12:44 PM May 15, 1995

US MISUSE OF TEXTILE AND CLOTHING ACCORD DEPLORED

Geneva 13 May (Chakravarthi Raghavan) -- Third World countries, exporters of textiles and clothing products, have strongly criticised the United States for its misuse of the "transitional safeguards" provisions of the Uruguay Round Agreement on Textiles and Clothing (ATC) and impose new quantitative restrictions.

The developing country position came out in a communique issued at the end of a week-long meeting of the Council of Representatives of the International Textiles and Clothing Bureau (ITCB) held at Cartagena de Indes in Colombia.

The ITCB while blaming developed importing countries, named the United States in particular.

The ITCB is the intergovernmental body of developing countries exporting textiles and clothing products under the Multifibre Agreement which has been subsumed by the Uruguay Round's ATC which provides for the gradual integration of the trade in this sector into the GATT 1994 over a 10-year period, with provisions for transitional safeguards under multilateral monitoring and control.

Under the MFA, the importing countries which maintained discriminatory quota restrictions against imports from the developing countries had a greater leeway in imposing restrictions and/or calling upon the exporting countries to exercise voluntary export restrains.

The ATC, while allowing existing restrictions to continue, while requiring their phase-out and simultaneous liberalisation over the 10-year period, allows transitionary safeguards to be applied by importing countries, but subject to stringent criteria and monitoring by the WTO and its Textile Monitoring Body (TMB).

Under the ATC, on the date of entry into force of the WTO, the importing countries had to integrate 16 percent of the total volume of imports of products listed in the annex, a further 17 percent on 1 January 1998, another 18 percent on 1 January 2002, and all remaining restrictions (49 percent) on 1 January 2006.

The integration programme set out by the United States and the European Union, the two major importing markets, make clear that there will be no real integration: they have 'integrated' in the first phase products in the annex but which are not under restraint.

The US programme, and President Clinton's assurances to the US Congress, leave also no doubt that restrictions on the socalled sensitive categories would go only at the end of the 10-year period.

But almost simultaneously with the announcement of the 'integration' of unrestrained products on 1 January 1995, the United States has issued "calls" on the exporting countries asking them to exercise voluntary restraints on these exports or face US ordered quantitative restrictions.

The United States has issued such calls on 21 countries.

Under the ATC's transitionary safeguards provisions (Art 6) temporary restraining measures can be taken by an importing country on the basis that imports of a particular product into its territory is in such increased quantities as to cause serious damage directly or indirectly to its own competitive products.

But before taking such action (or calling on exporters to do so), the importing country has to make a determination and it must be demonstrated that the damage or actual threat is caused by such increased quantities in total imports of that product and not by other factors such as technological changes or changes in consumer preferences.

The criteria to be used in judging this is set out in the Article, with some special provisions relating to the interests of exporting members to be taken into account.

Nevertheless, the United States appears to have issued some routine calls on countries last year, under the MFA, and after the WTO's entry into force, asked importing countries to negotiate bilaterally and act on its demands.

When the exporting countries pointed out the new requirements after the WTO's entry into force, and the ATC under it, the US would appear to have simply converted its old calls into ones under the WTO -- without making any of the determinations or demonstrations of serious injury or threat caused solely by the excessive and sudden imports.

The ITCB communique after its Cartagena meeting referred to this and said: "The ATC mandates the progressive dismantling of the prevailing restrictions in the textiles and clothing sector and does not sanction new quantitative restrictions except in terms of the transitional safeguard mechanisms, which is to be used sparingly.

"The ITCB noted with great concern moves by some developed importing countries to resort to the transitional safeguard mechanisms without adequate justification. In particular, the United States, in just over four months, has initiated more than twenty actions to apply transitional safeguards not covered by the criteria specified in Article 6, in particular, the demonstration of serious damage to domestic industry caused by imports.

"The ITCB believed that this amounted to a gross misuse of the transitional safeguards mechanism and strongly deplored such actions which undermines the Agreement on Textiles and Clothing."

In other comments, the ITCB expressed its "profound regret and utmost concern" that the integration programmes implemented so far did not contain "commercially meaningful products of interest to the ITCB members" and that these programmes had not led to "any significant liberalisation of the prevailing restrictions and will have no effect on world trade in textiles and clothing".

The ITCB pointed out in this regard that a fundamental premise of the ATC was "that progressive integration must contribute significantly to trade liberalisation in the textiles and clothing sector."

The ITCB meeting also considered the impact of "eco-labelling" on exports of textiles and clothing products and expressed concern at the manner in which "some schemes are being introduced and implemented by the developed importing countries which adversely affect the access opportunities for developing countries and that could be construed as protectionist devices".

The ITCB emphasized "the need for multilaterally agreed standards based on transparent, objective and equitable criteria".

The communique reiterated the ITCB's commitment to a meaningful implementation of the ATC provisions providing for more favourable treatment to the LDCs and the collective determination and strong resolve of ITCB members to see the strict and faithful implementation of the ATC with the objective of eliminating all restrictions and full integration of the trade in this sector into GATT 1994.