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Agreement on rules to reintegrate textiles and clothing under disciplines of the General Agreement on Tariffs and Trade (GATT) is frequently regarded as one of the major achievements of the Uruguay Round. Unfortunately, the agreement allowed the industrial countries a great deal of discretion in the manner in which they undertook this reintegration. And, as in the case of the agricultural tariffication discussed in chapter 2, this discretion was used to delay the process of reform.
The extremely backend-loaded nature of the reform program for textiles and clothing has been the focus of much concern for developing countries. Acceleration of the phase-out program was a major demand of developing countries in the lead-up to the failed 1999 Seattle Ministerial and in subsequent discussions. While developed countries have reiterated their intention to fully implement their commitment to eliminate barriers to textile and clothing trade, as promised under the Agreement on Textiles and Clothing (ATC), the developing countries remain concerned about the possibility of backsliding. This issue will overhang at least the first three years of the negotiations initiated at the Doha Ministerial, despite the renewed affirmation of WTO members to full and faithful implementation of the ATC (WTO 2001). Clearly, then, it is important to have a clear understanding of the issues involved.
The establishment and abolition of the Multi-Fiber Arrangement
Textiles and clothing have been traded under restrictions whose origins can be traced to the 1930s.
Since the establishment of ASEAN in 1967 by the five founding members — Singapore, Malaysia, Indonesia, the Philippines, and Thailand — the political view was carried through as the centre of co-operation for a decade. During the early days of the establishment of ASEAN, there were a number of factors causing political instability in the region, including an ideology revolution, internal tensions, conflicts between some countries in the region, tensions arising from the Vietnam War, as well as the threat of an expansion of communism. Hence, the formation of a regional grouping was a means of solving conflicts among members and to sustain peace within the ASEAN region. “At that time, political instability in the region was the driving force behind ASEAN, and it has been argued that much of the attraction of regional economic integration was merely its use as a ‘cover’ for political cooperation, in particular, vis-á-vis instability in Indochina.”1 Later, economic co-operation was promoted in the mid-1970s, at the first two summits.
Co-operation among the ASEAN members during the first decade (1967–76) was clouded by differences among them. The progress of integration was significantly slow except for a number of political agreements. At the end of the Vietnam War in 1975, the ASEAN countries were concerned about the spread of the Marxist-Socialist system. This led to the first summit in Bali, in 1976, with the aim of strengthening co-operation in the region. The main discussion at the first summit still focused on political co-operation but a few points on economic collaboration were included, which became the framework for trade co-operation and led to the establishment of the Preferential Trading Arrangement (PTA) to stimulate trade among the ASEAN members.
The Preferential Trading Arrangement, launched in 1977, was the principal instrument for economic co-operation. The PTA was applied to basic commodities by providing preferential tariff rates, or margin of preferences (MOP). There were weaknesses in the implementation, resulting in difficulties in increasing intra-ASEAN trade. In the early stages, the MOP was applied as a product-byproduct scheme with an exclusion list including important products that had high trade values. The MOP started at only 10 per cent for products that were either wholly produced in ASEAN or with local content of at least 50 per cent in value.
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