BILATERAL PACTS GIVE US AN EDGE IN TEXTILES

BILATERAL PACTS GIVE US AN EDGE IN TEXTILES

As world trade talks in Geneva lurch uncertainly toward a Dec. 15 deadline, the United States has quietly won major concessions in negotiations to extend many of its bilateral textile agreements.

Thirteen of the 23 bilateral textile agreements that expire this year have been renewed thus far. And all 13 renewals contain provisions far more restrictive than anything currently under consideration in the Uruguay Round of trade talks.A chief goal of the round, under the auspices the General Agreement on Tariffs and Trade, is to integrate textiles into the GATT, which sets rules for most of the world's trade.

By insisting on tough protectionist language in bilateral textile pacts, the Clinton administration may be trying to win points with the powerful U.S. textile industry in advance of what could turn into a bruising battle for congressional approval of the final GATT agreement.

"The administration doesn't want the domestic industry to revolt and torpedo the Uruguay Round," said Clint Stack of International Development Systems, a Washington, D.C., firm that tracks textile import quotas. "That's why the U.S. wants language that penalizes, rather than prevents, transshipments."

Among Asia's big textile-producing countries, however, only South Korea has completed negotiations to renew its bilateral textile pact with the United States.

U.S. bilaterals with China, India, Pakistan, Macao, the Philippines and Thailand - all major sources of U.S. textile imports - expire on Dec. 31. And interviews with textile officials from some of these countries and U.S. trade consultants indicate that renewal negotiations have stalled over U.S. demands over transshipments.

Transshipment is the practice of evading U.S. import quotas by shipping textile goods through third countries.

Specifically, Asia's big textile exporters are balking at U.S.-proposed clauses that allow the United States to unilaterally impose harsh penalties against trading partners suspected of illegal transshipments. These punitive measures include quota reductions of up to three times the amount of goods allegedly transshipped, as well as the unilateral imposition of import restraints on specific items.

By comparison, the final draft agreement of the Uruguay Round talks contains no punitive provisions. According to that draft, disputes would be resolved by a multilateral GATT body.

Just as important to U.S. trading partners is the so-called survival provision proposed by the United States. Under the survival provision, U.S. trading partners agree to carry-over clauses allowing three-for-one punishment and U.S.-initiated import restraints into the final GATT agreement.

"The U.S. language goes far beyond anything that we've had before," said Nasim Qureshi, a Pakistani commercial attache and participant in his nation's bilateral textile talks with the United States. "That's the problem. Everybody's unhappy with this. There are countries that have accepted (the U.S. proposal), but I don't know why."

In addition to South Korea, Egypt, Jamaica, the Czech Republic and Romania have signed off on the U.S. renewal agreement with few, if any, modifications.

A South Korean textile official in Washington, D.C., said South Korea was unbothered by the U.S. provisions. "Circumvention (of import quotas) is a bad thing," he said. "Under the GATT or the bilaterals, we have no reason not to accept the U.S. language."

An official with the U.S. Office of Textile and Apparel makes no apology for U.S. efforts to stop transshipments using both tough language in the bilaterals and the GATT.

"That's how you solve the problem," the U.S. official said. "You don't solve the problem of transshipment over seven years of (Uruguay Round) multilateral trade talks. That's not an effective way to address this issue. You've got to use all the tools that are available."

The Clinton administration, which has targeted transshipment as a top Customs enforcement priority, estimates that $4 billion in textiles and apparel illegally enter the United States each year via transshipments. China alone is responsible for $2 billion of that total, according to U.S. claims.

China has consistently denied U.S. estimates of the magnitude of the problem and U.S. allegations that Chinese government agencies participate in transshipment schemes.

"The U.S. has no particular evidence (of massive transshipments)," said Xia Guoqing, textile officer at the Chinese Embassy. "If we ask the U.S. side who the importers are who are doing this, they have no one."

Negotiators from China and the United States have met twice so far to try to hammer out a new bilateral textile agreement; both meetings ended with China refusing to accept the U.S. provisions on transshipments.

China is in an awkward position because if it doesn't agree with the United States on a new bilateral textile agreement by Dec. 31, it has no guaranteed U.S. quota. GATT member nations are guaranteed a minimum quota level even if their bilaterals expire, but China is not a GATT member.

Still, with the Clinton administration's new interest in Asia as a trading partner, many believe that the United States would never seriously consider trying to bully China or the other big textile-exporting countries into accepting blatantly protectionist language either in the bilaterals or the final GATT agreement.

"If exporting countries hold tough - and so far they have - at the end of the day, the U.S. will have to decide whether it is going to jeopardize the whole GATT round for this issue," said Doral Cooper, president of C&M International, a trade consulting firm in Washington, D.C.