NO NEW ROUND WITHOUT LIBERALISATION IN TEXTILES AND CLOTHING.

Feb 28, 1986

NO NEW ROUND WITHOUT LIBERALISATION IN TEXTILES AND CLOTHING.

GENEVA, FEBRUARY 27 (IFDA/CHAKRAVARTHI RAGHAVAN)--- The attitude of industrial countries on the question of liberalisation of trade in textiles and clothing would be seen as "an acid test" of their intentions for general trade liberalisation in any new trade round, third world countries have reportedly warned.

The warning is reported to have been given at this week's meetings of the GATT Preparatory Committee for a new round, where the issue of liberalisation of trade in this sector and its return to general GATT rules and principles came up.

The U.S., the EEC and other west European countries advised caution over demands for any short-term liberalisation of trade in this sector.

But third world countries are reported to have made clear that there could be no moves towards a general liberalisation of world trade through a new round without prior actions to liberalise this trade in the textiles and clothing sector.

The GATT Director-General, Arthur Dunkel, who chairs the Preparatory Committee is reported to have underlined that the trade in the sector could not be isolated from the general trade liberalisation issues, even though the operational decision over the Multifibre Arrangements (MFA) would have to be taken before end of July while the time-table for a new round involves a Ministerial meeting in September.

Third world participants said that the response of the industrial countries, and specially of the U.S. and EEC, the two major markets for third world in this sector, both in the preparatory committee and in parallel negotiations on the MFA, boded ill for the efforts to launch a new round.

The issue of trade liberalisation in the textiles and clothing sector is currently figuring in three bodies of the general agreement.

The trade in textiles and clothing sectors is governed by the Multifibre Arrangement (MFA), which is an "authorised departure" from the general GATT rules and principles, and enables the importing industrial countries to impose discriminatory restrictions and quotas on imports of products in this sector from the third world.

Originally put in place in the 1960’s as a short-term agreement covering cotton textiles, to provide breathing space for the industry in the industrial countries to adjust, it was followed up by the long-term arrangements in cotton textiles, and then replaced by the MFA to cover trade in other fibres also.

The MFA has been renewed twice, and the current MFA-3 is due to expire at end of July 1986.

The 1982 GATT Ministerial declaration had called for an examination of the modalities for further trade liberalisation of the trade in textiles and clothing, including the possibilities for bringing about the full application of GATT provisions to this sector.

This exercise has been going on since 1983 at a GATT working party, but without being able to reach any consensus on possible approaches to returning the trade to GATT rules and principles.

Parallel to this, since last august, negotiations have been going on in the textiles committee of GATT over the future of the MFA.

After a formal meeting of the Committee to begin the negotiations, much of the effort is in informal consultations and negotiations but without under the chairmanship of the GATT Director-General, but any real negotiations so far.

In the informal consultations, neither the U.S. nor the EEC have responded to the viewpoints of the third world exporting country-members of the MFA.

However the U.S. and EEC appear to be viewing the question of phasing out of the MFA and a return to GATT rules and principles as a kind of distant goal.

For the last round of informal negotiations earlier this month, the chief U.S. textile negotiator, Charles Carlisle did not even turn up.

The remarks and comments of the U.S. elsewhere indicate that it wants to tighten rather than liberalise the imports from the third world, and "freeze" the imports from the major exporters at their levels of 1985.

Carlisle has been visiting in this connection South Korea and Hong Kong (members of the MFA), and Taiwan (a non-member).

At least in so far as south Korea and Hong Kong are concerned, their exports in 1985 to the U.S. were respectively 0.5 and 0.2 percent below that of 1984.

The EEC Ministers, who are still trying to put together their common stand, have indicated at Brussels that they would want in essence the renewal of the current MFA-3, and would end quotas on product lines that have remained unutilised, claiming this to be their contribution in liberalisation of trade.

Also, the EEC would want "reciprocity" from the so-called advanced third world countries, by their taking actions to liberalise their imports of textiles and clothing.

The third world MFA-members are meeting next week in Peking to assess the situation and decide on their tactics and strategy in the MFA negotiations.

The Preparatory Committee for a new trade round, set up by the GATT contracting parties at their annual session November 1985, to consider the subjects and issues for possible negotiations and prepare recommendations for a Ministering meeting in September, at its meeting this week took up the textiles and clothing issue, figuring in the GATT work programme.

Dunkel, according to a GATT spokesman, stressed that the textiles and clothing trade could not be isolated from the general efforts to liberalise world trade and improve the functioning of the multilateral GATT trading system.

Nevertheless, operational decisions about the future of the MFA would have to be taken before the end of July, and before the process for a new trade round could get under way.

But any improved GATT disciplines resulting from the new trade round should be capable of being applied to textiles and clothing as to other areas of trade.

The GATT spokesman said that perhaps Dunkel had in mind such things like a safeguards agreement in the new round.

The GATT spokesman said that in the Preparatory Committee many of the contracting parties agreed that the issue should be part of a new trade round, though others wondered what there would be to negotiate if everyone agreed on the return to GATT rules and principles, as called for in 1982 Ministerial declaration.

Third world participants said that most of them saw a return of the trade to the GATT trading system as one that would restore confidence in the GATT confidence in the GATT trading system, and the attitude of the industrial countries in this as "the acid test" of the new round.

Several third world participants saw the need for a short-term extension of the MFA, with liberalisation of the regime, to be followed by a return to GATT rules and re-integration of the trade in the sector into the general GATT framework.

There were also sharp differences on whether the "dismantlement" of the MFA could be negotiated in the traditional sense of exchange of concessions "and benefits, and "a price being paid for the dismantlement".

A number of third world countries rejected the idea of a price being paid for dismantling the MFA.

The industrial countries, the beneficiaries of the MFA, paid no price for the creation of the MFA, and the third world countries could not be expected to pay any price now for its dismantlement.

A number of third world delegations who spoke are reported to have stressed that the question of "standstill and rollback" should be applied to textiles and clothing.

While there could be no direct linkage between the MFA negotiations and the preparations for the new round - in the sense of third world countries making concessions over new round by agreeing to negotiate on issues like services - failure to liberalise the trade in textiles and clothing would create "an unfavourable climate for participation in the new round" by the third world countries.

Earlier the U.S. delegate at the Preparatory Committee, Peter Murphy, and the EEC spokesman, Tran Van Thinh, are reported to have called for caution and prudence in pushing for liberalisation of textiles and clothing or phasing out MFA.

The EEC is reported to have raised the issue of what it could expect to get from the third world in the negotiations in return for winding down the MFA, while the U.S. had spoken of the domestic pressures in the U.S. for freezing the imports.

The South Korean delegate reportedly remarked that the U.S. administration having claimed credit for vetoing the Jenkins Bill, was now seeking to implement the provisions of the bill in action, and this was unacceptable to the third world exporting countries.