WTO agreements and developing countries
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TEXTILES AND CLOTHING
Half-way point of agreements implementation
At the end of the Uruguay Round,
developing countries considered the Agreement on Textiles and Clothing (ATC), which
provides for the gradual dismantling of bilateral import quotas over a ten-year period, to
have been a major result in their favour. Today at the halfway point of ATC
implementation many developing countries are calling for a Seattle decision that
would accelerate trade liberalization in this sector and redress what they consider to be
an imbalance in the implementation of the Uruguay Round results.
look at textiles and clothing exports of which amounted to $331 billion last
year representing 8.3% of world trade in manufactures as one major manufacturing
sector in which they have competitive advantage. They also believe that trade success in
this area would be an important step up in the industrial development ladder.
In the old GATT, the
Multifibre Arrangement (MFA) governed a large portion of the exports of textiles and
clothing from developing countries, to the main developed countries. Under the MFA
(1974-94), developed countries were able to establish quotas on textiles and clothing
outside normal GATT rules.
The ATC requires
members to liberalize trade in textiles and clothing in two ways. Members must
progressively bring ("integrate") all textiles and clothing products under
normal WTO rules in four steps (16% in the first stage beginning in 1995, a further
17 per cent at the second stage in 1998, a further 18 per cent in
the third stage in 2003 and the remaining 49% in the final stage on 1 January 2005).
Members that maintain quota restrictions (Canada, the European Union, Norway and the
United States), must progressively enlarge the quotas by increasing the annual growth
rates by a set percentage at each stage. When the products subject to quotas are
integrated, the quotas are removed.
A special safeguard
mechanism protects members from damaging surges in imports during this transitional
period. A quasi-judicial body the Textiles Monitoring Body (TMB) supervises
the implementation of the ATC, including the examination of disputes.
At the review of the
first stage of integration and in the current preparations for Seattle, developing country
textile exporters have voiced serious concerns over what they view as lack of meaningful
commercial benefits for them as the major importers have opted to integrate products of
less export interest to developing countries with few quotas being removed. They have also
criticized new restrictions imposed by a major importer through the use of the ATC
safeguards as well as other measures taken by importing countries such as anti-dumping
actions and changes in country-of-origin rules.
There is also the fear that
with most of the quotas being kept for the final stage, the major importers might not be
able to meet their obligations. A group of developing-country exporters (the
suggested that in Seattle, Ministers secure liberalization of the sector by requiring
major importers, among other things, to remove half of the existing quotas by the
beginning of the year 2002.
The major importing
members maintain that they have been observing scrupulously the requirements of the
Agreement. In turn, they have criticized a lack of market-access improvements in other
members in this sector as well as cases of quota circumvention through misdeclaration at
customs of where the products come from.
traders in clothing, 1998 (US$ billions)
||1. United States
|2. Hong Kong, China
| domestic exports
|4. United States
||4. Hong Kong, China
|| retained imports
||5. United Kingdom
|9. United Kingdom
|The International Textiles and
Clothing Bureau (ITCB): Argentina, Bangladesh, Brazil, China (observer in WTO),
Colombia, Costa Rica, Egypt, El Salvador, Guatemala, Honduras, India, Indonesia, Korea,
Macau, Maldives, Mexico, Pakistan, Paraguay, Peru, Sri Lanka, Thailand, Uruguay and Hong