TEXTILES NEGOTIATION NEED SUBSTANTIVE PROGRESS.

Dec 16, 1987

TEXTILES NEGOTIATION NEED SUBSTANTIVE PROGRESS.

GENEVA DECEMBER 14 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The need for substantive progress in the subsequent phase of negotiations in the Uruguay round negotiating group on textiles and clothing, parallel with work in other negotiating groups, has been underscored by a number of third world countries.

China, India, Mexico, Pakistan and Turkey were among the countries, members of the Multi-Fibre Arrangement (MFA), who reportedly made this point last week at the meeting of the negotiating group.

The initial phase of work in the group ended Friday ended with a chairman’s summing-up which said that the group agreed that in carrying out the further work in the subsequent negotiating process "it should focus its attention on the examination of techniques and modalities for achieving the (negotiating) objectives in this area, on the basis of proposals submitted by participants".

Negotiators have been mandated by the Punta del Este declaration "to formulate modalities that would permit the eventual integration of this sector into GATT on the basis of strengthened GATT rules and disciplines, thereby also contributing to the objective of further liberalisation of trade".

The three-para summing up earlier noted that the group had given preliminary consideration to the documentation provided by the secretariat and by participants on the state of textiles and clothing industries in certain countries, and had an exchange of views on possible approaches to future work, including scope of negotiations.

It also noted the views of "some participants" that there was considerable need for further information and efforts should be made to provide it, and that the group agreed to continue to address requirements for additional information.

This was a reference to the demand of the U.S., Canada, EEC, and the Nordics (all of whom restrain imports from the third world) that any actions by them to end the import restrictions under the MFA and return to GATT rules would have to be matched by third world countries taking reciprocal actions to liberalise their own imports, and that information should be collected on the state of textiles and clothing industries in the third world.

Third world countries whose exports alone are subject to discriminatory restraints under the MFA in industrialised countries have rejected this demand, pointing out that they were paid no compensation for the imposition of restrictions on their exports and should not be called upon now to pay a price for removal of the restrictions.

Apart from a number of reports and updated documentation of the GATT secretariat, the group was provided with a study of the state of textiles and clothing industries in Canada, Nordic countries and Austria, and in Japan and Switzerland.

The studies, similar to earlier ones on the U.S. and EEC, had been prepared by the third world exporters group "The International Textiles and Clothing Bureau" (ITCB).

Indonesian delegate, Abm. Darry Salim, in presenting the present studies on behalf of the members of the ITCB, said that the studies, as the earlier ones relating to the EEC and U.S., showed that the consumer expenditure on clothing had expanded markedly in these countries.

The indices of production at constant prices, and the turnover and value added at current prices, showed the current phase in these countries of diversification of production into higher value added products.

The rise in turnover had permitted the industries in these countries to expand their outlays on labour costs and on other value-added, "of which profits are an important component".

There was a substantial growth of investment in several of these countries during the period 1982-86.

The declines in employment could be largely attributed to the sharp gains in labour productivity induced by growth of investment in machinery and equipment.

As in the case of the U.S. and EEC, "this provided ample evidence of the conflict between the policy objectives of improving competitiveness through automation and other labour-saving devices on the one hand and maintaining employment on the other".

The studies also showed that the preponderant part of textiles imports into Canada, and textiles and clothing imports into the Nordic countries, Austria and Switzerland come from other industrial countries (who are not subject to MFA restraints).

In Canada the major supplier of textiles was the United States, while in the Nordic countries, Austria and Switzerland the bulk of imports are supplied by the EEC and the EFTA countries.

In Canada, the Nordic countries, Austria and Switzerland, by far the largest proportion of consumption in value terms is met from domestic supplies together with imports from industrial countries in both textiles and clothing.

In Japan the preponderant proportion of consumption in value of both textiles and clothing is accounted for by domestic suppliers.

The EEC, Nordics, Canada and U.S.A. reportedly said the information provided to the group so far was incomplete in that it did not include information on textiles and clothing industries in the third world. Without such information, these countries reportedly contended, it would not be possible to draw any meaningful conclusions.

In addition, the EEC reportedly criticised the GATT Secretariat for providing information on intra-EEC trade.

The GATT Secretariat is however reported to have explained that this was in line with the practice in the annual GATT reports on international trade, as well as the practice of the IMF and the OECD.

Japan found the ICTB documentation useful, but said it would need considerable study.

While the ITCB study of Japan showed that in 1973/86, Japan was a net exporter, Japan’s own data showed that in the period January/September 1987, Japan had exported 444.000 tons of textiles and clothing and imported 529.000 tons. There was a seven percent decline in exports and 28 percent increase in imports compared to the corresponding period in the previous year.

In response Hong Kong is reported to have pointed out that the ITCB study clearly showed a continuing trend whereby almost 90 percent of Japan’s total requirements of textiles and clothing was met domestically.

India is reported to have further pointed out that while Japan had cited volume figures of 1987, the imports and exports in value terms would reveal a different picture.

In assessing the work so far, a number of third world countries said that in the subsequent phase of negotiations there was need for substantive progress, in parallel with work in other negotiating groups, this was an indirect way of saying that progress in other groups would depend on progress in textiles and clothing.

Pakistan and Mexico, among these countries, said that the negotiating group on textiles would need to achieve some "specific results" which could be included in an "early harvest".

After the chairman’s summing-up, the EEC delegate reportedly described the trade in this sector as "a flagrant example of imbalance between developing and developed countries", and progress in the group could not be isolated from progress in other sectors of negotiations.

India however said that the trade in this sector was "a flagrant example of derogation from GATT".

"We will take account of progress here", the Indian delegate reportedly added in a reference to the oft-cited EEC view that the Uruguay round GATT MTNS are "a single undertaking".

Even in the other sectors of negotiations, India reportedly added, trade in textiles and clothing should not be differentiated (in providing for continued derogation from GATT).

Pakistan repeated its statement at Punta del Este; namely those modalities for liberalisation of trade in this sector should be pursued independently, and should not be contingent on agreement in other areas.

Hong Kong felt that return to GATT under strengthened rules should be based on a safeguard agreement.

India however reportedly pointed out that the group was not negotiating the return of trade in the sector to GATT rules, abut only with the modalities and formalities for return and, when the trade was returned, the strengthened GATT rules would be there.

This was presumably a response to what is seen as attempts of Hong Kong and other dominant far east exporters to slow down the phasing-out of the MFA regime (and for continuance of the current managed trade that assured them large quotas).