In a step towards implementing the Economic Community of West African States (ECOWAS) Common External Tariff (CET), the federal government recently delisted textile materials and other items from its import prohibition.

Alhaji Abdullahi Dikko, the Comptroller-General of Nigeria Customs Service (NCS), made this known in Lagos, last month. He said that the textile materials, furniture and other delisted items could now be imported. However, this was subject to the payment of a 35 per cent duty as agreed to by all 16-member countries of the sub-regional body. He added that there was also a provision for an import Adjustment Tax. Dikko was speaking at the launch of the implementation of the CET.

Some adjustments for member countries had to be made with the CET though, said Dikko. There were 97 chapters with the 5,899 tariff headings, but every member country was entitled to three per cent adjustment. This would later translate into 177 tariff headings, which would in turn enable member countries to protect their local industries. The new policy comes into effect in June, as directed by the Federal Ministry of Finance.

A committee has already been set up by the ECOWAS Commission, to monitor the implementation. This would allow it to ensure that there’s adequate compliance so that the provisions are not abused.

Cotton growers in Pakistan are still waiting for the government to decide on the cotton intervention price for the current season. The delay is having a negative impact on them. The National Assembly Standing Committee on Textile Industry and the Ministry for National Food Security and Research had fixed the intervention price of cotton at Rs 3,000 per 40 kg for the financial year 2015-16. The Trading Corporation of Pakistan (TCP), in the second week of November, intervened in the domestic market and started procurement the commodity to stabilise cotton prices. Less than 1,00,000 bales were procured. However, the late decision was not beneficial for farmers and objections were raised after which, cotton procurement was suspended. However, the TCP is likely to be made bound to procure at least two million cotton bales for this year.

It is possible that the government will procure seed cotton instead of lint cotton on an experimental basis, as per the Indian model of cotton procurement. The cotton price may be fixed in between the import and export parity prices. Lint cotton is exported as well as imported by Pakistan and during this course of business activity a lot of revenue is being spent, which may be avoided through the import of long staple cotton, which is required for fine quality cotton in certain textile sectors.

In the wake of the Rana Plaza factory collapse in Bangladesh in April 2013, two major initiatives were launched by major apparel brands, the Accord on Fire and Building Safety in Bangladesh (the Accord) and the Alliance for Bangladesh Worker Safety (the Alliance), to establish mechanisms to prevent fire and safety hazards. A recent report by the Institute of Developing Economies, the largest industry in Bangladesh is ready-made garments (RMG), which comprises nearly 50 per cent of the nation’s economy.

Tragedies trigger safety measures

As there’s a high population density and paucity of land, garment factories are usually built one upon the other and in some cases, in former swamp areas. Thus, while many factory owners share the same building, structural weaknesses tend to be ignored. This was the backdrop of the Rana Plaza disaster, which had five workshops and 2,000 workers.

Rana Plaza was not the only incident to take place due to the fire and safety hazards. A fire in Tazreen Fashions killed 112 workers in November 2012 and in a response, the Ministry of Labour and Employment of Bangladesh, in a joint effort with the International Labor Organization (ILO), coordinated the adoption of National Tripartite Plan of Action on Fire Safety and Structural Integrity in the RMG sector in Bangladesh. This was signed by the government, employers and workers. The Plan was in place even before the Rana Plaza collapse. However, the international community kept questioning fashion brands’ responsibility in the collapse, though brands did not directly own the supplier factories. Media reports and calls for accountability made brands take action and the Accord was launched on May 15, 2013 and the Alliance on July 10, 2013.

The two plans, similarities and differences Both the Accord and the Alliance are based on the National Tripartite Plan and share the same goal of preventing fires and building safety hazards in Bangladesh. However, there are some marked differences between the two. The Accord has over 260 members and includes many top European companies. It is often referred to as a ‘European’ initiative. While, the Alliance consists of 26 North American brands and companies.

A legally binding agreement, the Accord is signed by trade unions and NGOs. Most signatories are from Europe, some from North America and Asia. Four global labour unions and six Bangladeshi labour unions are a part of the Accord, and four international NGOs act as witnesses. Signatory companies commit to the Accord’s activity and obligations for its full tenure. Each company commits to maintaining long-term sourcing relationships with its main suppliers, conditioned upon the supplier’s compliance with fire and building safety measures. 

Pakistan's textile industry has lost its viability against regional competitors. Facing tough times the Pakistan Textile Exporters Association (PTEA) has sought government's intervention to tackle the situation. Production costs are at a comparative disadvantage in the country.

It’s tough times for industry 

Sohail Pasha, Chairman Pakistan Textile Exporters Association, points out that due to unfriendly and inefficient socio-economic environment, the cost of doing business in Pakistan has soared tremendously. This is because of the constant rise in raw material prices and production inputs that in turn renders the country’s exports uncompetitive in international market. Competing countries have an advantage and are making in-roads in traditional markets, pushing Pakistan textiles out.In Punjab particularly, the textile industry is in a crisis since long and is struggling to survive. High production costs coupled with energy constraints have put a stop to the industrial wheel and disturbed the competitive edge of textile exports. Regional rivals have grown their exports with government’s support, increasing their market share in global textile trade. From 2008 to 2013, Bangladesh achieved 160 per cent growth in textile exports, while China achieved 97 per cent and India, 94 per cent. However, Pakistan’s growth remained at 22 per cent. The statistics show Pakistan’s global textile trade had dropped from 2.20 per cent to 1.80 per cent.

Energy shortage is another major bug bear. Besides, the cost of doing business too has risen and there’s a burden of incidental taxes, provincial cess, inefficiencies in the system and withholding tax regime has made it more difficult for the industry.

Need for government intervention

PTEA chairman feels that the government needs to provide a level-playing field to double existing share in global textile exports. He cited an example such as incentives under technology upgradation fund scheme, focus market scheme, focus product scheme and export goods scheme that are available to Indian textile exporters.

PTEA also urged the government to look into this seriously and step up to save the forex earning sector from disaster. Two main factors as stated, energy crisis and high cost of doing business are keeping back this mainstay of the national economy from optimum growth. Thus, uninterrupted supply of gas and electricity at regionally affordable rates, liquidation of all pending refunds, removal of all innovative taxes and restoration of zero rating regime for textile export chain should be ensured by the government. This would help restore the competitiveness of the industry.