India’s Cotton Export Policies Under Fire By Global Textile Organizations

Textile organizations in the United States, European Union (EU), Mexico and Turkey have sent a
joint letter to their respective governments urging immediate action to halt cotton trade
restrictions by the government of India. The organizations include the National Council of Textile
Organizations (NCTO), European Federation of Cotton and Allied Textiles Industries (Eurocoton),
Cámara Nacional de la Industria Textil (CANAINTEX), Istanbul Textile and Apparel Exporter
Associations (ITKIB) and Turkish Textile Employers Association (TTEA).

Together, the organizations represent more than 1 million textile workers, whose jobs could
be threatened by what the groups contend are discriminatory and illegal actions by India — the
world’s second-largest cotton exporter — to restrict or ban cotton exports in an effort to protect
its domestic textile industry. The groups note that the actions, imposed in April 2010, have caused
global cotton prices to surge from 62 cents per pound to $1.20 per pound, while India has
guaranteed low prices for cotton consumed by its own textile mills. They further note that
resulting price inequities are skewing competition in favor of not only Indian textile and apparel
producers — which are able to offer their products at subsidized prices — but also Chinese
state-owned textile mills — which are purchasing the remaining global supply at the high prices
demanded while also enjoying government subsidies that allow “enormous price flexibility.”

“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,” said NCTO
President Cass Johnson. “Large state-owned Chinese textile producers are now paying any price to
secure cotton. These actions are imperiling what had been a robust recovery for U.S. textile

Hacoit Benoit, 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.”

The letter states: “If the current scenario of India curtailing and delaying export of its
cotton crop continues to play out, European, Mexican, U.S. and Turkish textile mills will face the
prospect of prolonged high prices for cotton or having no supply of cotton at all. Either way, our
mills cannot survive such a scenario for an extended period of time.” It further asks “that our
governments immediately send the strongest message to India that it must not restrict or delay
export of its cotton to world markets and must abide by international trade rules.”

October 26, 2010