ITCB MEMBERS IN NO HURRY TO EXTEND MFA BEFORE MAY 15.

Mar 20, 1991

ITCB MEMBERS IN NO HURRY TO EXTEND MFA BEFORE MAY 15.

GENEVA, MARCH 19 (CHAKRAVARTHI RAGHAVAN) – Members of the International Textiles and Clothing Bureau (ITCB), appear to be in no hurry to agree to a quick roll-over of the Multifibre Arrangement (MFA) ahead of U.S. Congress decisions on extension of the administration's fast-track authority for Uruguay Round negotiations.

The ITCB is the 32-member alliance of Third World exporting country-members of the MFA and is chaired by Amb. Hassan Kartadjoemena of Indonesia. At the Indonesian government’s invitation, it is holding its next Council meeting there from May 5 to 11.

The current arrangement, MFA-4, is due to expire on 31 July 1991 and the future of the MFA, an arrangement sanctioning a web of discriminatory restrictions on Third World exporters, is one of the issues that has to be decided.

GATT Director-General Arthur Dunkel had told an informal meeting of the UNCTAD Trade and Development Board Monday that as a result of the prolongation of the Round without any new deadline, a consequential decision that would need to be taken was about the extension of the MFA and that he would be taking it up in the Textiles Committee in GATT which deals with this issue.

Dunkel has reportedly scheduled "green room" consultations on this on 25 March, and there have been informal private consultations among the MFA participants and the secretariat on this.

The U.S., supported by Canada, would appear to be pushing for a 29-month rollover of the MFA and bilaterals under it i.e. till end of 1993, while the EC favours a 17-month roll-over till end 1992.

Both these time horizons appear to be based on their understanding of the completion of Uruguay Round negotiations and the time needed under their internal procedures for implementation.

In addition, the U.S. would appear to be favouring a quick decision on the roll-over now, well before the U.S. Congress holds hearings on President Bush's request for extension of fast-track authority, so that the U.S. Textile lobby, one of the opponents of the extension could be made ineffective.

However, members of the ITCB seem disinclined to take any such decision now in a hurry and prefer to wait for the outcome of the political level consultations and decisions in their Council.Only Hong Kong would appear to feel that in order to avoid uncertainties for trade and to help the U.S. win fast-track authority in the Congress, the Textiles Committee could decide now on a simple roll-over.

Mexico, which finds a coalition of U.S. lobbies (those against agreements likely to come out of Uruguay Round negotiations and others opposed to the U.S.-Mexico Free Trade negotiations) ranging against fast-track extension and treatment, is also reportedly in favour of actions to strengthen the administration's hands. The deadline for extension of the U.S. fast-track authority is June 1. The authority under the U.S. Omnibus Trade and Competitiveness Act will be automatically extended for two years (as requested by the Bush administration) if neither House of Congress adopts a disapproval resolution by 31 May.

For either of the two Houses to be able to so act, disapproval resolutions would have to be reported out of the Committees concerned by 15 May.

As some Third World members privately put it, the U.S. having failed to win any assurances from the EC over the agriculture issue in order to win Congressional approval of the fast-track authority, is now asking the Third World MFA-exporters to pay the price by agreeing to long extension of the MFA-4.

"No one wants to rock the boat now and jeopardise the extension or the negotiations, but most Third World countries are unwilling to pay the price either", one of them commented. The ITCB Council meeting in Indonesia is to discuss the future of the MFA and of the Uruguay Round negotiations in this sector with a view to arrive at a common position and its members are not willing to be hustled into an extension before that.

By the time the ITCB Council meets and evolves a common position, the outlook for the fast-track extension and the possible deadline or horizon for the negotiations as a whole would also be clear and it is only in that light the future of MFA could be decided, many of its members feel.

The way the bilateral accords under MFA-4, which have been negotiated and imposed on the exporting countries, has been so restrictive that except for two or three members who have garnered a high market share, all other Third World countries have been hurt and are getting fed up with the MFA, Third World observers say.

The concept of "cumulative market disruption" has been used to slap quotas on the middle and smaller suppliers in any product category where they emerge as competitive suppliers has meant that all these countries with have supply capacities have been prevented from expanding their exports. Their capacity to quickly "diversify" into other product categories not under restraint are limited and if they invest and do so (over a 2-3 year period) they would find themselves in the same situation. This realisation has resulted in growing and large consensus in the ITCB that the MFA should be got rid off within an agreed time-frame and transition arrangements and should not be prolonged.