As of today, India applies a tariff of 25% or more for the importation of clothing (India Trade Portal, 2018). However, if the country enters into trade agreements such as the RCEP and proposes to open the clothing sector below zero to zero tariffs, it will face fierce competition in the domestic market from exporters such as China, the Republic of Korea and Vietnam. It is therefore very likely that imports of clothing, which are currently low, will increase. Until the end of the Uruguay Round, textile and clothing quotas were the subject of bilateral negotiations and were governed according to the rules of the Multifibre Agreement (MFA). The implementation of GATT in the WTO was agreed on a long-awaited coherent approach. On 1 January 1995, the WTO Agreement on Textiles and Clothing (ATC) replaced macro-financial assistance. This multilateral approach was originally intended to end from 1995 to 2004. This is a process of gradually extending existing quotas until they are abolished. Liberalisation intensifies over time. The agreement is aimed at all products previously subject to AMF quotas: tops and yarn, fabrics, textiles and clothing.
India and the United States are two major players in the agreement, the United States as importers and India as textile exporters. It is interesting to note that most of India`s GDP is related to the textile industry, but there are also extremely high trade barriers in most industries. The United States is, of course, next to the EU, a country where the removal of barriers could potentially benefit the major textile-producing countries. There are three phases in which total imports of the products listed for 1990 are considered a basis. First, from 1 January 1995, members should include products of their choice representing no less than 16% of the reference year`s imports. In the second phase, which began on 1 January 1998, this figure was no less than 17%. Finally, in the current and final phase, which began on 1 January 2002, all other products (less than 49% of 1990 imports) will be integrated. After integration, the agreement ends. New provisions distinguish the ATC from the AMF. The implementation of the Textile Monitoring Body (TMB) is unique in ATC.
The TMB is responsible for monitoring the implementation and monitoring of compliance with the agreement. A second important aspect is the specific transitional security mechanism. The aim is to protect MEPs during the transition period from the damage caused by imports from products not already integrated. Countries must identify the threat to their domestic industry and then decide which Member States are suffering the damage. The Council for Trade in Goods rules if the rules are repealed. Finally, I would like to say that India has a large surplus in clothing exports. In recent times, however, concerns have been expressed regarding: (a) the benefits of other exporting countries that have trade agreements with key markets; (b) India`s inability to increase exports as a result of tariff reductions through bilateral trade agreements with countries such as Japan; (c) likely increase in imports, without an increase in exports, if tariffs are reduced under trade agreements such as the RCEP. To address this problem, India could also examine the costs and benefits of negotiating trade agreements with its major export markets, such as the United States and the EU.