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DIALOGUE WITHOUT ANY ENGAGEMENT

by Chakravarthi Raghavan

Geneva, 4 July 2000 -- Discussions at the WTO General Council on implementation issues over the Agreement on Textiles and Clothing trade has so far proved to be one where the major trading blocs are unwilling to enter into serious dialogue to redress grievances of the developing world.

The proposals of developing countries under the implementation rubric in this sector were taken up at the Special Session of the General Council on 22 June and resumed on 3 July, when there was further discussion of the proposals presented by the International Textiles and Clothing Bureau (ITCB, the 24-member developing countries exporting textiles and clothing products).

The ITCB members have been complaining that there has been so far no meaningful liberalisation or removal of restrictions. The US, EC and Canada, the three major importing markets having discriminatory restraints against the developing countries, on the other hand have been claiming that imports into their markets had been increasing since 1995, and the complaints were misplaced.

In various comments Monday, several of the ITCB members said that the growth in imports of textiles and clothing into the three major markets did not indicate any elimination of quotas, but rather an increase in imports into these markets at the cost of developing countries.

Thus, while the cumulative increase in imports into the US market from the world since 1995 may have been 59 percent (as claimed by the US), the increase in imports from the countries under restraint was only 55 percent, reflecting the continuation of the restrictive quota regimes. The bulk of the increased imports into the US markets came from the developed countries - with imports from Canada jumping by 132% and from Italy by 58% - who did not face any quotas and, in the case of Canada as a North American Free Trade (NAFTA) partner, no duty either.

[Mexico, the other NAFTA partner of the US, whose quotas are still being phased out, though on an accelerated schedule than under the ATC, but did not face the US high tariffs, had still been able to export to the US faster than any of the developing countries under quota restraint and facing high tariffs. There is also US industry investments in Mexico in maquilladora trade, resulting in further pressures by industry in Congress to prevent liberalisation of quotas from other countries.]

In the case of the EU, the share of the restrained countries in EU imports (other than their mutual trade) had in fact declined from 42 percent in 1990 to 40 percent in 1998. The imports from East European countries and Turkey (who are preferential suppliers to the EU market, and with no quota restrictions) had increased from 21% to 32 percent.

The US, EC complaints of wide-spread tran-shipment and illegal circumvention of quotas, another reason given by the major importers as forcing them to slow down liberalization, was also refuted by the ITCB members who said the problem was greatly exaggerated. According to the US customs data, the allegedly circumvented imports amounted to only 0.125 percent of total imports in 1997, 0.105% in 1998 and 0.068% in 1999. Such allegations of tran-shipment could not be used to justify the withholding of quota phaseout.

At the meeting on 22 June, Hong Kong China as chairman of the ITCB had said that there was now wide-spread recognition that the implementation of some WTO agreements had given rise to serious concerns among many developing country members and that progress in addressing them would enhance confidence in the multilateral trading system. Few agreements, he said, had given rise to as many concerns as the ATC, because of its great importance in the trade of developing countries - accounting for 20% of developing country exports of manufactured products, and one where manufacture of clothing was a labour-intensive activity.

Though the ITCB members had produced a detailed and factual critique of the way the ATC had been implemented and had presented this in the General Council in August last year, and had included it in their proposals on implementation for Seattle, these had never been discussed before or after Seattle.

“Most interestingly,” said Hong Kong, “a greatly diluted version” of the proposals of the ITCB appeared in the Chairman’s text for Seattle, and this had included a clause that was quite contrary to the views and interests of ITCB members. The genuine and deeply held views of the ITCB should not have been treated in this fashion, giving rise to the impression that those opposing their views did not want any real engagement. The entire Seattle process had in fact simply ignored the mandate in paragraph 8 of the Geneva Ministerial Declaration, and had even failed to undertake a collective evaluation on implementation.

Outlining the ITCB position in summary, Hong Kong said:

        although 33% of trade in the sector had been ‘integrated’ by the restraining countries in a narrow technical sense, this comprised mostly imports of products not under restraint - resulting in elimination of few quota restrictions:

        additional access granted has been limited to minimum increases in quota growth rates, and had not resulted in any lessening in restrictive nature of quotas

        developing countries, including small suppliers and least-developed countries, had not received any meaningful increases in their access possibilities;

        despite solemn commitments, the process of liberalization had failed to be progressive, and had not enabled developing countries to benefit from strong consumer demand;

        major developed countries had resorted to a variety of trade restrictive measures including a large number of unjustified transitional safeguard measures, changes in rules of origin, unduly cumbersome customs and administrative procedures, and anti-dumping investigations and actions, particularly of products already under quota restraints.

In their specific proposals, the ITCB has called for liberalization at the start of the next stage (1 January 2002) of at least 50% of the import of products under specific quota restraints The resumed WTO General Council Special Session on Implementation today continued discussions on evaluation of implementation of the Agreement on Textiles and Clothing (ATC). Also, the growth-on-growth formula for quotas should be used to contribute to meaningful increase in access.

Hong Kong China said that the para 21 of the chairman’s text, in the hurry of preparing for Seattle had mixed up the sequences and proposals, and the original proposals should be restricted and used as a basis for the discussions.

Developing countries, Hong Kong China said, had made tremendous sacrifices in accepting to live under quota restrictions for a long period of time. They also had to offer significant concessions in the Uruguay Round to secure an end to these restrictions, in a phased and progressive manner, even though the restrictions were never GATT-consistent. They now expect the major restraining countries to live up to their promise and fulfil their leadership responsibilities. The case for immediate action, to deliver some credible and meaningful liberalization was overwhelming. Besides assisting the developing economies, it can bring huge benefits for businesses and consumers in the restraining countries themselves.

Unfortunately, it was a matter of regret that, recently, a major restraining Member (the EC) has announced its decision to demand additional market opening from developing countries as a pre-condition for meaningful liberalization of its own quota restrictions, even during the third stage of the implementation of the ATC. The ITCB members, at their recent session in Guatemala, had rejected attempts by some importing developed countries to demand additional market access concessions from developing countries as a condition to fully comply with their obligations under the ATC.

From Hong Kong’s own experience it was clear that the notion of reciprocal market access in trade in textiles and clothing was “totally without a shred of credibility.” Hong Kong had not been able to export one single extra piece of clothing, or had been given a fraction of a percentage point of extra growth as a result of its completely open import regime. “Developing countries, rightly in our view, regard the rhetoric about reciprocity as insubstantive and purely tactical,” Stuart Harbinson, the Hong Kong China representative added.

In the discussions Monday, the EC clarified that its demand for additional market access was not related to the next stage of integration under the ATC, but for demands for more liberalization.

Pakistan complained that the discussions at the Special Session showed no real exchange of views or engagement. But since no one had expressed opposition to their views, it should then by taken as commanding consensus and acted upon, Pakistan’s ambassador Munir Akram said.

India, supporting Pakistan, said the issue of textiles and clothing should be addressed in the General Council, and not through the consultation process of the DG and the chair.

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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