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Raising Quota Questions

WASHINGTON — Developing countries are joining textile and union groups in an attempt to build momentum to address the phaseout of quotas on textiles and apparel at an upcoming crucial global trade meeting in Cancun, Mexico.<br><br>Trade...

WASHINGTON — Developing countries are joining textile and union groups in an attempt to build momentum to address the phaseout of quotas on textiles and apparel at an upcoming crucial global trade meeting in Cancun, Mexico.

Trade ministers from 146 countries are jockeying to liberalize trade in a variety of sectors as part of the World Trade Organization multilateral trade round launched in November 2001. The meeting of trade ministers in Cancun, set for September, is seen as a key to moving the talks forward.

Whether the Cancun meeting turns out to be a diplomatic success or ends in disarray will depend to a large extent on how far industrial powers are willing to go to meet the demands of developing countries on a range of issues, according to trade diplomats.

One new issue expected to surface in Cancun is the growing concern among developing countries about the removal of quotas on apparel and textiles. In just 19 months, quotas on all apparel and textiles in 146 WTO countries will be removed as part of the Uruguay Round of GATT, which established a 10-year phaseout of quotas on textiles and apparel set to expire on Dec. 31, 2004.

Smaller developing countries fear nations like China, India and Pakistan will have a competitive advantage that could decimate their apparel industries.

The expected post-2005 surge in Chinese exports may have far-reaching negative effects on developing nations in Asia, Africa and Latin America that rely heavily on apparel exports as a source of foreign income.

Several representatives from developing countries and textile and labor groups recently raised concerns about China’s dominance and the end of the quota regime at a two-day European Commission-sponsored conference in Brussels May 5-6. The meeting brought together more than 800 participants representing governments, industry, trade unions and nongovernmental organizations from more than 70 countries.

The U.S. government does not dispute that quota removal could hurt a number of developing countries. But U.S. Trade Representative Robert Zoellick and European Trade Commissioner Pascal Lamy have repeatedly said the quota phaseout is nonnegotiable in the current WTO round.

Jim Leonard, deputy assistant secretary of textiles, apparel and consumer goods industries at the U.S. Department of Commerce, attended the Brussels meeting and said there was a “fair amount” of discussion about China and the impact the quota phaseout will have on countries that are either less competitive or will become non-competitive.

But he noted there was no agreement on what can be done to mitigate the impact.

“The WTO position at this point is that quotas will go away [at the end of 2004],” said Leonard. “I’m not in a position to say anything will change there.”

But there is a growing movement in Washington among some developing countries and textile trade groups to raise the issue in Cancun and if a critical mass builds on the issue, developed countries will be forced to listen. If developing countries decide to raise the issue in Cancun, it could be difficult to build a consensus for extending quotas or creating a new quota system.

The WTO works by consensus, although the odds of creating a change would increase if major industrialized countries took up the issue.

“A substantial number of developing countries will have to stand up in Mexico and say this round is not going anywhere until you address this issue,” said Augustine Tantillo, Washington coordinator for the American Manufacturers’ Trade Action Coalition, which advocates negotiating a new quota agreement for certain countries. “Short of that, this problem will not have enough energy to be resolved.”

This represents an about-face on the part of some developing countries. India and Pakistan and other developing countries nearly derailed the launch of the new round in Doha, Qatar, in 2001 in a bid to have quota elimination accelerated.

WTO members in the current round of talks missed two deadlines to find solutions to developing countries’ demands to speed up the removal of quotas and the issue was sidelined. However, as the quota deadline draws near, many countries are now calling for extending quotas or strengthening preferential access.

Peter Craig, trade commissioner at the embassy of Mauritius here, said he would not be surprised if the quota issue is raised in Cancun and supported by a number of sub-Saharan African countries.

“Increasingly, there are concerns from many smaller developing countries, as well as the U.S. industry, to try to see what can be done to ensure we don’t get wiped out on Jan. 1, 2005,” Craig said. “There is a grave concern that these small and infant [apparel] industries, which are beginning to see positive effects in terms of job creation, foreign exchange earnings and initial steps of industrialization, might find themselves in direct competition with the traditional giants of the textile and apparel export world, such as China, India, Pakistan and the upcoming Vietnam.”

“People are looking for ways to safeguard those people who have invested in the apparel industry and in the United States,” he said.

The International Textile, Garment & Leather Workers’ Federation — a global union representing 220 affiliated organizations in 110 countries — is now calling for the continuation of quotas on dominant suppliers such as China after 2004.

“Unless something is done urgently, countries such as Bangladesh, Indonesia and Sri Lanka may be waving good bye to sectors that provide a vast number of industrial jobs,” Neil Kearney, general secretary of the Brussels-based ITGLWF, said in a statement. “Bangladesh alone faces the loss perhaps of one-million jobs and Indonesia, a similar number.”

“Now there is a real task ahead and that is to engage in detailed debate and discussion between unions and their governments to attempt to secure support through trade measures,” said Kearney. “Then there will be an attempt to build a coalition of governments in the lead up to the ministerial meeting in Cancun.”

But Munir Ahmed, executive director of the International Textiles & Clothing Bureau, a Geneva-based group of 27 exporting nations with a big stake in apparel and textile exports, bristled at the notion of extending quotas past the 2004 deadline.

He brushed off the idea that this proposal could even have a foothold in the WTO agenda.

“Even if the issue is raised, one has to understand that this is a commitment signed by all countries under the [Agreement on Textiles & Clothing in the Uruguay Round],” said Ahmed. “Either it is a legal commitment signed by everybody or it is not a legal commitment.”

The ITCB, comprising such developing nations as India, Pakistan, Bangladesh, Sri Lanka, Vietnam, Brazil, China and Indonesia, has pressured rich countries to adhere to their commitment made in the Uruguay Round and fought to eliminate quota and tariff barriers.

Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said it is doubtful these nations and groups could find a consensus in the WTO framework.

“I can’t see some countries agreeing to restrain themselves,” she said.

If such a plan were proposed by industrialized nations, however, it would certainly delay the round from meeting its deadline, she said.