NO SEMBLANCE OF DIALOGUE SO FAR IN MFA NEGOTIATIONS.

Feb 18, 1986

NO SEMBLANCE OF DIALOGUE SO FAR IN MFA NEGOTIATIONS.

GENEVA, FEBRUARY 14 (IFDA/CHAKRAVARTHI RAGHAVAN)— With industrial countries, particularly the U.S.A. and the EEC, unwilling to formulate a stand on the future of the international trade in textiles and clothing, negotiations in GATT have not even produced a semblance of dialogue, third world sources reported this week.

International trade in textiles and clothing is currently regulated by the Multifibre Arrangements (MFA), which became effective January 1974, and has been extended twice by protocols.

The current MFA-III is due to expire on July 31, 1986.

As per its terms, negotiations on the future began formally in August, and since then the GATT Director-General, who chairs the negotiations, has been organising informal negotiations and consultations.

As part of these informal consultations, negotiators from third world and industrial country members of the Multifibre Arrangements (MFA) held informal consultations this week, and are to have and the meeting early in April.

The third world MFA members are due to meet in Beijing in the first week of March.

At this week's meeting, according to third world sources, neither the U.S. nor the EEC gave any indication of their positions.

Third world countries have generally said that there should be an eventual return of the trade to GATT rules and principles, and any extension of the MFA should be seen as essentially one for transition and phase-out.

Within this broad framework, there are undoubtedly differences between some of the dominant far east exporters (like South Korea and Hong Kong) who have a vested interest in the continuance of a "managed" trade that assures them of their market shares through quotas, and of the others who want a free trade with some transitional arrangements.

Though the industrialised countries have been hoping for these differences to surface, so far the third world countries have presented a united front, arguing for the final objective of return to GATT rules and principles, with transitional arrangements through a renewed MFA, and with provision for liberalisation of the trade, during the period of transition.

Both the third world exporting countries, and the GATT secretariat itself, have been underlining the importance of these negotiations, and their impact on the wider issues of trade liberalisation and a new trade round.

The industrial countries on the other hand have been "hinting" of a possible "trade-off" between liberalisation of the trade in textiles and clothing with concessions by the third world countries in regard to the new trade round.

In this, some of the third world countries have made clear that there could be no such trade-off, and specially in terms of their giving way to the U.S. on new themes.

In their efforts to get a trade-off, the industrial countries are running against the time-table of the MFA itself, which expires at end of July and, unless renewed, will automatically return the international trade in textiles and clothing to GATT rules and principles.

The Ministerial meeting for a new trade round is to meet in September, and a new trade round itself may not be launched, if at all, before 1987.

Part of the "silence" of the major industrial countries on the future of the MFA, and the lack of any negotiations, could be tied to their strategy of not doing anything till July, creating some kind of "panic" among some of the exporting countries, and ultimately pushing through a mere extension of MFA-III leaving all talk of "liberalisation" to be taken up as part of a new round.

At this week's informal consultations, the chief U.S. negotiator, Charles Carlisle was absent, and only his deputy Ron Sorini was present, and he is merely reported to have talked on the need for "a good MFA, with stability and predictability".

U.S. officials have been privately saying that the word "liberal" in trade is now a "dirty word" in the U.S., and specially in the Congress, and that there is need for tightening up of the MFA and the bilateral accords under it.

The EEC has said that it is unable to state its own position, since it is yet to complete its internal discussions.

In other remarks, the Nordics are reported to have called for "some arrangements" to carry forward the MFA, taking up the issue of the future of the trade in this sector and eventual return in the context of a new round to GATT rules and principles.

Japan also apparently called for a relatively simple agreement for an extension of the existing arrangements through a protocol.

Third world participants reportedly criticised the failure of industrial countries, and specially the two major trading blocs, for their failure to state their position and start a dialogue.

Some of the participants are reported to have underlined that if there is a consensus on the need for eventual return of the trade to GATT rules and principles, they could begin negotiations on a new MFA which would be a transitionally phase-out mechanism, but containing elements of liberalisation of trade in the sector, and for simplification of the procedures and removal of irritants.

The U.S. itself is reported to have presented data to suggest the difficulties faced by its textiles and clothing industry by a surge of imports.

However third world participants reportedly underlined that the U.S. data itself showed that the large surge in imports had come from other OECD countries, and specially of western Europe, and there was also some from U.S. companies that had invested in the Caribbean under the Caribbean basin initiative.

One third world participant reportedly remarked that the U.S. should begin negotiating bilateral with OECD countries, and apply the CBI preferences to all third world countries.