Bridges Weekly Trade News Digest • Volume 6 • Number 29 • 6th August 2002

Key Developing Countries Cry Foul As Textiles Stumbles At WTO

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A continuing rift between developed and developing countries at the WTO over textiles liberalisation widened considerably at a 31 July meeting of the General Council, leaving developing countries asking where the ‘development’ aspect had gone from the so-called ‘Doha Development Agenda’ and dampening hopes on progress in other WTO negotiating areas. The meeting was a continuation of the session begun on 8 July (see BRIDGES Weekly, 10 July 2002), and was the last General Council session to be held with Director-General Mike Moore still in office.

According to the negotiating mandate agreed to in Doha last November, the Chair of the Council for Trade in Goods (CTG) was to have made recommendations to the General Council by the end of July for action on freeing up import restrictions — principally growth in quota levels — on textiles and clothing in importing countries (primarily the Canada, the EC and the US). Textiles and clothing are products of major export interest to many developing countries, which are the demandeurs in this area. But CTG Chair M. Supperamaniam (Malaysia) told the General Council that due to ongoing "fundamental differences" between Members, he was not in a position to make recommendations. As such, and since there was also no agreement on whether, how or when to continue consultations, this issue remained stalled. Repeated attempts at brokering a report by Chair Supperamaniam ultimately led nowhere, leaving the process in a procedural limbo that delegates said would likely have to be taken up by the General Council at a later date.

The "fundamental differences" at issue pitted the textile-exporting members of the International Textiles and Clothing Bureau (ITCB), such as Hong Kong - China, India, Pakistan, Indonesia and Brazil against Canada, the EC and the US. ITCB members argued that developed countries had failed to progressively increase growth rates for textile quotas to allow for meaningful access to their textiles markets, as mandated by paragraphs 4.4 and 4.5 of the Doha Decision on Implementation and by the 1995 WTO Agreement on Textiles and Clothing (ATC). For their part, developed countries maintained that they had adhered to the transitional process under the ATC — which aims to bring textiles trade under normal GATT rules by 1 January 2005 — and had already provided meaningful market access to developing countries, with considerable adjustment being undertaken by their domestic textile producers.

Doha and WTO textiles mandates

Paragraphs 4.4 and 4.5 of the Doha Implementation Decision mandate the CTG to make recommendations "for appropriate action" on the following: (a) that when calculating the quota levels for small suppliers for the remaining years of the Agreement, Members will apply the most favourable methodology available in respect of those Members under the growth-on-growth [in textile quota] provisions from the beginning of the implementation period; extend the same treatment to least-developed countries; and, where possible, eliminate quota restrictions on imports of such Members; and (b) that Members will calculate the quota levels for the remaining years of the Agreement with respect to other restrained [developed country] members as if implementation of the growth-on-growth provision for stage 3 had been advanced to 1 January 2000.

The growth-on-growth provisions of the ATC require developed countries to apply more favourable calculation methods in determining import quota levels pending the phase-out of all textile quota restrictions over a 10-year period ending in 2005. Under these provisions, developing countries are assured of market access to the major textile importing countries on a formula of 16 percent growth over the previous year during the first three years (1995-97), 25 percent during the next three years (1998-2000), and 27 percent in the last four years (2001- 2004). According to a WTO report published last week, the EU has so far eased restrictions on only some 20 percent of textile goods covered by the accord.

ITCB reactions

Amb. Stuart Harbinson (Hong Kong - China), on behalf of the ITCB members, called the textile debate in the CTG "a charade", and demanded redress in some way for the lack of meaningful benefits from the ATC to developing countries. He cited the decreasing share of industrialised countries in the textile and clothing import total of the US, unjustified anti-dumping actions, and changes in the rules of origin as hurting developing countries. He was joined by India’s delegate, who said "the Doha work programme constitutes an overall package, with an emphasis on development. The message that is coming out is that the development message is being jettisoned." India continued, saying, "If the development aspects are sidelined…it will inevitably have an impact on other aspects. Any attempt to drive the work programme forward at two speeds would lead to an unravelling of the package," he added. Others, including Brazil, Pakistan and China, echoed the warning.

Also at the General Council

Further to the contentious talks around textiles, an "extremely long debate" was held, according to WTO sources, around the issue of rules of origin, which are the criteria used to define where a product was made, and therefore determine applicable tariff levels. This usually quite technical area is becoming politically more contentious, sources say, because rules of origin can be used as a barrier to entry of goods, particularly against developing country products. Most intervening Members, particularly China, India and Pakistan, expressed concern over a slowdown and lack of progress in this matter, and asked the General Council — which involves senior- level officials such as ambassadors — to take it up in future. The General Council agreed to address 12 major issues, from a list of over 100, with respect to harmonising non-preferential rules of origin on sensitive products such as agriculture, fish, and textiles.

Delegates to the General Council also gave a ‘rubber-stamp’ approval to the extension of a deadline to come up with specific recommendations on the 86 items under consideration on special and differential treatment by the Committee on Trade and Development special session (see related story, this issue).

The General Council is scheduled to meet next on 15 October.

ICTSD reporting; "Angry developing states lash rich at WTO talks," REUTERS, 31 July; "India lays blame for slow progress on development issues in Doha talks," INTERNATIONAL TRADE REPORTER, 25 July 2002.