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Wednesday, Sep 15, 2004

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Quota concerns

THE MOVE TO re-think the termination of the textile quota regime — scheduled for 2004 end — has taken a formal turn with less-developed countries such as Mauritius, Bangladesh and Nepal seeking an emergency meeting of the WTO Council of Trade in Goods (CTB), to highlight their difficulty to compete with bigger exporters. Calling for a review of "adjustment costs," they argue that the quota phase-out and the emergence of exporting giants such as China and India would cost "hundreds of thousands if not millions of jobs in countries that can least afford it".

Certainly, these nations have a case, but as the issue is neither new nor unexpected, their demand is weakened — a point underscored by the stand of China, India, Pakistan, Brazil and Hong Kong, among others. While the latter group has argued that an emergency CTB meeting could be seen as the opening shot in a campaign to extend the quota system, the WTO Director-General, Mr Supachai Panitchpakdi, has asked the "aggrieved" countries to raise their concerns at the next regular meeting of the CTB (October 1), which in any case is to do a final review of the quota phase-out process. Holding an emergency meeting could send the wrong signal. Trying to extend that very system, the abolition of which was agreed to by all WTO members through the Agreement on Textiles and Clothing, is indefensible, especially when the world community is veering towards carefully calibrated trade liberalisation. What makes the move suspicious is that steps (as outlined by Mr Panitchpakdi) have already been taken by the WTO Secretariat "to address textile and clothing sectoral implementation, integration and expiry issues, including the challenge of short-term adjustment costs". In addition, the IMF is doing its bit by launching the Trade Integration Mechanism, to help low-income economies face the challenges, post quotas. Further, according to the WTO chief, the World Bank and the IMF have "constantly indicated their predisposition to assist with adjustment and related issues, if they were reflected as priorities in country programmes". The European Union has also revised its Generalised System of Preferences scheme to take into account the problems countries such as Bangladesh may face on the textile exports front after January 2005.

With the textile "adjustment" problems of the low-income nations looked after, it appears more than likely that other factors were responsible for these countries taking the stand they have. One is perhaps the pressure exerted by the threatened textile lobbies in developed countries such as the US and the EU. Since only governments can play a role in WTO deliberations, these lobbies may have influenced some small nations to play their game by proxy in Geneva. (Interestingly, Washington and Brussels remained neutral in the debate on holding an emergency meeting of the CTB.) These lobbies, particularly in the US,have their backs to the wall and are desperately trying everything to protect their businesses from the expected textile onslaught, mainly from China. This also underscores the need for exporters such as India to close ranks and ensure that the Agreement on Textiles and Clothing is followed in both letter and spirit in the crucial months ahead.

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