EU will review anti-dumping duties on Pakistani bed linen
The European Union will probably reduce before the end of the year anti-duping duties imposed on Pakistani bed linen since last March. A full review has been initiated with EU investigators expected in Pakistan in the short term. Pakistan's bed linen exports to the European Union continued rising since the start of the year and could surge in quota-free 2005.
EU's Commission decided launching a new review over imports of Pakistani bed linen. A definitive duty of 13.1% has been imposed since March 2004.
On-site investigations had been interrupted by a life threatening letter received by EU's team when visiting the country.
As a consequence, EU's Commission had decided to unusually impose an overall additional tariff, the same for all exporters.
Anti-dumping duties may usually differ depending on companies with certain exporters being possibly exempted from any duty.

Possible exemptions
Exporting companies accepting to release information and to negotiate often receive better treatment than others.
Due to the life threatening letter, all major Pakistani groups were imposed the additional duty, effective from March.
"Security circumstances have changed," explained EU's Commission in its latest notice. As a result, investigations will resume with EU's team possibly visiting Karachi and Faisalabad in November.
After the official notice announcing the anti-dumping review was published on 3 August, EU's Commission apparently received answers from major Pakistani producers, including Al-Abid, Younus, Nishat, Chenab or Gul Ahmed.
Exporters previously urged EU's Commission to lift anti-dumping duties as they will also lose their duty-free access on EU's market from 1 January 2005.
A preferential treatment had been offered to Pakistani apparel and bedwear exporters from 2002 under EU's GSP drug provision.
EU's Commission last year decided graduating Pakistan, effective from 2005. Bed linen imports will be imposed a normal 12% duty, as a consequence. Added to the anti-dumping duty, the removal of the GSP benefit would result in a 25% additional tax.

US imports of home textiles from India continued increasing in the January-August period (latest available data), in line with a new rise in the market.
Shipments from India were weakened by the strength of the rupee at the end of 2003 and the beginning of 2004 before being boosted by a new depreciation of the Indian currency from April this year.
Cotton towels (363)
Shipments even surged 31% in volume terms in category 363 (cotton terry towels) after declining 4.52% in 2003.
By the end of September, the US quota was not far from being filled in tihs category when taking account of products that were effectively shipped from India.
Fill rate reached 94.52% against 82.75% at the same time last year, according to India's export promotion body Texprocil. Exports rose 29% in volume terms in the January-September period in this category 363 with average unit value of shipped products remaining unchanged at US$1.82 per piece.
India is already the largest supplier in this category and gained new market shares this year as US imports from Pakistan only rose 1.10% over the January-August period.
Cotton sheets (361)
US imports of cotton sheets (category 361) from India also remained relatively strong in 2004, although less booming than in the past two years.
Shipments were up 96% and 51% in 2002 and 2003 in volume terms, before only rising 10.50% in the first eight months of 2004, reflecting a decline at the start of the year followed by a rebound in the second quarter.
Indian suppliers are not threatened by their major competitors, as US imports from Portugal and Pakistan declined 30% and 20% at the same time, respectively.
Average price of Indian sheets was up 23%, as suppliers shifted to higher-valued products. US imports from India jumped 36.60% in value terms, as a result.
With its share of nearly 20% in value terms in the January-August period, India was a clear leader on the US market.
Cotton pillowcases (360)
India also remains a leader on US market for cotton pillowcases (category 360). US imports from India only rose 3.16% in the first eight months in this category after jumping 98% in 2002 and 57% in 2003, but shipments from Pakistan and Portugal were down 25% and 22% in the January-August period, respectively.
Imports from China rebounded, however, possibly prefiguring a surge in the coming year, after quotas will have been eliminated.
In category 369 (other cotton manufactures), imports from India this year slightly rebounded after remaining flat in 2003.
China remains the leader with a substantial gain in market shares while Pakistan is losing ground before India which is still in third position.
Wool blankets and carpets
In wool categories, in sharp contrast, India is doing extremely well.
US imports of wool blankets from India more than doubled over the January-August period with its import market share rising to 54%.
Shipments from China fell 73% at the same time with its share declining to only 20% on this very small market.
In category 465 (wool carpets), imports from leading India were up 13% while shipments from China and Iran fell 5.6% and 19% respectively. Total US imports from India reached US$245 million in 2003 or 23% of total imports of made-ups from the same country.

With demand from downward processors remaining weak, prices of cotton yarns did not increase in China.
Compared with two weeks ago, cotton yarn prices were unchanged or sligthly up on 30 September in Changyi (Shandong), on the eve of a 1-week long holiday.
Lower margins
Average price of carded 32s was up 100 yuan or 0.56% to 17,850 yuan (US$2.15 per kilo).
Cotton yarn prices slightly rose during the same period in the southern province of Guangdong and in Ningbo, mainly due to the low level in stocks at customers' mills.
Average price of 32s carded was about 19,300 yuan in China by the end of last week.
Spun yarn makers are apparently confronted with lower margins since unable to raise prices when raw materials costs are increasing. On the other hand, they were forced to pass on to their customers all decreases in cotton prices in the first half of the year.
In addition to cotton costs, viscose and polyester prices also increased in the past two weeks, limiting the substitution of cotton by other fibers.
Due to the high level in cotton prices in China, compared wih international markets, exports of cotton textiles were depressed this year, even falling below imports of the same products.
Cotton yarn exports decreased by 2% while shipments of cotton woven fabrics declined 9.5%. Exports of knitted fabrics were limited by the new quota re-imposed by the United States.
Yarn capacities are rapidly increasing at the same time, putting pressure on prices. Yarn production is rising 15% per year and could reach 10.5 million tons in 2004.
Investment would have increased by 35% at the same time, adding to costs supported by China's spinning industry.
Lower prices in Pakistan
As a result of a sharp decline in cotton prices, yarn prices also fell in Pakistan in the past two weeks.
In Karachi, prices were down about 10 to 25 rupees per bundle of 10lbs. They declined between 4 and 11 cents per kilo in US$ terms.
Demand is not considered strong as downward processors are waiting for the end of the current decline in cotton prices and arrival of the new crop before ordering more cotton yarns.

EU's outgoing Commission this week proposed a plan to limit the expected impact of textile quota phase-out in the coming years.
In addition to measures aimed at modernizing textile and apparel industries in the 25 member countries, EU's Commission pledged it would more strictly monitor textile and apparel imports from China.
EU's future Trade Commissioner Peter Mandelstam already warned that imports from China would certainly surge in 2005.

No hurry...
Outgoing Commissioner Lamy this week confirmed that EU's executive arm would set up a monitoring system with four alarm levels for each type of product, from green to red.
When reaching the red light, a China textile safeguard would be launched by EU's Commission, with quota being re-imposed on corresponding imports from the PRC.
In sharp contrast with the United States where quotas were already re-imposed on three categories of products, EU's Commission is in no hurry to use the China safeguard.
The Commission would obviously prefer negotiating with China ahead of any official safeguard process. It could also launch anti-dumping investigations rather than limiting imports, according to various observers.
EU's outgoing Commissioner also confirmed that preferential treatment would now focus on poorest countries. A decision covering the new Generalized System of Preferences (GSP) could be taken on 0ctober 20th.
Major textile exporters such as China, India and Pakistan would be excluded from the GSP benefits, effective from 1 January 2006.
According to Chinese sources, the GSP treatment on China's exports would today account for 20% of EU's average import tariff of 9%, or 1.8% of import value.

Euro-Med regional cumulation
In addition to limiting the anticipated surge in imports from China, India and Pakistan, the GSP reform is a way to support Bangladeshi exports to the European Union.
When interviewed by EU's Parliament a few days ago, Peter Mandelstam made it clear that Bangladesh is threatened by the textile quota phase-out, being highly dependent on its clothing exports.
"Bangladesh is facing ferocious competition, near wipe-out in the case of textiles," said the former UK's minister and architect of Tony Blair's New Labour who announced a relaxation in rules of origin for preferential treatment offered to the poorest countries.
The European Union will also continue negotiating an improved access to textile markets of low-cost countries.
As part of the Doha Round of multilateral trade negotiations, EU's Commission will insist on non-tariff barriers, in addition.
The European Union will also try speeding up regional integration with Mediterranean countries. A so-called cumulation of origin for textile and clothing trade within the region would help protecting its industries from Asian imports.
Before implementing the regional cumulation, EU's Commission requires that free-trade agreements will be concluded between all interested parties, however.
This is a very slow process, due to political issues in North Africa and the Middle East.
The European Union is also renouncing in immediately imposing any origin marking on imported clothing.

US apparel imports rose 8.29% and 9.39% in August in volume and value terms, respectively. This is a first sign of a possible recovery in US apparel imports, after they were up 0.63% in first half in volume terms before declining 2.20% in July.
China took advantage of the rebound with shipments from the PRC increasing by more than 31% in volume terms in August, compared with a rise of 28% in July and 25% in the first half.
China's share of total US apparel imports further jumped from 12.14% in 2003 to 16.64% in August 2004.
Vietnam and Cambodia
More surprisingly, US apparel imports from Vietnam surged 29% in August after falling 22% in July and declining 13% in the first part of the year.
Shipments from Vietnam were actually slowing down in the comparable month of August 2003 after the US imposed quotas on Vietnamese clothing, effective from 1 May.
US imports from Cambodia also surged in August, up 51% in volume terms. Shipments rose 20% in 2003 and increased by 19.50% in the January-August period of 2004.
In sharp contrast, Mexico and Central America are facing new difficulties on the US market.
Mexico's share of US apparel imports fell from 10.48% in 2003 to 8.89% in the first eight months of the year.
Imports from Honduras and El Salvador continued declining in August while shipments from Dominican Republic were only up 2%.
Imports from so-called CAFTA countries were down 19% in volume terms in August.
Price decline supporting MMF apparel imports
Imports of cotton apparel were again much stronger in August, rising nearly 10% while US imports of cotton apparel only increased 6%.
Sharp rises were recorded in categories 333 (cotton M/B suite-type coats), 336 (cotton dresses) and 349 (cotton bras), however.
US imports of W/G wool suits continued surging, up 84% in August while shipments of MMF hosiery further jumped.
Imports of MMF W/G suits and MMF bras also sharply increased.
Average value of US apparel imports began declining from US$3.42 per square meter equivalent in July down to US$3.39 in August.
Unit prices of MMF apparel more sharply decreased than prices of cotton apparel.
Import prices of cotton knit shirts in categories 338/339 further rose while average value of cotton trousers remained at a high level.