International Trade Daily | October 29, 2001 | By Daniel Pruzin
GENEVA--The European Union is preparing to offer new concessions to developing countries for market access on their textile and clothing exports in an apparent bid to win their support for a broad trade round.
Trade sources told BNA Oct. 26 that Brussels is adopting a two-prong approach on the textiles and clothing issue: agree to consider the implementation demands of developing countries related to the WTO's Agreement on Textiles and Clothing (ATC), in particular with regards to so-called "growth on growth" demands; and conclude bilateral agreements with a number of developing countries on market access to the EU market for textile and clothing products similar to the trade deal with Pakistan announced by the European Commission on Oct. 16.
The sources said a number of developing countries, including Brazil, Peru, the Philippines, and Thailand, have already signaled their interest in negotiating bilateral market access deals with the EU.
Under the Oct. 16 deal, the EU agreed to temporarily boost import quotas for Pakistani textiles and clothing by 15 percent for a four-year period through 2004, a move the Commission said will result in up to $910 million in additional Pakistani exports over the four years. EU trade commissioner Pascal Lamy admitted that the agreement with Pakistan was "sped up" because of the country's current difficulties resulting from military action in neighboring Afghanistan.
EU Move Puts Pressure on U.S.
The EU initiative is likely to ruffle feathers in the United States by putting pressure on Washington to offer similar concessions on textiles, something it has so far refused. The EU is seeking developing country support for the initiation of talks on issues such as investment, competition policy, and the environment as part of a broad new trade round that WTO members are expected to launch at their Nov. 9-13 ministerial conference in Doha.
The textile demands that the EU said it was ready to negotiate are spelled out in Annex II of a draft ministerial decision on implementation circulated by WTO chairman Stuart Harbinson on Sept. 26. Among other things, the Annex II concessions on textiles would require developed countries to apply more favorable calculation methods in determining import quota levels pending the phaseout of all textile quota restrictions by 2005 as required under the ATC.
In specific, the implementation demands call on countries that still maintain quota restrictions on textile and clothing imports--the United States, the EU, and Canada--to calculate the quota levels for small suppliers and least developed countries by using the "most favorable methodology available" (i.e. that of the EU) in applying the ATC's growth-on-growth provisions. In addition, countries with import quotas would be obliged to calculate the quota levels for other WTO members as if implementation of the growth-on-growth provision for the final quota phaseout stage had been advanced from Jan. 1, 2002, to Jan. 1, 2000.
Under the ATC, the level of quota restrictions are to be increased by 16 percent in stage 1 (Jan. 1, 1995-Jan. 1, 1998); by 25 percent in stage 2 (Jan. 1, 1998-Jan. 1, 2002) over stage 1 levels; and by 27 percent in stage 3 (Jan. 1, 2002-Jan. 1, 2005) over stage 2 levels.
Developing countries have insisted on accelerating the phaseout of import quotas on textiles and clothing as part of their demands to address the difficulties they face in implementing existing WTO agreements and ensuring better terms for the organization's poorer members. Textile producing nations, in particular, complain that while countries with import quotas may be adhering to the letter of the ATC, most of the quotas that have been removed so far concern low-end textile products rather than the more lucrative value-added products such as clothing.
The United States has indicated it is uncomfortable with the implementation demands on textiles spelled out in the Harbinson draft decision. "The sensitivities that our textile industry faces, more than sensitivity, the dislocations and adjustments they are enduring, we're very cognizant of that as we approach this work," a senior U.S. trade official said Oct. 3.
The United States is expected to be particularly reluctant to take on demands that it apply the "growth on growth" methodology used by the EU since it would be obliged to make greater market access commitments.
Copyright c 2001 by The Bureau of National Affairs, Inc., Washington D.C.International Trade Daily:
