INDIA SEEKS WTO PANEL ON US CLOTHING QUOTAS

7:02 AM Mar 15, 1996

INDIA SEEKS WTO PANEL ON US CLOTHING QUOTAS
Geneva 15 Mar (Chakravarthi Raghavan) -- India is seeking the establishment of a dispute settlement panel over restraints quotas imposed by the United States on imports from India of certain categories of women's clothing products, according to WTO sources.

WTO officials could not disclose details of the Indian complaint.

The Indian request for a panel, the sources said, will come up at the next meeting of the Dispute Settlement Body on 27 March. The request could be accepted at that meeting, if the US agrees. Otherwise it would be automatic at the next meeting. The dispute settlement panels will not be hamstrung by the consensus rule and, ultimately the panel rulings, subject to any appellate body rulings, will result in binding rulings.

But from the information that became known, after the decisions in August last year and then again in November by the Textile Monitoring Body (TMB) of the Agreement on Textiles and Clothing (ATC), the Indian complaint would appear to involve among others legality of the US continuing to impose, without the sanction of the TMB, the unilateral restraints it put in place on grounds of 'actual threat of injury' to its domestic producers caused by increased imports from India.

In January last year -- within days of the entry into force of the World Trade Organization Agreement, and its annexed Agreement on Textiles and Clothing (ATC) which provides for a transitional period of 10 years for integration of all textiles and clothing products into the normal GATT trading rules -- the US had issued 'calls' on a number of exporters asking them for consultations to agree on restraints.

When these calls and consultations failed, the US went ahead and imposed the restrictions unilaterally, and notified the TMB which under Art 8.6 of the ATC is required to promptly review the matter and to make recommendations within 30 days.

It took the TMB until August to hear and dispose off the Indian complaints against the US restrictions on three categories of products -- No 434 (men's woollen jackets and coats), No 435 (women's woollen jackets and coats) and No 440 (women's wool shirts and blouses).

In all three cases the US had claimed that the restraints were needed because of 'serious injury' and/or 'actual threat' thereof.

Unlike under the old Multifibre Agreement (MFA), the ATC while permitting 'transitional safeguard measures' and quotas towards that end aimed at individual exporters, provides for stricter criteria for the application of both the 'serious injury' and 'actual threat', and the criteria relate to facts and evidence before issue of 'calls'.

During the TMB proceedings in July-August last, the US is reported to have sought to justify its contentions of injury by 'facts' subsequent to its original actions.

The TMB had held against the US in all three cases about US producers having suffered 'serious injury' as a result of increased imports from India.

But on the US contention of 'actual threat of serious injury', based on the same evidence, the TMB held against the US over the item No 434 -- men's woollen jackets and blouses -- and asked the US to rescind the orders.

On item No 440, women's woollen jackets and blouses, the TMB found an imminent actual threat of injury.

On item 435, women's woollen jackets and coats, the TMB was unable to give any decision due to lack of consensus, but asked the two sides to consult again.

India came back to the TMB in seeking a review of its decisions on items 440 and 435 in terms of Art 8.6, 8.8 and 8.10 of the ATC.

In reviewing these matters, the TMB, in November last year, however merely decided to reiterate its earlier decision not to make any recommendations.

Under Art 8.6 and 8.8 of the ATC, the TMB is required to review any matter promptly, and make a recommendation within 30 days, on any matter which a Member finds detrimental to its interests where its consultations with another Members has failed to produce a mutually satisfactory solution.

Under Art 8.10 any Member unable to conform to the TMB recommendations could communicate to the TMB the reasons for its inability to do so, and the TMB is then required to issue further recommendations. The article further provides that if the matter remains unresolved (after the TMB makes 'further recommendations'), the member may bring the matter before the WTO's Dispute Settlement Body.

This is what India has now done.

In the same way, Costa Rica has already brought up, and got a panel established, on a similar complaint involving the US restraints, involving the same points of legal interpretation, while the facts of the action relate to different products.

There are also other pending disputes involving the US and the TMB process (including the procrastinating way it functions to the detriment of exporters) that will also end up in panel adjudications.

And at the meeting of the General Council of the WTO in December last, Hong Kong, Pakistan and India had sharply criticised the way the TMB was functioning.

The process now being set in motion for dispute settlement by adjudication of independent panellists will clarify several of these issues, trade observers believe.