by: A.Arputha Selvaraj APMP IIM Calcutta

Textile Trade Textile Trade Scenario with Scenario with CanadaCanada

International Trade Agreements

▪ General Agreement on Tariffs and Trade ruled international Textile trade since 1948

▪ The Multi-Fiber Arrangement (MFA) governed international trade in textiles and clothing since 1974

▪ The WTO’s Agreement on Textiles and Clothing (ATC) to abolish MFA quotas marked a significant turnaround in 2005

▪ The ATC provided for a stage-wise integration process within period of 10 years (1995-2004)

▪ Integration process divided into four stages starting with the implementation in 1995 as:

Each country was required to integrate :

(Stage i) 16 percent of the total volume of imports of 1990

(Stage ii) 17 percent at the end of first three year

(Stage iii) 18 percent at the end of third stage

(Stage iv) final integration of the remaining 49 percent of trade

Canadian Textile Industry The Canadian apparel industry plays a key role in the Canadian economy

In 1994, the apparel industry contributed 2.2% of Canada's GDP

Accounted for 5.7% of total manufacturing employment

It is made up of some 2000 firms, mostly owned by Canadians

Most foreign-owned firms, are the US-based MNCs

Total employment in the industry is estimated at more than 1,00,000 people

The supporting textile mills and retail stores that employ over 2,00,000 people

Canadian Textile and Apparel imports:

• FTA with US in 1989 and 1992, caused high rise in imported textiles and apparels

• In 2004, 62% of Canadian textiles and apparels were imported

• In 2004, China, became highest exporter to Canada, with 15% share of total Canadian textile imports

• India accounted for 4% of Canada's total textile imports in 2004, double the proportion in 1992

• Other major textile exporters to Canada are UK, EU, Bangladesh and Mexico

HS CodesHS Code Categories Chapter contentsChapter 50 (5001 to 5007) SILK, Raw and Spun, and Fabrics

Chapter 51 (5101 to 5113) WOOL, Animal hair, and Woven Fabrics

Chapter 52 (5201 to 5212) Cotton, fiber, yarn, and all types of fabric

Chapter 53 (5301 to 5311) Other vegetable fibers; paper yarn and woven fabrics

Chapter 54 (5401 to 5408) Man-made Filaments

Chapter 55 (5501 to 5516) Man-made staple fibers

Chapter 56 (5601 to 5609)Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables

Chapter 57 (5701 to 5705) Carpets and other textile floor coverings

Chapter 58 (5801 to 5811) Special woven fabrics; lace; tapestries; trimmings; embroidery

Chapter 59 (5901 to 5911)Impregnated, coated, covered or laminated textile fabrics; industrial use textiles

Chapter 60 (6001 to 6006) Knitted or crocheted fabrics

Chapter 61 (6101 to 6117) Articles of apparel and clothing accessories, knitted or crocheted

Chapter 62 (6201 to 6217) Articles of apparel and clothing accessories not knitted or crocheted

Chapter 63 (6301 to 6310)Other made up textile articles; sets; worn clothing and worn textile articles; rags

Export of Various Textile Materials to Canada

Export of Various Textile Materials to Canada

Export of Various Textile Materials to Canada

Export of Various Textile Materials to Canada

Indian Textile Export To Canada- Trends▪ Export of textile items is be covered by bilateral agreements

▪ Currently, 79% of apparel in Canada is imported

▪ The demand is stable; manufacturing is decreasing while imports are increasing

▪ India is fourth largest textile and clothing supplier to Canada, ahead of Mexico, Bangladesh and Turkey

▪ Of the total RMG exports from India, 3.8% goes to Canada

▪ India's major exports to Canada include readymade garments, textiles, cotton yarn, carpets and floor spreads

▪ Problems related to exporting textiles to Canada:

– Strict labor safety and working environment laws

– High quality standards, hard to fulfill

– Time limits and restrictions

– Excessive documentation process

– High risk business, vulnerable to changes (economic, social and cultural)

– Risk of damaged or lost goods in transit

Import of Various Textile Materials From Canada

Import of Various Textile Materials From Canada

Import of Various Textile Materials From Canada

Import of Various Textile Materials From Canada

Canada Trade Policies Canada’s Global Commerce StrategyGCS looks at five areas:

• Access to key markets

• Access to trade promotion and partnership development

support

• Access to capital

• Access to technology

• Access to talent

Canada Trade Policies

Comprehensive Economic Partnership Agreement

•The Indo-Canadian joint study for feasibility and benefits of CEPA started in

November, 2009

•The study covered all bilateral trades in goods and services

•In November 2010, Canadian Prime Minister opened negotiations on

importance of cooperation in creating ambitious Free Trade Agreement

•Eighth round of negotiations on creating FTA concluded on June 2013

•The negotiations, including market access for goods, rules of origin, trade

facilitation, origin procedures, technical barriers to trade, sanitary and

phytosanitary measures, institutional provisions, and trade in services,

including temporary entry for business persons, telecommunications, and

financial services

Canada Trade Policies

Foreign Investment Promotion and Protection Agreement

•A FIPA is an international treaty providing binding obligations on host

governments regarding their treatment of foreign investors and investments

•FIPA provides a stable legal framework to promote and protect foreign

investment

•It sets out a range of obligations that host governments guarantee

pertaining to non-discriminatory treatment, expropriation, transfer of funds,

transparency, due process and dispute settlement

•Canada and India agreed to begin negotiations towards a FIPA in June 2013

Documentations for trade with CanadaCommercial documents

Auxiliary documents Regulatory document

Other document

Commercial invoice Performa invoice Shipping bill Black list certificate

Inspection certificate Intimation for inspection

Export application Freight payment certificate

Marine insurance policy

Declaration of insurance

Vehicle ticket/gate pass

Insurance premium certificate

Certificate of origin Shipping instructions Bank certificate of realization

Legal invoice

Bill of lading Bank letter for negotiation of

documents

Airway bill

Shipment advice to importer

Packing list

Bill of exchange

Thank You

email me “ arputhaselvaraj@gmail.com “