Court Stops Auction of Textile Growth Quota

The Sindh High Court (SHC) restrained the auction held by EPB on March 11, 2003 of textile quota category-363 (terry and other pile towels) to be exported to USA and category-9 (towels) to European Union (EU) on a petition filed by a large group of textile exporters.

The petitioners, country's top exporters and members of Towel Manufacturers Association of Pakistan (TMA) and Pakistan Commercial Exporters of Towels Association (PCETA), pleaded that they had to suffer a huge loss due to the deduction of quota of 5.1 million pieces category-363 by the US authorities for adjustments, 1,400 tonnes of quota category-9 of EU due to the Union's refusal to allow flexibilities and a monetary loss of about $3-4 million due to heavy demurrages they had to pay at the EU ports.

They said the growth quota should be disbursed among them to compensate losses. The growth quota extended by the USA and EU is meant for allocation to new exporters and not for earning revenue, they argued.

The EPB had offered a quantity of 2.826 million pieces category-363 to US and 670,000 kgs category-9 to the EU in auction and fixed a reserve floor price of Rs25 per piece and Rs20 per kg respectively.

The EPB officials had sealed the bids received in the auction for both categories when the court order reached them at 12:30 noon with bidders already having dropped most of the bids in the boxes along with a draft of 30 per cent against the bids. The bids will now be opened after the case is disposed of.

The petitioners blamed EPB for mismanagement. It had allowed over-programming for the EU categories without getting the quantities of flexibilities from the EU, they alleged.

The EPB was expecting about 4,000 tonnes flexibilities in top four categories from the EU but the it expressed inability to extend the quantity. This resulted in detention of exporters' consignments at the EU destinations.

Sources said the EPB used to allow 15 per cent over-programming after getting the flexibilities quota from the EU but this year EPB allowed over-programming without getting the quantities due to which a big quantity had been shipped by the exporters and got stuck up at EU ports.

They said they had to pay a huge amount of $3 to $4 million as demurrage until their consignments were released after allocation of New Year's quota. Likewise, the US Customs had deducted 5.1 million pieces quota from towels category on similar reasons and made the exporters to bear a massive loss.

They said the EPB has offered 2.82 million pieces quota in auction whereas their loss stands at 5.1 million pieces category-363 and 1,300 tonnes category-9. Thus they would be facing a shortfall of 2.3 million pieces and 100 tonnes even after all the growth quota is allotted to the affectees. The petition will come up before the Division Bench on March 19, 2003 for hearing.