EEC ACCUSED OF SEEKING "MANAGED TRADE" IN TEXTILES.

Jun 16, 1988

EEC ACCUSED OF SEEKING "MANAGED TRADE" IN TEXTILES.

GENEVA, JUNE 14 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Proposals by the European Community on trade on textiles and clothing came in for some sharp criticism this week at the meeting of the Uruguay round Negotiating Group on Textiles and Clothing.

The group, chaired by Lindsay Duthie of Australia, met June 13-14 and is to meet again on July 20-21.

Third world countries charged the EEC, through its proposals, with attempting to rewrite the Punta del Este mandate while Australia said the EEC was seeking solutions in terms of "managed trade" rather than the integration into GATT disciplines called for by the Punta del Este mandate.

A number of third world participants noted the total lack of any progress in the group and said without political direction negotiations in the area would not move forward, and such lack of progress would inevitably affect other negotiations in the round.

The group received what was described as "communication" from the EEC, which sought to disguise its opposition to the dismantling of the Multifibre Arrangement through use of some involuted language.

The EEC tied up progress in negotiations in the textiles and clothing group to other negotiations (tariffs, non-tariffs, subsidies, dumping, balance-of-payments exceptions, safeguards, and protection of intellectual property rights).

Through such progress, the EEC said, "it should thereby be possible, taking into account the work in other groups, to assure the feasibility of the objective of the eventual integration of the textiles sector into GATT on the basis of strengthened GATT rules and disciplines".

The EEC’s contribution was "obviously intended to ensure that nothing happens" and should be ignored, India reportedly told the group.

Earlier, Indonesia speaking for the third world textile exporting countries said the industrial countries were injecting issues of doubtful relevance into the discussions. The EEC was now suggesting "virtual rewriting" of the Punta del Ester mandate.

The trade in the textiles and clothing sector was affected by the discriminatory and restrictive regime outside GATT, and the removal of this regime would restore the proper balance of rights and obligations under GATT.

There was no scope for negotiations in the group for removal of restrictions consistent with GATT. Third world countries had no discriminatory restrictions nor any specific to the textiles sector, but only those arising out of their need to safeguard their Balance Of Payments (BOP)

On the EEC and Nordic call for further studies and data, the Indonesian delegate pointed out that the preparatory stage (of data collection and studies) was over and the group was engaged in the "subsequent negotiating phase". It would hence not be appropriate for this Secretariat to undertake further studies or diagnosis of the problems.

Australia said that the EEC’s efforts to create a relationship between development of production capacity in the industry and consumption was "unacceptable" and an effort at seeking solutions "in terms of managed trade".

The Australian delegate welcomed ideas for negotiations put forward in the paper submitted on behalf of a number of third world countries, members of the International Textiles and Clothing Bureau.

The EEC paper spoke of the Community’s commitment "to participate constructively" in achieving the negotiating objectives in this sector, but spoke of the persisting "real difficulties" facing the industry despite restructuring efforts.

The road to return to GATT rules had to be envisaged through "progressive an realistic measures".

To achieve real progress in defining the techniques and modalities for eventual integration of the trade in this sector into GATT, there was need for "a common diagnosis of the problems", with particular attention to relations between development of production capacity and consumption.

In a separate presentation, the Nordic countries spoke of negotiations leading to "eventual integration" of the trade into GATT, and the need to take account of all restrictions affecting trade in these products.

The Nordic statement also sought to defend the MFA by arguing that it had guaranteed producer countries "some stability and expansion" for their exports and had given "a certain consideration" to small producers and new entrants.

The negotiations in the Uruguay round, in the Nordic view, did not involve renegotiations of MFA-IV nor were bilateral accords under it violative of the standstill commitment.

Flying in the face of the theories of "free trade" and "free market" advocated in the GATT, the Nordics justified the use of the "price criteria" to determine "market disruption" for textiles and clothing trade, an in effect rejected the third world proposals for discarding it as a cause for restraint.

The eventual integration of the trade into GATT and the termination of the MFA, the Nordics said, had to fulfil the criteria of the "real situation" in the industry and "de facto practices must not deteriorate from the present ones".

The Nordics found the EEC paper "interesting", and many of the observations "valid".

Hong Kong said it was puzzled by the EEC’s references to the need for balance of rights and obligations. Except for the MFA, the remaining trade was already under GATT, and it was only the derogation from GATT through the MFA that had created an imbalance in the first place.

The EEC was attempting in its paper to widen the scope of the negotiations in this sector as it had done in the case of tropical products, Hong Kong charged.

Hungary supported the ideas in the third world proposals, but felt that solutions should be sought on a non-discriminatory basis.

The Hungarian delegate questioned whether the EEC approach could lead to successful negotiations and said that it should not be forgotten that the price for MFA had been paid by some of the exporting countries.

While the negotiating mandate spoke of "eventual integration", this did not mean that they had to wait for the conclusion of the Uruguay round. Negotiations for the modalities to assure such integration should begin now, and the conditions and a timetable for return of the trade to GATT disciplines must be settled now.

India said that the experience of the MFA was long enough to know the nature of the problem, namely the existence of selective and discriminatory regime.

The EEC paper had nothing to say on this. The EEC paper had mentioned a number of other issues on the Uruguay round where progress would be needed to achieve progress in textiles, but one wondered why the EEC had not mentioned the Uruguay round as a whole or the other issues.

A number of third world countries also reportedly spoke criticising the demand of the EEC and Nordics for fresh Secretariat analysis and data.

The chairman suggested that the Secretariat should prepare an outline of further studies that could carry forward then 1984 GATT study in this area, particularly the chapter V on the economic consequences of alternative future trade policies in this sector. Such an outline, Duthie reportedly added, should take account of studies like that of the World Bank and others.