Jan 26, 1989

RIGID U.S., EEC STANDS IN TEXTILE CONSULTATIONS.

GENEVA, JANUARY 25 (IFDA/CHAKRAVARTHI RAGHAVAN)— The rigid negative positions of the United States and the European Communities on commitments to wind down the Multifibre Arrangement (MFA) have blocked progress in the GATT "green room consultations", participants reported Wednesday.

The GATT Director-General, Arthur Dunkel, in his personal capacity as the chairman (at the official) of the level Trade Negotiations Committee, has been mandated to conduct high level consultations on the four areas of Uruguay round negotiations where there was a deadlock at Montreal Ministerial mid-term review meeting (December 5-9, 1988).

These four areas are: textiles and clothing, agriculture safeguards and Trade-Related Intellectual Property Rights (TRIPS).

The consultations on the first of these, that on textiles and clothing, began Tuesday in the framework of the GATT’s "green room consultations".

No consultations are scheduled for Wednesday (as originally planned), but one is scheduled for Thursday, participants said.

At the consultations Tuesday, third world participants reportedly said that for any progress in this area, it was no longer enough to use some nice sounding words about future negotiations.

What was necessary was for the imparting countries to agree on a freeze on further restrictions, agree to start the phase-out of the MFA when the current MFA-4 expires on 31 July 1991, and agree to negotiate an agreed time-frame for the completing the phase-out.

Only the Nordics, among industrial nations, provided some support to the third world countries, by reiterating their stand that the time-frame for winding down the MFA should be agreed upon within the Uruguay round.

The U.S. and EEC reportedly stuck to their stands that the phase-out of the MFA was only one of the options or modalities for integration of the trade in this sector into GATT, and that the issue of what after MFA-4 could only be negotiated as provided in that agreement.

Under the MFA, and the protocol for MFA-4, negotiations on its future would have to commence by August 1, 1990.

The EEC reportedly said that it could not negotiate in 1989 on the modalities, but only in 1990.

In the U.S. Omnibus Trade Act of 1988, which spells out the mandate to the administration for the Uruguay round negotiations and the negotiating objectives in each area, the textiles and clothing trade is not even mentioned.

This means that anything the U.S. negotiators agree to would not be part of any Uruguay round package they could present to Congress, but would have to go through the normal congressional processes.

The EEC Council of Ministers have also not provided the EEC Commission with any negotiating mandate.

Textile interests in both EEC and U.S.A. are opposed to the winding down or phase-out of the MFA system governing trade in this sector, but want either continuance of the MFA or its permanent incorporation into GATT with provisions for continuing the selective and discriminatory restraints an imports from third world countries.

Hence the U.S. and EEC negotiating tactic in the Uruguay round of promising to negotiate in the future, after the Uruguay round is completed with agreements on other issues, particularly those of interest to them like TRIPS, services and investment.

Third world countries have made clear that they would not accept such a ploy.

At a meeting Tuesday of the informal group of third world countries in GATT, there was reportedly wide spread support, from everyone who spoke, for the position that the third world countries have taken in the negotiations so far, reflected in the formulations in the papers sent to Montreal.

In the consultations Tuesday, the U.S. and EEC reportedly said that they could not anticipate and commit themselves now to the final outcome of the negotiations in the round in this area, and could only do so as a part of the final package.

However, third world countries reportedly said that in some of the other areas, where "results" were tentatively achieved at Montreal but put "on hold", such as on services, the end-results of the Uruguay round had been anticipated.

The tentative accord on services for example, stipulated that the Group of Negotiations on Services should endeavour, by end of 1989, to assemble the necessary elements for a draft to permit negotiations to take place for completion of all parts of the multilateral framework and "its entry into force by and of the Uruguay round".

Not only were the end results anticipated but a timetable for this had been also tentatively agreed to, even though the Punta del Este mandate did not provide for this.

If no balanced results satisfactory to the third world in areas of interest to them could be achieved in the consultations then the other results and package too could be in jeopardy.

The consultations by Dunkel are on the basis of the original texts remitted to Montreal by the Uruguay round Group of Negotiations on Goods (GNG).

In that text, the industrialised countries were only agreeable to "affirmation of political will to effectively implement" the Punta del Este mandate by "commencing substantive negotiations in 1989" on the modalities to permit the "eventual integration" of this sector into the GATT.

They were also ready to give "recognition" that the negotiations in this area was "one of the key elements" in the round in view of the "great importance of this sector" for the economies of many countries and its importance for economic and social development and expansion of export earnings.

In the consultations Tuesday, attempts of the U.S. and EEC merely to improve upon this language, or to promise negotiations in right earnest in 1990-1991 on the future of the MFA, were dismissed by third world participants.

This kind of promises about "negotiations in right earnest", India reportedly said, had been made so often in the past, and the MFA and its predecessors (admittedly intended to be a temporary arrangement but continued successively for 25 years) had been extended repeatedly with more restrictions, that such promises no longer had any credibility.

What was needed now was agreement on freeze against new restrictions, agreement that phase-out would begin in 1991 at and of the MFA-4, and agreement to negotiate in the Uruguay round the time-frame for completing the phase-out.

This stand was supported by several other third world participants in the consultations including Brazil, Pakistan, Indonesia, and Mexico.

Uruguay reportedly said that the third world countries were not prepared "to pay" (through accords in other areas) for the industrial countries saying that this textile trade was a crucial sector or that industrial countries would engage themselves in substantive negotiations.