FOOD AND TEXTILES PROVE TO BE THORNS IN GATT'S SIDE

FOOD AND TEXTILES PROVE TO BE THORNS IN GATT'S SIDE

There are just seven months remaining in the most complex series of multilateral trade negotiations ever undertaken and suddenly all that is old is new again.

Worries about unbridgeable impasses in new areas of discussion like stronger protection for patents and copyrights and liberalization of trade in services have faded substantially in recent months.But they have been replaced by genuine concerns among developing countries that without substantive reform in the more traditional areas of textile and farm products trade, the Uruguay Round of trade talks may just fall apart.

"If textiles and agriculture do not begin to move, there will be an echo effect. . . . Some developing countries face an extremely difficult political situation, and if they cannot deliver some result in these key sectors, then they will have to hold off on other issues like services or intellectual property or whatever," said Jesus Seade, Mexico's ambassador to the General Agreement on Tariffs and Trade.

GATT is the Geneva-based body governing most world trade in goods.

Textile production is often the first step a country takes in shifting

from an agrarian to a manufacturing economy.

Some officials from developing countries believe the removal of textiles

from GATT in 1961 and the later adoption of the Multi-Fibre Arrangement - a complex web of import quotas in the industrial countries - have had a deleterious effect on the growth in those countries.

Moreover, they believe that efforts by the rich countries for indefinite curbs on their exports sends the signal that Washington, Brussels and Tokyo do not fully support development.

"If you do not bring textiles back into the GATT, it means a serious imbalance in the process of structural adjustment between the developed countries importing textiles and the less developed countries exporting textiles. This message is important particularly to the less developed countries moving into manufacturing and industrialization," said H.S. Kartadjoemena, Indonesia's ambassador to GATT.

But these discussions have been contentious as the industrial countries seek to protect their domestic industries through temporary relief

from imports.

Discussions have not yet focused on how long such a period would run, which products would be covered under such transition rules and how this would be accomplished.

The debate at this point centers on the U.S. plan to scrap existing Multi- Fibre Arrangement quotas for individual exporting countries and establish a new order in which exporters would compete for markets limited by an overall import ceiling.

Of the 106 countries participating in the round, 104 have rejected the U.S. proposal, with only Canada taking the U.S. side. But U.S. officials say their proposal makes sense.

If the goal is liberalization and competing for markets, they say, why not

allow for competition immediately under a gradually expanding global quota system?

"It's not a question of total amounts (of imports allowed); it's just a question of how the market gets divvied up. The modality does not determine total access," said one U.S. official.

But developing countries see the U.S. proposal as an effort to establish a new - and equally restrictive - alternative to the Multi-Fibre Arrangement.

"One problem with the global quota approach is the replacement of one set of restrictions with another restriction. Textiles have along history of introducing something temporary and suddenly in becomes permanent," said Indonesia's Mr. Kartadjoemena.

U.S. officials deny that their proposal is aimed at establishing a permanent system of restrictions.

But many point out privately that textiles and agriculture - two areas in which the U.S. market is heavily protected - create giant political problems for the Bush administration.

The powerful textile lobby has warned that it will oppose any Uruguay Round pact that opens the U.S. market to more imports. A significant number of lawmakers, including Sens. Ernest Hollings, D-S.C., and Jesse Helms, R-N.C., have voiced the same view.

Developing countries have their own problems. Their infant industries in the service sector stand to lose if Western banks, insurance companies and telecommunications firms are given access to such markets.

Moreover, the manufacturers that have done well selling pirated goods would find themselves outside GATT rules if a stricter enforcement of intellectual property protection is approved.

To offset those losses, developing countries need to win market-opening

gains in textiles and agriculture.