Jul 25, 1985

OPENING SHOTS IN BATTLE FOR NEW MFA.

GENEVA, JULY 23 (IFDA/CHAKRAVARTHI RAGHAVAN) – Industrial and Third World countries fired their opening shots Tuesday in the GATT Textiles Committee in what will prove to be a year-long and contentious battle on the future of the Multifibre Arrangements.-

The Third World countries called for measures of liberalisation and end to discrimination against then in the MFA, and leading to the full return of GATT rules and principles to this trade.-

The Third World countries also assailed the Jenkins bill before the U.S. Congress, and its provisions for cutting back imports form the Third World to the 1982 levels, and warned that this could wreck the MFA negotiations, and endanger the GATT system itself.-

Among Industrial countries, the U.S. and Canada in effect called for further extension on the MFA, and with more restrictive provisions, underlining the difficulties their industries were facing because of growing imports and the large protectionist pressures in their countries.-

The European Community and Japan suggested continuance of the MFA, but with some liberalisation, and ultimately leading to full application of GATT principles by both Industrial and Third World countries.-

But the EEC’s promise of "flexible and liberalised" application of a new MFA was tempered by the demand that Third World countries too should liberalise their textiles and clothing imports.-

The Nordic countries called for a continuation of the MFA, and while taking the position that the "internal discussions" in their capitals had not been completed, hinted at continuance of restrictions.-

International trades in textiles and clothing have been the subject of a special regime, departing from the rules and principles of GATT, and discriminatory against Third world exporters, since the 1960's.-

Beginning with special arrangements for trade in cotton textiles and clothing in 1961, it was enlarged in 1974 to cover all textiles and clothing trade (cotton, woollen, silk, and artificial fibres).-

Envisaged as a "temporary measure" to provide breathing space for a senescent industry in the north to structurally adjust itself, the discriminatory regime against the Third World has now been in force for nearly 25 years.-

Each new regime or extension, has resulted in more discriminatory measures against the Third World, and introduction of concepts, like "market disruption" and "low-cost producers", that have no basis in economics or GATT principles of "free trade".-

The total international trade in textiles and clothing in 1983 is estimated by GATT at about 92 billion dollars.-

Of this, the total imports into the OECD countries was 37 billion, of which imports from Third world amounted to about 15 billion dollars, and is regulated by the MFA.-

Textiles and clothing exports account for a little over 24 percent of total Third World exports of all manufactures, and 14 percent of total merchandise exports.-

For many Third World countries, just beginning the process of industrialisation, in fact the textiles and clothing exports are the only manufactured exports.-

Some 52 countries are members of MFA-3, which in effect regulates and restricts the exports of Third World signatories to Industrial countries, and does not apply to intra-industrial country trade in this sector.-

The current MFA-3, came into force on January 1, 1982, and is due to expire on July 31, 1986.-

Under MFA-3, the Textiles Committee has to meet at least one year before the expiry to decide whether it should be "extended, modified or discontinued".-

The meeting of the Textiles Committee Tuesday was for this purpose, and heard statements of the various protagonists, laying out their initial negotiating stances.-

The actual negotiations are expected to take much of the remaining one year, going into bilateral or plurilateral consultations, and as in previous cases a final agreement or decision emerging just in time to beat the expiry deadline.-

The negotiations in the Textiles Committee runs parallel with ongoing work in a working party of GATT on textiles, under the GATT work programme and Ministerial declaration calling for further trade liberalisation including the possibilities of full application of GATT provisions to this sector.-

In opening the Committee, the GATT Director-General and chairman of the Committee, Arthur Dunkel underlined the "particularly critical circumstances" of the meeting.-

There was on the one hand "an upsurge of protectionist pressures" including proposals for "further tightening" of restrictions on textiles and clothing.-

On the other hand, the GATT Contracting Parties were engaged in efforts to strengthen the trading system and improve its capacity to withstand pressures through a broad process of trade liberalisation.-

In presenting the view of the Third World exporting members of the MFA, the South Korean Minister, Joun Yung Sun, noted that in the over a decade of the MFA, import restraints in Industrial countries had became more and more restrictive - spreading in country and product coverage and increasingly discriminatory.-

The MFA had also failed in the central objective of structural adjustment and the goal of trade liberalisation, sought in 1974 when MFA-I came into force.-

The key question before the Committee, sun said, was whether continued protection to Industrial country textile and clothing industries was justifiable, and whether they could continue to claim special treatment in the form of a derogation from GATT rules.-

The Committee was also faced with the issue whether a convincing case could be made to justify the persistent discrimination against the Third World.-

But overshadowing the opening of the negotiations were legislative moves in one of the principal members of the MFA (the U.S.), which if enacted would violate the multilateral and bilateral obligations of the country.-

By bringing forward the legislation with the element of discrimination in a key sector of trade, the bill would undermine the very basis of the present open multilateral trading system, he warned.-

Several of the Third World countries also spoke in support of the joint stand.-

Speaking for the ASEAN countries, the Philippines deputy Minister, Antonio Carag, said that a return to the "original precepts and disciplines" of the MFA was in order, and asked the Industrial countries to give "substantive meaning and content" to the implementation of provisions for special treatment to new entrants and small suppliers.-

India’s J. K. Bagchi said the trade in the sector was "a touch-stone" of the multilateral trading system, and the continuation of the basic derogation from GATT in the MFA was now threatening to undermine the very basis of the system.-

MFA should not be accepted as "a regular and parallel law" of international trade, and Industrial countries should give a categorical and unconditional commitment to apply GATT rules and principles as the first step for meaningful work on trade in textiles and clothing in the future, Bagchi added.-

U.S. delegate, Charles Carlisle of the U.S. Trade Representative Office, complained of steady growth of imports into the U.S. market in 1983 and 1984, and its current "sheer magnitude" causing acute problems, even though there had been no increase in the first five months of 1985.-

Imports of apparel made of non-MFA fibres, he further complained had risen sharply, and in first part of 1985 was five times greater than in same period of 1984.-

He sought to present the U.S. Congressional moves, and the Jenkins bill, which had support of over half of U.S. Senators and Congressmen, in this context, and said while the Reagan administration was strongly opposed to it, "I cannot predict its future course".-

For over 50 years, he noted, the U.S. Congress had delegated to the president the power to conclude and enforce trade agreements, but Congress could take away the delegated authority or legislate new conditions.-

In the U.S. view, a new arrangement should succeed the MFA-3, and negotiations should start and move forward expeditiously.-

The overall thrust of the U.S. delegate's remarks seemed to indicate an U.S. preference for more restrictions.-

The Chinese delegate, Liu Xianming, however warned that the enactment into law of the Jenkins bill would undoubtedly undermine the negotiations on the future of the MFA, and "bring severe consequences to trade in textiles and clothing and the international trading system as a whole".-

Jean-Pierre Leng, the chief negotiator of the European Community, reaffirmed what he called "the Community's attachment to the objective of progressive liberalisation of trade in textiles on the basis of a better balance of rights and obligations between Contracting Parties".-

In the present circumstances, an extension of the MFA appeared necessary, but the Community planned to apply "in a more flexible manner" the multilateral and bilateral provisions of a new MFA to be agreed upon.-

This however would be contingent on "parallel efforts" towards opening of their markets by other countries engaged in the international textile trade, and "to which each will contribute according to their level of development and economic capabilities".-

Japan’s Kazuo Takase said Japan’s basic position was to renew the MFA regime "with no drastic change but with modifications based on incessant efforts towards liberalisation".-

In its various transitions, Takase conceded, the MFA regime had increased its restrictive nature.-

And under the current trade environment, renewal of the MFA "with substantially liberalised modifications seemed to be the most desirable way, representing a balanced compromise among its member countries".-

Norway's Bjorn Frode Oestern, speaking for the Nordic countries, hoped the negotiations would lead to an extension of the MFA.-

He did not spell out what its broad thrust should be, but said that "internal discussions" in Nordic countries on the possible elements of a new protocol of extension had not been completed, but the Nordic countries would revert to the issue at later meetings.-

In a separate statement, the Swedish delegate Mr. Dolling, said Sweden supported the continuation in principle of the present MFA, "modified where necessary in the light of the situation now obtaining in the textile trade".-