Feb 23, 1998

 

FOCUS ON REDRESSING WTO INEQUITIES SAYS DEVELOPING WORLD

 

Geneva, 19 Feb (Chakravarthi Raghavan) -- The Ministerial Conference of the World Trade Organization, to be held in Geneva on 18 and 19 May, should focus primarily on the issues of implementation and orient its future activities around the built-in agenda and tackling the inequities in the system and shown up in the implementation.

This view was urged at the WTO General Council Thursday by a number of developing countries.  

The WTO spokesman confirmed that consultations at the informal meeting of heads of delegations of the Council have not so far resulted in any consensus on the modalities for concluding the meeting -- a chairman's summing-up, a short declaration or some other document -- nor on the proposals for agreeing to a process in 1998 that could lead to decisions about future activities at the 1999 Ministerial. 

This last is an euphemism for the EC proposal for a so-called millennium round of trade negotiations, involving some of the existing issues on the built-in agenda (agriculture and services) and the new issues promoted by the EC and the US - investment, competition, government procurement etc.  

The Ministerial sessions on 18 and 19, are to deal with implementation and future activities. The formal sessions are to be followed by a separate meeting on the 20th for observing the 50th anniversary of the GATT trading system. 

On Thursday, when the issue came up at the General Council, a number of developing countries made statements strongly in support of 'implementation' of the WTO agreements being given the primary focus. The developing countries also called for 'transparency' in any conclusion or outcome of these discussions.  

A number of developing countries in the informal consultations and at the meeting have been stressing that the 'implementation' issue should not be made into mere 'statements' by Ministers, as happened at Singapore, without any serious discussions and conclusions.  

Egypt, Pakistan (which chairs the informal developing country group), Jamaica, Nigeria, Bangladesh (for the least developed countries), and Brunei (for the ASEAN) made this point. India said even the future activities should primarily focus on the built-in agenda and the existing inequities in the agreements and in their implementation. 

On other matters, the General Council took note of the report and decisions of the Council for Trade in Goods which completed earlier in the week its Major Review of the Implementation of the Agreement on Textiles and Clothing in the first stage of the integration process.  

The "consensus decision-making process" of the Goods Council, giving the importing countries (as in the Textile Monitoring Body) a veto power against any firm conclusions, and perpetuating the built-in inequities of the WTO accords and rules, comes out in the Review report.  

While recording the dissatisfaction of the exporting developing countries on the lack of meaningful liberalisation, the Goods Council reiterated the commitment of Members to the "full and faithful" implementation of all provisions of the ATC.  

The Council noted that, as specified in Article 9, the ATC and all restrictions under it "shall stand terminated on 1 January 2005, on which date the textiles and clothing sector shall be fully integrated into GATT 1994 and that there shall be no extension of the ATC."  

Developing exporting countries took satisfaction from what a member of the International Textiles and Clothing Bureau called reiteration of a notice to the industry in Europe and North America that the ATC would end, and there would be no more extensions.

Even this statement of the obvious, in terms of the provisions of the WTO's ATC, was resisted by the major importing countries.  

While noting that the importing countries had fulfilled the legal requirements for integration of the textiles and clothing products into GATT 1994 in the first two stages, the Goods Council in its review said these programmes had included only a small number of products which had been actually under quota restrictions, "leaving a large number of products for which quota restrictions would need to be eliminated."

 

The Goods Council called on members to allow "for continuous autonomous industrial adjustment and increased competition" in their markets in order to facilitate integration of the sector into GATT 1994, and said that further information in this regard would facilitate the review of the progress. 

The review noted the complaints and concerns of exporting members about the resort to a large number of transitional safeguard measures (by the US) in the first year of the ATC and that this could not be considered a "sparing use of safeguard", particularly when in most cases the recourse had been found to be unjustified. 

The review report also refers to the complaints of developing countries about the changes in the Rules of Origin introduced by the US, and their view that these were unilateral actions and inconsistent with the ATC, the WTO accord on Rules of Origin, and the MFN clause of GATT 1994. It notes the view of the exporting members that the changes in rules of origin, in sum, had upset the balance of rights and obligations, adversely affected access, impeded full utilization of quotas and had disrupted trade in textiles and clothing from exporting members.

Another issue relating to the US practice was also aired in the Review process. This relates to the US requirement that shipments of textiles and clothing products from developing countries must come with a "visa" document, whereby the exporting country certifies the origin of the product and asking for the export to be debited against its quota.  

This was the practice of the old Multifibre Agreement (MFA), under which the quotas on imports were administered by the exporting countries.  

But when products have een integrated into the GATT 1994 under the ATC, there are no quotas on them, and imports and formalities relating to them are to be administered on an MFN basis.

This means that if the US did not demand a "visa" requirement or document for imports from the EC, it could not ask for this from other countries either.  

Yet, the US has been demanding such a "visa" to accompany textile and clothing products imported into the US from some 14 exporting developing countries in respect of their exports of products which supposedly have been integrated by the US into GATT 1994. 

The US has bee asking the exporting countries to voluntarily comply with this requirement - claiming that it is necessary to enable the US to ensure there is no circumvention.  

But under the normal safeguards rules of the GATT 1994, which is to apply to all textiles and clothing products integrated into the WTO/GATT 1994, there is no scope to ask any exporting country to undertake some restraint on a voluntary basis.  

But the desire of the developing exporters to avoid trade harassment is such that no one has so far brought up the complaint against the US as a dispute. The WTO's dispute settlement mechanism, one exporting country representative explained, is a very costly process, and over and above there is the intermediary of a TMB that has to be crossed.

Another issue brought up in the review has been the recourse to anti-dumping investigations and measures by the European Community.  

A major complaint of the exporting countries has been that the EC has been resorting to start of anti-dumping investigations, and levy of provisional duties on products that are already under quota restraints, thus creating a double barrier to exports. 

The Goods Council review report notes the complaint and concerns of the exporting members over the way the anti-dumping measures have been initiated, and 'double protection' exercised, and the view of exporters that such actions "touched the very essence of the objective of trade liberalization which the ATC was meant to bring about and could be considered tantamount to trade harassment." 

Recording too, the EC's view that its application of anti-dumping legislation was fully in conformity with WTO rules, and was done in a transparent and non-discriminatory manner across all sectors, the Goods Council review ends with a very weak conclusion - another example of the veto power that the importers can exercise.  

The Goods Council review says on this: "Recalling the concerns of some Members regarding the use of trade measures in respect of textiles and clothing products, including those which were already under restraint, the Council called on Members to observe the relevant WTO provisions to ensure the application of policies relating to fair and equitable trading conditions regarding textiles and clothing products in areas including inter alia, dumping and anti-dumping rules and procedures."

At the Goods Council discussions for adopting the report, the EC representative, Mr. Abbot argued that India which had complained about the anti-dumping measures had itself resorted to anti-dumping actions recently, including on acrylic fibres, and that India's normal duty was about 36% while that of the EC was about six percent.  

This brought a retort from the Indian ambassador, Mr. Narayanan, who noted that while India had tariffs on imports, there were no quotas as the EC had. 

In the report adopted, the Goods Council emphasized the importance of its overseeing and regularly evaluating the progress of the integration, but qualified and weakened by putting in the context of Art. 8 of the ATC - the TMB route for a case-by-case consideration, a very frustrating experience given that the TMB has often avoided giving decisions or reviewing its mis-decisions.