May 12, 1992

TEXTILES: EXPORTERS PREPARE FOR "INTERIM ARRANGEMENT" ON MFA.

GENEVA, MAY 10 (TWN/CHAKRAVARTHI RAGHAVAN) -- Third World countries exporting textiles and clothing are preparing themselves for a possible "interim arrangement" for extension of the life of the Multi-Fibre Agreement (MFA) if the Uruguay Round of multilateral trade negotiations is not concluded before the end of the year and brought into effect.

The current MFA-4 which was to have expired in July 1991 has been extended till 31 December 1992, on the basis that the Uruguay Round would be concluded and its agreements, including those relating to the textiles and clothing sector, would be brought into effect from 1 January 1993.

The fate of the Uruguay Round continues to remain uncertain, with most participants feeling privately that it cannot be concluded before the U.S. presidential elections in November.

There are however some who believe that the U.S. and EC might still strike a deal (on agriculture) before the G7 summit in Germany in July, and the negotiations could then be wrapped up by October or November.

Such an outcome could even be useful for President Bush, particularly since he is now likely to be facing Democratic candidate Clinton who, in many of these matters, does not seem to have any different policy or platform.

However, even if the negotiations are wrapped up by October, it is now clear that the Uruguay Round agreements cannot enter into force, as envisaged by Dunkel's "Draft Final Act" by 1 January 1993 and this makes some interim arrangement over the textiles and clothing trade inevitable.

At a meeting of the International Textiles and Clothing Bureau (ITCB), the alliance of Third World exporting countries members of the MFA, held last week at Shanghai in China, the participants would appear to have considered this as well as the state of the Uruguay Round negotiations and the draft agreement within this on textiles and clothing.

According to a communique, issued by the meeting (4-8 May) and made available here by the ITCB, the ITCB Council reviewed the state of the Uruguay Round and, while noting a perceptible loss of momentum due to the differences among the major trading entities in other areas, reiterated its commitment to an early successful completion of the Round with balanced results.

The Council also urged all participants of the Round to demonstrate their political will for the attainment of this objective.

"At the present stage of the negotiations in the Uruguay Round", the ITCB communique said, "it is not clear when its textile and clothing agreement would be available for implementation".

"The MFA is due to expire on 31 December 1992. In this context, the Council recognised that a need might arise for an interim arrangement. It directed the ITCB Secretariat to prepare an analytical study of the range of possible options for its consideration and decision by September 1992, in the light of developments of the Uruguay Round".

The Council, according to the communique, also made an evaluation of the textiles and clothing agreement in the DFA, paying particular attention to its provisions relating to the elements in the economic package.

It noted that there were still a few outstanding issues in the text which had to he settled and asked the representatives of its member states at Geneva to seek their resolution as early as possible.

According to participants, at the Shanghai meeting, Indonesia, Jamaica and Sri Lanka, tried to get the Council to agree to re-open the Dunkel package, and particularly to get the term for the integration, now fixed at ten years, to be extended to 15 years.

While the three wanted this longer time-frame to enable them to make adjustments in their own industry, the longer time-frame is also sought be the Americans.

However, the other participants in the ITCB did not agree to any such wider reopening of the package, but only to deal with some of the outstanding issues which both importers and exporters, in the current state of the Uruguay Round process, have agreed needs to be looked into and clarified.

Among the other ITCB members, at least three (Argentina, Brazil and Uruguay) have announced their acceptance of the Dunkel package, despite their differences and concerns over parts of them, and thus have been consistently opposing any reopening of the text or any recourse to "track four" of the Dunkel process - namely, examining the package and bringing about changes of substance on the basis of a consensus.

The three, while privately as members of the Cairns group, see that some changes in the agricultural text may be forced on them, to win the EC approval, are like many others worried that any recourse to track four might unravel the whole package.

The ICB Council also took note of the special needs of the least developed countries and reiterated its support for the practical application of differential and more favourable treatment for the exports of their textiles and clothing products.

The ITCB also took note of China's participation in the Uruguay Round as well as in the MFA, and decided to extend its full support for China's participation in the textiles and clothing agreement.

While China is a participant in the Uruguay Round, and in the MFA, its ability to participate in the future textiles and clothing agreement (and thus avail itself of the rights conferred on it and assume obligations) would depend on whether it could sign and accede to the proposed draft agreement for a Multilateral Trade Organisation.

This in turn depends on its ability to successfully conclude the negotiations for resuming its status as a member of the GATT. In terms of the GATT, where Taiwan wants to join (and is backed by the U.S., EC and others), the Taiwanese memberships now seems contingent on the negotiations over China's being concluded.

But in the draft MTO, there are provisions, which could enable Taiwan to become a member (with the support of the U.S., EC and others) while China's application could be kept stalled.