"A new report, Economic Development in Africa 2019, by the United Nations Conference on Trade and Development (UNCTAD), the Rules of origin may have a deep impact on African Continental Free Trade Area (AfCFTA). As these rules specify the criteria needed to determine the made-in label for a product, they will boost the economic well-being of the continent. However, for this they need to be formulated in a simple, transparent, business friendly and predictable manner."

A new report, Economic Development in Africa 2019, by the United Nations Conference on Trade and Development (UNCTAD), the Rules of origin may have a deep impact on African Continental Free Trade Area (AfCFTA). As these rules specify the criteria needed to determine the made-in label for a product, they will boost the economic well-being of the continent. However, for this they need to be formulated in a simple, transparent, business friendly and predictable manner.

AfCFTA to boost intra-African trade by 33 per cent

The UNCTAD data for 2015-2017 notes AfCFTA has the potential to change the intra-continental trade which currently constitutes only 15 per cent of commerce in Africa, compared to around 47 percent in the Americas, 61 per cent in Asia and 67 per cent in Europe. If fully implemented, it could increase the GDP of most African countries by 1 to 3 per cent once all tariffs are eliminated.

The AfCFTA will also boost the intra-African trade by 33 per cent once full tariff liberalisation is implemented, attracting additional intra-African investments and creating market opportunities to foster Africa’s industrialisation through regional value chains, according to the report. However, many of these gains could be undermined if rules of origin are not appropriately designed and enforced to support preferential trade liberalisation

Rules of origin have ensured the success of many trade agreement negotiations over the years, including the North American Free Trade Agreement and Central American Free Trade Agreement. However, these rules have also at times invited contrasting views from various economists. While some argue that the role of these rules should be confined to the authenticating the origin of goods, others believe that the negotiations for these rules are often inundated by lobbying and protectionist pressures.

Trade preferences to help develop regional value chain

As per the report, the best way to approach this dilemma is to use AfCFTA to enhance the consistency of trade policy with industrial policy objectives and the continent’s transformation agenda. These rules are not an industrial policy tool and should not be crafted or used to build non-tariff barriers around regional suppliers.

Rather than importing, AfCFTA member countries can source more intermediate and final goods among themselves by granting each other trade preferences. This would not only develop regional value chains but also build manufacturing capabilities in Africa.

Proper design and implementation to ensure success of rules

However, for companies to utilise these trade preferences, these rules of origin need to be designed and implemented properly. If they are made too costly or complex, firms could choose to trade with partners outside the AfCFTA. Another option is that companies might stick to trading only within existing regional economic communities, with few incremental gains arising from consolidating the regional market.

These rules should also consider the production capacities and infrastructure across the broad set of countries, including the Least Developed Countries (LDCs) that face challenges in making use of preferential tariffs and implementing origin requirements.

The global wool yarn market is growing at four per cent a year. Wool yarn is used to manufacture curtains, carpets, etc. The increasing preference for upholstery fabrics among consumers to enhance the appearance of their home interiors is creating a lucrative impact on the wool yarn market. The textile market has been growing at a significant rate. Owing to this, textile manufacturers are demanding raw materials such as wool yarn. Thus growing textile industry is acting as an influencing factor for the global wool yarn market. Increasing consumption of wool in end-use industries, especially in regions such as Europe and Asia Pacific, is set to boost cloth production, which is expected to increase the demand for wool yarn. The increased penetration of online retailing in the clothing sector is indirectly driving market growth. Even with the reduction in overall wool production, the trade in yarn, apparel, and textile items has grown. This is expected to drive the demand for wool yarn from clothing and textile industries.

India is working on persuading growers to focus on wool production rather than meat production. Production in such countries is further backed by the availability of cheap labor. Hence a considerable amount of wool yarn produced in India is exported to international markets.

German textile and clothing companies have made 2.5 percent more sales in the first quarter of this year. The number of employees rose year on year by 1.5 percent. The German textile and clothing industry has about 1 400 companies and 135 000 employees and is the second largest consumer goods industry in Germany. Exports increased by 9 per cent last year, while the sales declined due to a crisis in the German fashion retail.

German brands are leaders when it comes to excellent design and value. Worldwide, German companies produce according to best environmental and social standards. The medium-sized companies in the German textile industry assert itself worldwide with high quality.

Indian technical textile market is expected to witness substantial growth from 2016 to 2024. The government of India has launched various support schemes for textile and apparel manufacturers to make them globally competitive. The schemes target technology up-gradation, infrastructure development, export promotion etc. Various state governments have also announced their textile policies aimed at attracting investments in their states.

However, several measures still need to be undertaken and prioritised to facilitate the growth of the overall technical textile industry in India and help in the growth of India as a global manufacturing hub. Some of these measures include: establishing regulatory norms for mandatory usage of technical textile items in specific industries to increase their consumption, developing exclusive HSN codes for identifying high growth products for further development, establishing and implementing Indian standards for developing high quality products of global acceptance, improvement of operational standards, focus on training and education and creating end user awareness for increasing domestic demand for high end technical textile products.

Besides the above measures, few specific measures need to be undertaken for developing India as a global manufacturing hub including measures to attract investments from domestic and global players, forming partnerships with global players for acquiring technical know-how, the creation of mega parks to attract large-scale investments and focus on R&D initiatives.

Textile firm Welspun India has received preliminary court approval for settlement of its litigation in the US with regards to labelling and marketing of Egyptian cotton products. In May this year, Welspun India had announced that company and its subsidiaries, which have been facing litigation in the US surrounding its premium cotton home textile products, have entered into a settlement agreement in the US.

The settlement agreement provides monetary payments to settlement class members not exceeding $36 million (about Rs 250 crore). The company has agreed to increase payouts to individual settlement class members without increasing the aggregate $36 million settlement cap.

As per statutory procedure, the settlement agreement is subject to final approval and review by the appropriate courts in the USA. Welspun had reported a consolidated loss of Rs 78.43 crore for the quarter ended March 31, 2019, due to exceptional expense of Rs 224.01 crore related to settlement of litigation in the US with regards to labelling and marketing of Egyptian cotton products.

In 2018, Vietnam’s textile and garment exports grew by 16 per cent. The free trade agreement with the European Union is expected to yield huge benefits. The EU is the second biggest market for Vietnamese textile and garment products. Textiles and garments shipped to the EU are currently subject to export tariffs of 9.6 per cent, but when the free trade agreement takes effect, the rate will be gradually reduced to zero in seven years. If Vietnamese firms meet origin requirements, the agreement will open enormous opportunities for exports. To be exempt from tariffs, apparel products must satisfy two conditions: the fabric used to make apparel must be from Vietnam or the EU, and the production process must be carried out in Vietnam or the EU. However, 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.

However, Vietnamese firms still face several challenges as most of them have engaged in only cutting and sewing so far, and not producing fabric or yarn. Additionally, most production materials still come from China, which doesn’t have a trade deal with the EU.

Texworld USA will be held July 22 to 24, 2019. This is the largest fabric sourcing event for the North American market. This edition boasts an exciting educational line up with a spotlight on sustainability, and will also cover topics including circularity, traceability, and how to stay relevant in the current state of the industry. Since companies are uncertain how to implement sustainable practices, Texworld’s educational platform aims at addressing this matter by explaining how to improve internal processes and systems like a direct to consumer business model and how to become sustainable-certified. Interactive sessions will address current issues facing the industry, from supply chain changes to the impact of environmental textile trends. Insightful and informative sessions will be offered for every role and level of experience across every segment of the industry.

The African continent is a rapidly developing apparel market with Morocco, Egypt, Jordan, and the AGOA beneficiary countries topping the list for sourcing executives. The event will present the latest on this emerging region in the light of trade tensions, tariffs, and sustainability considerations. Experts will share their thoughts on the future of the area for apparel and the range of factors companies should consider when evaluating these countries.

The next edition of Collection Premiere Moscow (CPM) will be held from September 3 to 6, 2019. It will showcase collections for the spring/summer 2020 season. Exhibitors from Germany, Italy, France and Turkey will be strongly represented. Around 30 per cent of the exhibition space will be taken up by Russian manufacturers. CPM Shop & Retail Solutions is a service meant for specialists, manufacturers, retailers and service agencies, who, for example, manage online shops and retail chains digitally and are looking for the latest IT solutions, products and services for retail range management including merchandising.

There will be a focus on lingerie with CPM Body & Beach Fabrics featuring new products in terms of fabrics, haberdashery, accessories and print technologies. Spain will be represented by brands such as Admas, Disney, Santoro and Ysabel Mora. Exhibitors from Germany include Bugatti, Ceceba, Götzburg, MEY, Rosch Fashion and Tom Tailor Underwear. CPM Body & Beach is organised by Lingerie, one of the most influential Russian publications about lingerie and the lingerie business. At the upcoming edition of CPM, the magazine will be celebrating its 15-year anniversary and inviting its most important business partners, customers and friends. There will be a competition for young lingerie designers.

In spring/summer 2019 season Russian clothing imports from the European Union increased by eight per cent.

Südwolle Group, a leading producer of worsted yarn for weaving, circular and flat knitting in pure wool and wool blends, will showcase its Biella Yarn and HF collections at Pitti Filati. These variety of landscapes, both natural and human, is an inexhaustible source of inspiration, colours, feelings and shapes which is reflected in the yarn collections we create to clothe your daily life.

The new products feature the finest wools, sometimes in blends with other natural fibres, for lightweight contemporary knitwear. The color palette indulges prevailing trends with numerous shades of whites and beiges and an array of greys, from luminous ice tones to the darkest greys verging on black. Alongside these neutral and balanced hues there are flashes of bright color in yellow, green-blue and turquoise. An exploration of warm autumnal colors ranges from a variety of different khakis, ochre, sand and hazelnut to intense dark browns

India may revamp its customs duty regime, weeding out some exemptions and correcting inverted duty structures in order to encourage exports. An inverted structure is one in which the import duty on finished goods is lower than that on the materials or parts that go into making such a product, thus acting as a disincentive for local manufacture.

There will be a review with respect to encouraging domestic manufacturing. Sectors such as telecom, metals, batteries and chemicals for electric vehicles could see changes. Earlier duties were imposed on smart phones and telecom equipment and enhanced. A comprehensive review may now be undertaken that could lead to a reduction of duties on some critical inputs used in the manufacture of phones while raising them on finished products to further encourage domestic manufacture of handsets. Companies which have established assembly lines will be asked to locate their entire manufacturing chain in India.

Procedures for exporters and importers will be simplified. There is a move to anonymous assessment, aimed at greater efficiency and transparency in functioning. Single-window clearance has already been put in place for traders. Measures to boost exports, including tax refunds, are also on the anvil. Provisions to check tax evasion will be tightened.