In a joint letter to their respective governments dated October 26, 2010, textile groups employing more than one million workers urged the governments of the European Union, Mexico, Turkey and United States to take action against India if it continues to restrict the export of cotton.
The groups cited an illegal pattern of export restraints on cotton that the Indian government has imposed since April. The Indian restraints have contributed to an enormous increase in the price of cotton for non-Indian textile producers around the globe. Since India began restricting the export of cotton in April, the price of cotton has increased by nearly 100 percent, from 62 cents per lb to $1.20 per lb. According to the Wall Street Journal, cotton prices have hit all time highs in recent weeks.
The Indian action has come as world supply of cotton has tightened amid increasing demand and disappointing cotton crops in several large producing countries. As the second largest exporter of cotton, India is enjoying one of its largest cotton crops in history but has dramatically restricted its exports over the last six months.
Mr. Hacoit Benot, the president of Eurocoton, stated, India's anti-trade actions on cotton have caused turmoil in world markets. Under these circumstances, competition is seriously distorted. As a result, our European textile customers are faced with difficult options. They are forced either to pay prohibitive prices for their cotton and suffer increased competition on processed products imported into the EU at lower price, or they must reduce their own costs by relocating their production facilities and jobs outside of Europe, or they must simply close their doors.
Mr. David Garcia, the president of CANAINTEX stated, The Indian government has clearly broken WTO rules and must be held to account. Textile producers in Mexico should not be forced to pay ruinous prices for cotton because India is illegally subsidizing its domestic industry through its export bans and restrictions.??
Mr. Halit Narin, president of the Turkish Textile Employers Association (TTEA) joined with ITKIB Presidents Ismail Gulle and Hikmet Tanriverdi, and stated, We are very concerned that the recovery in the Turkish textile sector will be cut short by the Indian actions which have caused the price of cotton to skyrocket. While the Indian government has pledged repeatedly that its actions are short term, they have continued to interrupt supply to export markets for over six months.
Mr. Cass Johnson, president of the National Council of the Textile Organizations (NCTO), stated, For the first time in history, U.S. mills are worried about running out of cotton because India's actions have constricted the worldwide supply and have caused panic buying. Large state-owned Chinese textile producers are now paying any price to secure cotton. These actions imperiling what had been a robust recovery for U.S. textile mills.
The groups noted in the letter that their mills face the prospect of extremely high prices for cotton or having no supply of cotton at all. They noted that either way, our mills cannot survive such a scenario for an extended length of time, and urged their respective governments to send the strongest message to India that it must not restrict or delay export of its cotton to world markets.
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