Feb 8, 1991

URUGUAY ROUND EXTENSION AND THE TEXTILES PROBLEMS.

GENEVA, FEBRUARY 7 (CHAKRAVARTHI RAGHAVAN)— The extension of the Uruguay Round negotiations and uncertainties over what would happen is facing textile importing and exporting countries with some immediate practical problems.

This was alluded to at the GATT Council Wednesday when it took note of the report of the Textiles Committee.

Its Chairman (GATT Director-General Arthur Dunkel) pointed to the practical implications of the prolongation of the Uruguay Round where one of the items on the negotiating agenda is the integration of the textiles and clothing sector trade into GATT.

The current MFA-4 is due to end on 31 July. A number of bilaterals negotiated under it run till the end of the year and some into next year. All the bilateral agreements for restraint of trade and quota arrangements would be illegal if there is no MFA. GATT rules would automatically apply.

In the Uruguay Round negotiations the draft agreement being discussed provide for transitional arrangements and rules to take effect from 1 January 1992, and for phased integration of the trade into GATT from that date (with terms, conditions and duration yet to be agreed). In that context, though there had been no formal proposal, it was understood that the MFA-exporting countries had been willing to envisage a roll-over of the MFA-4 by five months, with the new agreement becoming effective from 1992.

In the new situation, where the extension of the Uruguay Round and resumption of substantive negotiations now depend on the U.S. getting an extension of its fast track authority, the exporting and importing countries would need to look into what should happen now.

On the one side the trade negotiators do not want to engage on this issue, particularly because of the likely impact of the U.S. textile lobby on the U.S. processes for extension of fast track authority. On the other side there are also issues of trade uncertainties and implementation or negotiation of new contracts.

If the U.S. does get the fast track renewed, there seems to be a general agreement that no "deadlines" would be set for the completion of the Uruguay Round and thus in practice the U.S. fast-track authority deadlines of March 1993 (if the authority is extended) would become the real deadline.

If that happens the MFA countries would have to decide on how to deal with that interregnum. If fast-track authority is not extended and the Uruguay Round ends in practical terms, the countries concerned would also be faced how to approach the textiles trade issue and on what terms.

There were no clear answers available, and most of the exporting countries had clearly not applied their minds individually and collectively, but are expected to do over the next few weeks.