7:59 AM Jan 19, 1995

TEXTILE MONITORING BODY DEADLOCK IN WTO

Geneva 18 Jan (Chakravarthi Raghavan) -- Informal contacts and consultations, after the New Year resumption of work, has failed to resolve the deadlock over the composition of the Textile Monitoring Body in the World Trade Organization continues, with the European Union holding out against a take-it-or-leave-it compromise suggested by Peter Sutherland in December, according to trade diplomats.

Unless resolved, the deadlock over the TMB might block the WTO getting into action -- with some of the developing countries blocking the constitution of other WTO bodies.

Some of these countries are weighing whether they should block constitution of all the WTO bodies, and thus implementation of the WTO agreements, or pick and choose among these bodies.

One view among them, voiced at the December final meeting of the Preparatory Committee was that in line with the concept of the Uruguay Round single undertaking, with participants forced to accept all the WTO agreements, implementation also has to be a unified process.

If the latter view prevails, even one or two countries with major interest in the textiles and clothing sector, like India and Pakistan, may block consensus on the constitution of the WTO General Council and its officers as well as other subordinate bodies like the Councils for Goods, Trips, Services.

The WTO's Agreement on Textiles and Clothing provides for a 10-member TMB, with an independent Chairman, to monitor and supervise the implementation of the accord.

The Europeans wanted to perpetuate the pattern of membership in the old Textiles Surveillance Body (TSB) of the Multifibre Agreement which had a more limited number of signatories.

The Textile and clothing exporting countries have not accepted this in relation to the WTO and its TMB and held out for a composition of four for the importing countries and six for the others.

After weeks of consultations within the Prepcom's Institutional, Legal and Procedural Sub-Committee failing to resolve the issue, GATT Director-General and Chair of the Prepcom, Peter Sutherland, put forward in December a take-it-or-leave-it compromise to break the deadlock.

It provided for four constituencies of importers: with the US, EU and Japan and Canada, with Switzerland to be accommodated as an alternate within this grouping, thus ensuring US, EU and Japan always being a member. A fifth mixed constituency would have involved Norway in one year alternating with East Europeans and Turkey.

Norway is a member of the European Economic Area and the East Europeans have association agreements with EU and the EFTA.

The other five members would have been drawn from constituencies -- with countries with them alternating among themselves -- involving Asean, Latin American and Caribbean, Pakistan and China, Hong and Korea, India alternating with Morocco, Tunisia and Egypt.

Sutherland had pointed out that decisions of the TMB like other WTO bodies was to be by consensus.

However, consensus has been defined in the WTO to mean that anyone present at the meeting not objecting. Some exporters fear that in some mixed constituencies, with weak alternates (having special relations with the), consensus could be manipulated by alternates not being present in the room!

The exporting countries agreed to the Sutherland formula reluctantly, but making clear that they could not accept it becoming a basis for further negotiations.

The other majors also accepted it, but the EU did not agree. A suggestion by the EU in January, for Turkey to be joined to the Pakistan-China constituency has been rejected.

At the December Prepcom, India supported by Hong Kong, Turkey, Pakistan, Morocco, Brunei (for the Asean) stressed that the implementation had to be of the agreements as a whole.

Some of these, as also some of the Latin Americans with greater interest in say agriculture, have been arguing against holding up all other agreements and bodies, but selecting only a few like the TRIPs and/or Services.

But India and others have been arguing that for them to pick and choose and hold up other individual agreements would be to do what they are accusing the EU of and want to block consensus on all.