the appellate level, there remains a substantial backlog of
cases across all appellate fora and courts. It is unclear whether bringing in DTC will add
to or subtract from the present pile-up. Under the Income-Tax Act, several significant
provisions have attained some certainty, thanks to judicial adjudication by tax tribunals
and courts over time. As was highlighted by the Supreme Court in the Vodafone case in
2012, certainty and stability of law is fundamental for any fiscal statute. If a new tax
code is introduced now, it would seem that such ‘certainties’ will need to be redefined all
over again. Instead of a new tax code, what is needed is a fair and reasonable
administration of existing tax laws as contained in the Income-Tax Act, 1961. With the
introduction of the general antiavoidance rule (GAAR) in the Income-Tax Act,
‘aggressive tax planning’ on the part of taxpayers stands sufficiently addressed. Then
there’s the matter of treaty abuse by ‘third country’ parties. The terms of reference of the
task force are laudable. But these, too, can be made part of the Income-Tax Act and
implemented to reduce tax disputes in India. For instance, how does one reduce tax
litigation when foreign direct investment into an Indian operating company from a
prominent foreign economy is treated as unexplained cash credit (read: black money) in
the tax assessment of the Indian company? Once again, fair and reasonable
administration of tax laws, coupled with accountability of field officers, needs to be
pushed as a solution. It is also not very clear whether the proposed DTC will articulate
the provisions of incometax law in a totally different manner, the new law being
considered ostensibly to simplify matters and introduce best international practices.
One hopes that GoI carefully considers the pros and cons of introducing the new tax
code. It should also consider streamlining the existing Income -Tax Act instead of
introducing DTC.
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GLOBAL:
Christine Lagarde nominated as president of European Central Bank
(Source: Business Standard, July 03, 2019)
International Monetary Fund Managing Director Christine Lagarde was on Tuesday
nominated as the president of the European Central Bank, following which she
announced to temporarily relinquish her responsibilities as head of IMF.
The nomination means Lagarde will step down two years before the end of her second
five-year term at the helm of the IMF.
I am honoured to have been nominated for the Presidency of the European Central
Bank, Lagarde said in a statement issued at the IMF headquarters here.
In light of this, and in consultation with the Ethics Committee of the IMF Executive
Board, I have decided to temporarily relinquish my responsibilities as Managing
Director of the IMF during the nomination period, Lagarde said.
Lagarde would succeed Mario Draghi, whose term ends on October 31.
Lagarde's second term in office coincided with the rise of US President Donald Trump
and a wave of confrontations among major economies over trade, which the former
French finance minister described as a singular threat to the world economy.
Lagarde has at the same time acknowledged the strains caused by globalisation, which
has disrupted industries and marginalised some workers.
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Trade war: US manufacturing slows to a 3-year low
(Source: The Hindu BusinessLine, July 02, 2019)
The index of national factory activity dropped to 51.7 in June, the third straight monthly
decline.
US manufacturing activity slowed to near a three-year low in June, with a measure of
new orders received by factories tumbling, amid growing anxiety over an escalation in
trade tensions between the United States and China.
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19 CITI-NEWS LETTER
Other data on Monday showed construction spending unexpectedly fell in May as
investment in private construction projects dropped to its lowest level in nearly two and
a half years. The reports were the latest indications that economic growth slowed in the
second quarter after getting a temporary boost from exports and an accumulation of
inventory.
While the slowdown in factory activity was not as steep as had been flagged by some
regional factory surveys, a sharp drop in a gauge of prices paid by manufacturers could
be yet another reason for the Federal Reserve to consider cutting interest rates this
month. The US central bank last month signalled it could ease monetary policy as early
as this month, citing low inflation and growing risks to the economy from US-China
trade tensions.
“Manufacturing is clearly taking it on the chin from the rising trade uncertainty,” said
Chris Rupkey, chief economist at MUFG in New York.
The Institute for Supply Management (ISM) said its index of national factory activity
dropped to 51.7 last month, the lowest reading since October 2016, from 52.1 in May. It
was the third straight monthly decline in the index.
A reading above 50 indicates expansion in the manufacturing sector, which accounts for
about 12 percent of the US economy. Economists polled by Reutershad forecast the ISM
index would fall to 51.0 in June.
‘Trade turbulence’
The ISM said businesses “expressed concern about US-China trade turbulence.” They
were also spooked by potential tariffs on Mexican imports, which were averted at the
eleventh hour.
The United States’ bitter trade war with China has hurt business sentiment. That,
together with disruptions to supply chains caused by import tariffs, is weighing on
manufacturing.
US President Donald Trump and Chinese President Xi Jinping on Saturday agreed to a
trade truce and a return to talks. But Trump said he was “in no hurry” to cut a deal and
Chinese state media warned there was no guarantee an agreement would be reached.
Trump in May raised import tariffs on $200 billion in Chinese goods, prompting Beijing
to retaliate.
Slowing economy
Manufacturing is also taking a hit from an inventory overhang, which has resulted in
businesses placing fewer orders with manufacturers. A reduction in the production of
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Boeing's MAX 737 aircraft, which was grounded in March after two fatal plane crashes
in five months, is also a drag on activity.
The weakness in factory activity is in sync with a slowdown in economic growth
following a temporary boost from exports and an accumulation of inventory. Consumer
spending is rising moderately, while the pace of job and wage growth has slowed. In
addition, the housing market is struggling and the goods trade deficit widened in May.
The ISM's forward-looking new orders sub-index decreased 2.7 points to a reading of
50.0 last month, the lowest reading since December 2015. A measure of prices paid by
manufacturers tumbled 5.3 points to 47.9.
Computer and electronic products manufacturers complained that “China tariffs and
pending Mexico tariffs are wreaking havoc with supply chains and costs” and described
the situation as “crazy.” Transportation equipment manufacturers said “demand for the
remainder of 2019 has softened significantly, due to issues in the aerospace industry.”
“While manufacturers' worst fears about an all-out trade war with China developing
imminently have been allayed, uncertainty about the structure of future trading
relations continues to linger,” said Sarah House, a senior economist at Wells Fargo
Securities in Charlotte, North Carolina.
“We suspect factory activity will continue to struggle in the second half of the year.”
Improving sentiment
However, there were some glimmers of hope for manufacturing. Factories reported
hiring more workers, which included replacing retiring workers and adding summer
help. The survey's factory employment gauge rose to 54.5 from 53.7 in May.
That pointed to a moderate pick-up in manufacturing payrolls in June after they were
almost flat in May. It also suggested an improvement in overall job growth last month
after non-farm payrolls increased by only 75,000 in May.
The government is scheduled to publish June's employment report on Friday.
Suppliers' deliveries are improving. While a measure of inventories contracted for the
first time since December 2017, with many manufacturers saying they continued to align
stocks with softening demand, more customers viewed inventories as too low, which
could lead to some increase in orders.
Stocks on Wall Street were trading higher, with the S&P 500 index hitting an all-time
high, as technology stocks gained on a likely reprieve for Chinese telecoms company
Huawei. The dollar rose against a basket of currencies, but US Treasury prices fell.
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21 CITI-NEWS LETTER
Despite the persistent weakness, US manufacturing is in relatively better shape
compared to the rest of the world. Reports on Monday showed factory activity shrinking
across much of Europe and Asia. The ISM said 12 industries, including machinery,
computer and electronic products, textile mills, furniture and electrical equipment,
appliances and components reported growth last month. Apparel and transportation
equipment were among the five industries reporting a contraction.
A separate report from the Commerce Department on Monday showed construction
spending declined 0.8 per cent in May, the biggest drop since last November, after rising
0.4 per cent in April. Construction spending surged in the first quarter, boosted by
increased investment in roads and highways by state and local governments.
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Pakistan: Govt allows duty-free cotton import till July 31
(Source: The News, July 03, 2019)
The government has silently granted extension to duty-free import of cotton by another
month, contrary to the demands of most of the stakeholders, sources said.
The Economic Coordination Committee (ECC) of the Cabinet last week accorded
permission to give total exemption of 11 percent duty and taxes on cotton import. This,
the sources added was unlike the previous year’s practice, and favoured the textile lobby.
The recommendation came from Abdul Razak Dawood, advisor for textile, commerce,
industry and production, and investment. The government silently gave the extension
on June 30, 2019, and contrary to previous practices, did not announce the formal
decision after the ECC meeting.
The decision was against the recommendations of the non-partisan Parliamentary
Committee on Agriculture. In its unanimous recommendations, the Parliamentary
Committee asked for restoration of regulatory import duty on cotton to prevent its
massive import and dumping, and to enable farmers receive international parity price.
Ministry of National Food Security and Research also supported withdrawal of
exemption given on cotton imports to give incentives to local farmers to grow the silver
fibre on greater area. Almost all farmer bodies vehemently oppose the import of cotton
right in the middle of cotton cultivation season.
Pakistan Kissan Ittehad (PKI) has forcefully backed domestic production of cotton by
giving incentives to local farmers. The unabated import of cotton would ruin local
growers, as price of lint would crash in the market, warned PKI.
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22 CITI-NEWS LETTER
The price of fresh cotton was already below Rs3,000/maund in Sindh, much lower than
the due price, it added. The decision might discourage growers from tending their
standing crops against pest attacks, which could also impact total output of the silver
fibre.
Cotton ginners were also unhappy with the inconsistent policy for dealing with the
cotton market. Ihsanul Haq, senior member of Pakistan Cotton Ginners Association
(PCGA) said frequent changes in policy for cotton trade made this business riskier,
which was always unwelcomed by ginners.
PKI President Khalid Khokhar said the regulatory measures being taken by the federal
government were against its policy of increasing cotton production in the country.
Textile bodies, including the All Pakistan Textile Mills Association (APTMA) have hailed
the federal government's decision to continue the policy of duty-free cotton import.
APTMA spokesman said cotton import was necessary for meeting the requirement of
local industry. He brushed aside the notion that farmers would be adversely affected
from the imports. “Local cotton is yet to start arriving in the market,” he added.
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Apparel sector urged to develop supporting industry to optimise EVFTA
(Source: Vietnam Plus, July 02, 2019)
Insiders have recommended Vietnam pay attention to developing weaving and other
production activities supporting the textile-garment sector to make best use of the
EVFTA, a freshly-inked free trade agreement with the European Union.
In 2018, the textile-garment sector posted year-on-year exports growth of more than 16
percent to surpass 36 billion USD, making Vietnam the world’s third biggest exporter of
these products, after China and India.
Based on these figures, the Vietnam Textile and Apparel Association (VITAS) believes
the export target of 40 billion USD for 2019 is achievable, thanks in part to FTAs,
including the one with the EU – the second biggest market for Vietnamese textile and
garment products.
VITAS Chairman Vu Duc Giang said the EVFTA, signed in Hanoi on June 30, promises
apparel export potential of more than 100 billion USD annually. Textiles and garments
shipped to the EU are currently subject to export tariffs of 9.6 percent, but when the
EVFTA takes effect, the rate will be gradually reduced to zero percent in seven years.
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23 CITI-NEWS LETTER
He noted most of the countries exporting textiles and garments to the EU don’t have
FTAs with the bloc. Therefore, if Vietnamese firms meet origin requirements, the
EVFTA will open up enormous opportunities for exports.
Managing Director of the Vietnam National Textile and Garment Group Cao Huu Hieu
said that to be exempt from tariffs, apparel products must satisfy two conditions: the
fabric used to make apparel must hail from Vietnam or the EU, and the production
process must be carried out in Vietnam or the EU.
However, the EVFTA is also flexible, he said, elaborating that apparel products can also
benefit from preferential tariffs under this deal if the material fabric comes from the
countries that have FTAs with both the EU and Vietnam, such as the Republic of Korea.
VITAS Chairman Giang pointed out that although the rules of origin in the EVFTA are
not as strict as in the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP), Vietnamese firms still face several challenges because most of
them have just engaged in cutting and sewing steps while not producing fabric and yarn.
Additionally, most production materials still come from China, which doesn’t have a
trade deal with the EU.
To capitalise on the EVFTA, he urged domestic businesses to develop weaving and the
supporting industry to provide materials for the sector.
They also need to use more fabric from the Republic of Korea to make use of the trade
pact pending the supporting industry’s development. Under the EVFTA, companies can
also import materials from Europe to improve their products’ quality and value, he
added.
According to Director General of the Garment 10 Corporation Than Duc Viet, his
company has high hopes for the EVFTA, and has made preparations to capitalise on this
deal.
Exports now account for 80 percent of Garment 10’s total revenue, with 45 percent of
export turnover from the US, 35 percent from Europe, and 10 percent from Japan.
These figures will change when FTAs come into force as the firm will receive more
orders, he noted, adding that the business has made plans to connect its domestic
supply chain to satisfy origin requirements
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Pakistan: Razak emphasis for role of Chinese investors in local textile
sector
(Source: Business Recorder, July 03, 2019)
The Adviser to Prime Minister on Commerce, Textiles, Industries and investment, Abdul
Razak Dawood on Tuesday underlined the significance of investment opportunities for
Chinese investors in textile sector for industrial cooperation and growth.
Razak appreciated the role of Chinese Companies in textile sector of Pakistan and urged
the Chinese delegation to have more extended cooperation in the textile sector, said a
press release issued by Ministry of Finance here.
A Chinese delegation of National Textile and Apparel Council (CNTAC) was called on
Abdul Razak Dawood to deliberate upon bilateral trade and investment opportunities.
CNTAC is the National Federation of all textile-related industries, as it includes the
textile industrial associations and the other economic entities as the registered
members.
Members of the delegation showed interest in technology up gradation in Pakistan by
investing in Textile Research Centers and Stitching Labs.
Adviser to PM emphasized to enhance know-how regarding Chinese technological
advancement in textile sector and urged the delegation to cooperate in the development
of textile sector to avail investment opportunities for developing better partnership.
He appraised the delegation that China Pakistan Economic Corridor (CPEC) has opened
enormous investment and business opportunities in Pakistan.
In the first phase of the project investment was only attracted to power sector and
infrastructure development, he added.
Now “we are entering into second phase of CPEC, as industrial cooperation, which
provides enormous opportunities for investment in textile and agriculture. Moreover, in
the wake of China-Pakistan Free Trade Agreement (FTA) Phase-II bilateral cooperation
between two countries is widening by providing extended market access to Pakistani
product in Chinese market which has increased industrial base of Pakistan, adviser
highlighted.
Razak said Chinese companies should invest in whole value chain of textile, from cotton
to garment, for the development of sector and both countries should work for win-win
position.
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25 CITI-NEWS LETTER
He apprised the participant that China has already cooperated in manufacturing of
polyester yarn in Pakistan and eying for extended mutual cooperation in finished/value
added products of textile sector.
Head of CNTAC delegation appreciated the Pakistan’s business friendly environment for
better cooperation in industrial development, especially textile industry.
The visit of CNTAC aims to observe the existing business environment for future
investment in industrial development in Pakistan.
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EU-Mercosur Trade Deal Opens Opportunity For Textile And Clothing
Companies
(Source: Textile World, July 02, 2019)
EURATEX, the European Apparel and Textile Confederation, welcomes the conclusion
of negotiations for a comprehensive and ambitious Free Trade Agreement between the
European Union and Mercosur (Argentina, Brazil, Paraguay and Uruguay).
EURATEX has been actively engaged in the negotiation process to ensure an agreement
fit for textile and clothing companies, also preserving social and environmental
standards in the manufacturing of high-quality products. “Despite a challenging trade
environment, we are glad rules-based trade has prevailed” stated Alberto Paccanelli,
EURATEX president.
The EU-Mercosur FTA is the largest trade agreement ever concluded by the European
Union, covering a population of 780 million. According to the EU, this agreement will
save European companies over 4 billion euros in duties. For the textile and clothing
industry in particular tariffs have been very high, reaching 35% in Brazil.
“In 2018 EU exports of textile and clothing products to Mercosur were 460 million
euros and the elimination of tariffs will open further business opportunities for our
sector” added Paccanelli, “We look forward to a swift approval by the European Council
and the European Parliament.”
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