Jul 23, 1986

MFA NEGOTIATIONS RESUME.

GENEVA, JULY 21 (IFDA-CHAKRAVARTHI RAGHAVAN) – The last round of negotiations over the future of the Multifibre Arrangement (MFA) resumed here Monday, with a warning from third world exporting countries that the failure to liberalise MFA could jeopardise the broader negotiations in GATT for a new trade round.

The current MFA-3 is due to expire on July 31, 1986.

The yearlong negotiations over its future, and especially the terms and conditions of a protocol for an MFA-4, has not progressed very far.

A major reason has been the U.S. insistence that MFA-4, and the bilateral accords under it, should be "not less restrictive" than the current MFA-3.

Also, the U.S. and EEC have not been willing to commit themselves to a phase-out of the MFA regime.

With an eye on the Congress and domestic lobbies, the U.S. negotiators here have not given any ground to the demands from the third world countries for liberalisation.

They have also been seeking to secure bilateral accords, with stringent and restrictive growth provisions, from the dominant suppliers, but have so far secured only from Hong Kong.

Negotiations with South Korea, the other dominant MFA-supplier to the U.S. market, have reportedly broken down, since South Korea reportedly is unwilling to have its share frozen vis-a-vis its main competitor, Hong Kong.

The negotiations resumed Monday afternoon in the textiles committee chaired by the GATT Director-General, Arthur Dunkel, when the spokesman of the group of third world exporters of textiles and clothing made a plea for focussing on specific issues.

The committee, which also heard statements from China and Egypt, recessed till Friday, while informal consultations under Dunkel are slated to resume Wednesday afternoon.

In the committee Monday afternoon, the third world group’s spokesman, Felipe Jaramillo of Colombia, noted that in the negotiations to date, a wide range of issues and approaches for settling the future of the MFA had been indicated.

This process, he said, had now to be advanced to focus on the critically specific issues and to develop "a secure credible and clearly liberal framework for the developing countries, exporters of textiles and clothing".

"The next two weeks", Jaramillo warned, "could not only make or break the textile negotiations but could also jeopardise the broader negotiations which are being attempted".

"... lest we disappoint the world trading community, with adverse implications for the world trading system, we shall have to display the will to liberalise the trade regime that has led to restrictive and discriminatory treatment of developing countries’ exports of textiles and clothing".

This "will" was yet to be fully shown by all importing countries, and where expressed was not adequate "to ensure a secure and credible framework" for expansion of their world exports in textiles and clothing, and "a meaningful and substantial liberalisation of these exports".

Unless the importing countries broke out of the approaches typical of the previous two rounds of negotiations "we would be darkening the prospects’ of third world trade and impede the impulses for growth in world trade".

All the importing countries, the third worlds spokesman asserted, would have to exert the necessary will.

"Only then could we turn the corner".

Jaramillo underlined that the economies of industrial countries were in better shape now than at the time of previous negotiations.

The textile industries of industrial countries were "certainly not beleaguered, as they contend on the basis of misleading indicators".

The prolonged protection of the MFA, unrestricted access to main markets, and development of new technologies had afforded necessary means to keep the predominant share of the market for themselves.

"On the other hand it is the developing countries who face the grim prospects for growth due to low commodity prices, mounting debt burdens and continued restriction of access to main markets".

The current negotiations, Jaramillo underlined, "must ensure progressive liberalisation and phase-out, under strengthened GATT disciplines, of it current regime in textiles and clothing".

Such an objective would require several essential elements in any instrument to be agreed.

There should be tighter disciplines for safeguard measures, and restrictions on small suppliers and new entrants and the least developed countries should be removed.

There should also be strengthened treatment for cotton and wool producing countries.

The new instrument should also prevent nullification of the arrangements by importing countries through additional measures.

Other essential elements should include progressively liberal access through higher base levels, growth rates and flexibility, reduction of coverage, and an "understanding on phase-out under strengthened GATT disciplines".

China’s Tang Yufeng, in supporting the statement of Jaramillo, stressed that the credibility of the commitments of industrial countries required that in the current negotiations ways and means must be found to reduce the level of restraints on exports from third world countries and eliminate discriminatory restrictions.

The gradual reduction of product coverage was "a touch stone" to measure the attainment of the objective of the MFA, namely its temporary nature and commitment to progressive liberalisation of the trade.

As a first step restrictions on yarns and children’s clothing should be removed from the categories under restraint in the MFA.

Any attempt to expand the coverage to include non-MFA fibres (like remy, silk and line, sought by the U.S.A.) would be counter to the basic objective of liberalisation and the principle of "standstill and rollback", and hence "unacceptable" to China, Tang declared.

There should also be progressive increase of growth rates in order to ensure greater access to the markets of industrial countries and there should be automatic observance of the flexibility provisions.

The Chinese delegate also called for removal of the anti-surge mechanism in the 1981 protocol of extension.

As regards the charge of "circumvention", the Chines delegate said it was unjustifiable to hold the primary exporting countries responsible for the re-exports by third country exporters.

The Egyptian delegate, Adel El-Gowhari underlined the need to bring the textiles and clothing trade under strict GATT rules and disciplines.