Peruvian cotton only meets 40 percent of the demand of Peru’s textile and garment chain, and the remaining 60 percent is being met by imported cotton from the U.S., the Andina news agency reported.
According to Jose Ignacio Llosa, the president of the Committee of Textiles of the National Society of Industries, the Peruvian cotton production is limited by several structural problems that the Ministry of Agriculture and Irrigation (MINAGRI) is trying to resolve, but has failed to as of yet.
As a result, Llosa requested that the Institute of National Defense of Competition and Intellectual Property Protection (INDECOPI) prepare a careful analysis on the possibility of applying countervailing duties on the imports of cotton from the United States.
Countervailing duties are trade import duties imposed under World Trade Organization rules to neutralize the negative effects of subsides. In the case of Peru, countervailing duties would raise the local spinner’s cotton price which would affect the entire textile and clothing chain.
Andina reported that an INDECOPI investigation on the subsidies provided on Peruvian cotton by the US in 2012 was carried out last year by request of local cotton farmers.
In the preliminary reports, INDECOPI suggested that the subsidies granted by the U.S. on cotton produced in the country are the reason for the decline in cultivation of cotton in Peru.
Llosa believes there are other relevant factors affecting the decline in production.
“Small farms, low production per hectares, the abandoned genetic development lack of funding, and the informality present in the sector are among the factors contributing to low cotton production in Peru,” he said.
Llosa fears that the low domestic production will drastically affects the Peruvian spinning industry and endanger the entire textile chain that employs 450,00 workers directly and 1.5 million indirectly.