May 6, 1987

URUGUAY ROUND MANDATE REQUIRES DISMANTLING MFA.

GENEVE, MAY 4 (IFDA/CHAKRAVARTHI RAGHAVAN) – While Third World countries continue to insist that the dismantling of the Multifibre Regime and integration of trade in this sector into GATT is the main task of the Uruguay round negotiations in this area, the United States appears to be still resisting this, third world participants in the negotiations said.

At the meeting of the negotiating group on textiles last week a number of third world counties are reported to have stressed that the basic negotiating mandate for the group was to formulate modalities for the integration of trade in textiles and clothing into GATT on the basis of strengthened rules and disciplines.

Hence the dismantling of the Multifibre Arrangement (MFA) was the basic issue, and the preparatory work in the initial phase had to be related to this.

Participants said that the U.S. however appeared to be resisting this, and trying to deal with the issue in terms of "some ... liberalisation" within existing arrangements, rather than in terms of negotiating the modalities for dismantling the MFA itself.

Pakistan reportedly argued that the basic question was whether MFA-type restrictions were still needed the collection of data and material about the state of the industry must focus primarily on the situation in the textile-importing countries.

Hong Kong reportedly was of the view that unlike in negotiations like that on natural resource products, the primary task of the negotiating group was how to integrate trade in this sector into the general agreement.

Brazil and Turkey are reported to have supported this view, and argued that the main task of the group would be to deal with the MFA issue.

The U.S. argued that id did not consider the mandate of the group as merely study of MFA. The EEC also supported the view that the information to be collected by the Secretariat must relate not only to MFA countries, but others as well.

India is however reported to have said that there was no way the group could escape coming to grips with the MFA issue, since this was the principal mandate of the negotiating group.

The trade in the sector faced similar problems to that in agriculture in that GATT rules and principles did not apply. But unlike in the case of agriculture, the non-application, and sanction of discriminatory treatment against third world exporters, was founded on derogation from GATT.

The GATT Secretariat study had pointed out in 1984 that the most common feature of textiles and clothing trade over the past century was "the above-average level of government intervention", and that the entire basis of the special treatment since 1961 (short-term arrangements on cotton textiles) was on the view in industrial countries that the trade-related problems confronting these industries were "special".

The study had added that it would be difficult to argue (now that the criteria used in the past to justify a "special case" or a separate trade regime continued to be valid).

If participants had any doubt that dismantling the MFA was the major focus of the negotiations, the negotiating group should first discuss the negotiating objective, set out in the Punta del Este mandate, and sort out the differences at this stage itself, India reportedly argued.

Hong Kong is reported to have added in this connection that the exporting countries were not paid any "price" when the MFA restrictions were imposed, and "no price can be extracted from them now for unwinding the MFA".

Yugoslavia reportedly supported the view that as a result of the work in the group, trade in the sector should be integrated into GATT rules and disciplines by 1991. There were enough GATT provisions relating to "dumping! And "countervailing" to take care of any unfair trade practices, and there was no need for the MFA, the Yugoslav delegate reportedly added.

Hungary is reported to have agreed that the objective of the negotiations was the dismantling of MFA. If MFA had not been derogation from GATT by an instrument negotiated under GATT auspices, the issue would have been subject to the rollback commitments.