OFFICIALS ARE STEPPING UP DEMANDS FOR BETTER ACCESS TO TEXTILE AND LIBERALISING ITS QUOTAS UNDER THE URUGUAY ROUND AGREEMENT ON TEXTILES AND CLOTHING.

5:50 AM Feb 9, 1996

OFFICIALS ARE STEPPING UP DEMANDS FOR BETTER ACCESS TO TEXTILE AND LIBERALISING ITS QUOTAS UNDER THE URUGUAY ROUND AGREEMENT ON TEXTILES AND CLOTHING.
Officials say that in exchange for such access to markets in Asia, the EU may be ready to speed up the elimination of some quotas and other restrictions imposed on textile exports from the developing world.

"Europe needs to improve its presence in textile markets in Asia and elsewhere," an EU trade expert stressed. "For us, market access is now a key priority."

Under commitments made in the Uruguay Round on trade liberalisation that set parameters for a new trade pact, textile importing regions like the United States and the EU are to eliminate all restrictions on imports of clothing and textiles over a 10-year period, ending in 2005.

The plan is to gradually phase out the restrictions under the earlier Multifibre Agreement (MFA) (as a derogation from normal GATT rules), which had regulated world textile and clothing trade for over 30 years and to make trade in textiles and clothing sector subject to the rules of the World Trade Organisation (WTO).

Work on liberalising the MFA began last year. But, textile exporting nations say that importers have done the bare minimum to fulfil their Uruguay Round obligations.

Asian textile exporters, including top textile producers like India and Pakistan, have complained that instead of freeing trade in products which are currently subject to quotas, both the United States and the EU have "liberalised" imports of items which were never under restrictions to start off with.

Technically, the importing nations have fulfilled the legal requirements of the deal on phasing out the MFA. But, exporters say this minimalist attitude of the importers is damaging the "credibility" of the whole exercise.

As part of the Uruguay Round agreement, importers agreed to free 16 percent of their overall textile and clothing trade in 1995, 17 percent in 1998, 18 percent in 2001 and the remaining 49 percent in 2005.

"The integration process is terribly back-loaded," says an Asian trade expert, who noted that the US for instance has already said that it will liberalise the lion's share of its textile and clothing quotas only in 2005.

In contrast, the EU has still not made up its mind. "We could either be generous or restrictive," says an EU official. "In any case, we will develop our textile strategy stage by stage."

The EU is obliged to notify the WTO of its liberalisation plan by January 1, 1997. As a result, EU trade officials will spend most of 1996 debating the bloc's future approach.

The focus will be on access to third country markets, especially in Asia. EU officials and industry representatives insist that there is a new class of wealthy Asian consumers who can afford to buy European textile and clothing.

Commitments on opening up their markets made by Asian exporters as part of the Uruguay Round must now be fulfilled, says the EU.

An EU policy document approved by the European Commission last year stresses that the bloc should use the prospect of "a more rapid integration" of textile and clothing products into the WTO system as a "lever for the accelerated opening of third countries' markets.

"If accelerated market access could be obtained only from certain third countries, it would also be worth examining the adequate liberalisation of selected quotas," the Commission said.

European textile makers are also pushing for better access to markets in Asia.

"There is a definite link between dismantling the MFA and access to third country markets," says an official at Euratex, the influential lobby group representing the interests of Europe's textile and clothing manufacturers.

Euratex says that there have been some successes in European exporters' efforts to penetrate Asian markets. Europe's textile and clothing exports to China rose 80 percent last year: but the rise was only from 5,000 tonnes to 11,000 tonnes. In contrast, China exported 100,000 tonnes of textiles to the E.U.

Access to the Chinese market is a key element of a new textiles agreement signed by the E.U. and Beijing late last year. "More and more people in China could buy European products if they had the choice," an EU official commented. "The problem is that they do not have the choice."

The EU has also suspended a recent textile agreement with Vietnam because it says Hanoi is not fulfilling its promise to improve access to the Vietnamese market for European goods.

Vietnam was expected to agree to a gradual dismantling of its tariffs on imports of textiles and clothing last December. But, the reductions were not made.

The EU says it will only start implementing the new and higher textile quotas it promised Vietnam, once Hanoi meets its commitments on improving access to its own textile markets.