Local textile cos top list of cotton deal default

The International Cotton Association (ICA) is likely to sit in Dhaka soon with cotton deal defaulters from Bangladesh to resolve disputes in payments and explore means for further cooperation.
According to sources, a high-level delegation of the ICS is likely to visit Bangladesh shortly to resolve disputes arising out of non-payment of prices of cotton in Bangladesh.
The ICA has already informed the Bangladesh Textile Mills Association (BTMA) urging the apex body of the country's textile mills to make necessary arrangements in this regard.
Earlier in November last, ICA president Jordan Lea visited Bangladesh and discussed the issue with BTMA president Jahangir Alamin and requested him for arranging mediation for early settlement of the disputes.
The ICA has recently introduced mediation mechanism for quick settlement of disputes between the party and the review board.
"We have already sent letters to member mills, which have defaulted to the ICA so that they could settle the disputes with the ICA review board," said an official of the BTMA requesting them to contact the apex body to get its approval.   
The ICA based in Liverpool, the UK, introduced the mediation services to help resolve disputes over reneged contracts that have blocked hundreds of blacklisted firms from doing business.
The group, which oversees the global cotton trade, said mediation would be another speedier tool to resolve disputes, in addition to the current methods of negotiation and arbitration.
According to the ICA, the world's leading international cotton trade association and arbitral body, some 700 companies have been listed as defaulters. The group is now trying to find some ways to help get them off that list.
It introduced the mediation services as very often negotiation doesn't work out well.
The global trade group was inundated with requests to resolve disputes in 2011 and 2012 following a historic run-up that lifted prices above $2 a pound in early 2011 only to fall almost as quickly. At present, per pound of cotton sells at around 80 cents.
The ICA, meanwhile, has listed some 96 companies from Bangladesh for failing to make payments to the suppliers. The country ended up on top of the default list.
In the previous update in April last, the number of Bangladeshi defaulters was 91.
The ICA updated the list of default companies on January 7, 2015.
The BTMA authorities, however, said that the default list would be much lower as many of them have already settled their disputes with suppliers abroad.
Among the South Asian textiles and garment producing nations, India is in the second position with about 90 companies while Pakistan has 50 companies on the list.
The ICA prepares the list on receiving complaints from the cotton supplying companies worldwide. The companies became defaulters as the importing companies did not receive shipments for an abnormal price hike of the item in 2010-2011.
"We have already told the ICA for appointing arbitrators in Bangladesh to resolve disputes in payment as it is very expensive to attend the hearings by going to the UK," said Jahangir Alamin, the immediate past president of the BTMA.
"Many of the defaulters are victims of the circumstances," said Mr Alamin adding that many have also honoured their contracts, incurring enormous losses.
"Only a few, about 10 per cent of the mills are defaulters," said Mr Alamin adding that the problems would be settled much earlier if the ICA arranges the mediation in Dhaka.
After getting responses from the default mills, the BMTA will inform the ICA which will fix the date for the mediation.
Earlier, the international cotton trade association fixed January 19-23 for mediation with local textile mills, which defaulted in making payment.
The ICA began its journey more than 170 years ago when a group of cotton brokers created a set of bylaws and rules to help regulate the sale and purchase of raw cotton.
Today, about 85 per cent of the world's cotton is traded internationally under the ICA bylaws and rules.
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