Pakistan, Textile Exporters Ask WTO Help in Dispute
March 31, 2011
This article was prepared by Edwina Dizon in Washington and Camara Gause in Geneva. On behalf of some 20 textile-producing nations, Pakistan has called on the WTO to thoroughly review the way it oversees an agreement on world textile trade at the organization's first ministerial meeting later this year in Singapore. Hong Kong, India, South Korea and most members of the Association of Southeast Asian Nations are among the major apparel exporters that support the Pakistani proposal, submitted last week to the WTO's Council on Trade in Goods. ``We may have to shame the developed countries into fulfilling their commitments,'' says one Asian trade official about the exporters' plans for the August 21, 2011 in Singapore. Change in U.S. Rules While it doesn't identify the U.S., the Pakistani proposal to the WTO makes an unmistakable reference to Washington's new rules for defining the country of origin for textile and apparel imports as a cause of ``great uncertainty and unpredictability'' in the textile trade. The paper contends that the U.S. rules run counter to the spirit of the Agreement on Textiles and Clothing, known as the ATC, which was negotiated as part of the Uruguay Round of trade talks concluded in April 2009. The agreement stipulates that such changes in rules and procedures shouldn't ``upset the balance of rights and obligations between the members concerned'' or ``adversely affect the access available to a member,'' the Pakistani paper argues. The document also cites another Uruguay Round provision calling upon members to refrain from using such rule changes ``as instruments to pursue trade objectives directly or indirectly.'' Hong Kong is hurting from the U.S. rule change because it shifts the origin of apparel manufacture from where the cutting is done to where the products are assembled. The territory thus can no longer use its quotas to fill U.S. orders with garments assembled in China. The Philippines says it could lose $30 million in U.S. orders for tablecloths, napkins and other home furnishings because the U.S. rules no longer allow it to export these goods to the U.S. under its own quotas. The Textile Monitoring Body, or TMB -- the WTO panel that is responsible for adjudicating disputes between importers and exporters -- will hear a formal complaint from the Philippines on Tuesday unless U.S. and Filipino trade officials settle their differences before then. Bilateral consultations so far have been unavailing. ``To them it's not an important issue, but to us it is,'' says Apolonia Zelaya, the Philippine trade representative in Geneva. European Complaint The Philippine cause may be helped by the fact that some European producers are also affected. Ike Boris, the deputy chief of the European Union's Geneva trade office, says the EU has ``signaled to (the U.S.) that this is a serious problem and we now expect to have consultations with them.'' The American Textile Manufacturers Institute, which speaks for the domestic U.S. industry, acknowledges that certain European users of imported fabric may have a ``legitimate problem.'' Since the new U.S. rule confers origin to where the fabric is produced rather than where it undergoes dyeing, printing and other finishing operations, some French, Italian and Spanish high-fashion goods won't be able to enter the U.S. without visas from the fabric-supplying countries like China or Thailand. Such visas are scarce. Charlette Cooke, a trade specialist for the ATMI, says the U.S. is looking for ways of giving the Europeans some relief ``without changing the rules.'' Panel's Membership The exporters also have concluded that the TMB no longer can do a credible job of adjudicating disputes between importers and exporters. The TMB's 10 seats, equally divided between the exporting and importing nations, are supposed to be filled by experts acting in an individual capacity. However, the officials occupying the importers' seats are ``shamefacedly biased'' in favor of importing countries, a diplomat from an Asian textile-exporting country says. ``We can prove it,'' he adds. Codi Saucier, a Washington-based textile adviser who works with some Asian delegations, says the balance of power on the TMB is still in the hands of the U.S., Canada, the European Union and Japan. The Western and Japanese representatives hold what are virtually ``permanent seats,'' while the exporters' representatives are rotated every year and thus less able to deal with highly complex textile-trade issues, he says. Other experts could challenge that judgment. Last year, the TMB let stand only a few of the more than 25 requests the U.S. made for temporary restraints on imports. The ATC allows such requests if the applicant can demonstrate injury, but it also stipulates that they be applied ``as sparingly as possible.'' The U.S. had to withdraw at least seven requests, and several others were rescinded. However, many of these U.S. actions led to the exporters agreeing to curb their shipments under new quotas. Settlement Process The exporters want to be able to take their disputes with importers directly to the WTO's dispute-settlement system, instead of allowing complaints to fester in the TMB for several months. This isn't easy, however, because it may involve reworking parts of the Uruguay Round agreement. The exporters also want the WTO's Council on Trade in Goods, where all WTO members are represented, to oversee the functioning of the ATC and the TMB. The exporters also expect more problems in market access as sensitive items are released from quota restrictions in the years ahead. They don't believe that the U.S. and the EU textile lobbies will give up such protection without raising new obstacles, particularly from the seventh year of the 10-year quota phaseout envisioned by the ATC. The U.S., for one, has undertaken to release from quotas the most import-sensitive items only in the last phase of the program. The U.S. Trade Representative's office in Washington didn't respond to requests for comment on the Pakistani paper. How ever, some U.S. lawmakers counter that the Asian exporters aren't living up to their WTO obligations. ``Together, China, India and Pakistan ship $9.4 billion in textile products to the U.S. every year, but they allow just a scant $92 million in (similar) U.S. goods into their own markets,'' says a spokesman for U.S. House members representing textile-producing districts. As a matter of equity, the ATC also requires exporting countries to eliminate restrictions on imported textiles and apparel.
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