WTO secretariat back-tracking on textile study?

Geneva, 24 Nov (Chakravarthi Raghavan) - On the eve of a meeting Thursday of the WTO’s Council on Trade in Goods (CTG), the secretariat of the World Trade Organization has posted some new qualifications to its publications issued in the ‘Discussion Papers’ series and available on the WTO website.

The new qualifications on the ‘Discussion Papers’ and their citations are found in general terms on the WTO Website , under ‘WTO discussion papers’, and in specific terms of further qualifications to Discussion Paper No.5, which is titled: “The Global Textile and Clothing Industry post the Agreement on Textiles and Clothing”.

The WTO publication was issued on 11 or 12 August.

The new general qualifications to the ‘discussion papers’, and the particular one on textiles and clothing, appear to have been posted at the WTO website over the last one or two days. The WTO media office which, on 12 August, drew attention of the media to the study and its availability on its website, as well as provided printed copies, did not advise about the new posting on the website.

The CTG is meeting on 25 November, and has on its agenda two carry-over items from previous meetings: “The major review of the implementation of the Agreement on Textiles and Clothing (ATC) and (a separate item) the ‘post-ATC adjustment’ issues.”

Discussion Paper No.5 was posted on the WTO website on 12 August, and printed copies (priced at Ch.20/- ) were made available to the media by courtesy of the WTO media office.

The publication, which was written about in the media and figured prominently in the campaigns by the US and European, Turkish and other textile lobbies, and in the discussions in the CTG (formal and informal), was often presented as a ‘WTO study’ showing how China, India and a few others would monopolise the trade when the ATC and with it the 42-year- old quota regime in the international trade in this sector would come to an end.

The printed copy carried the title page: ‘The Global Textile and Clothing Industry post the Agreement on Textiles and Clothing’, and below it, the name ‘Hildegunn Kyvik Nordas, ERSD’, and below it ‘World Trade Organization Geneva, Switzerland’.

A footnote to the name Hildegunn Kyvik Nordas, read: ‘Research assistance from Roberto Chavez and useful comments from Michael Finger and Robert The are gratefully acknowledged’.

On the back of this page - where publications usually carry information on where it can be obtained, the price, the ISSN number and other information/notice about copyright etc - a two-line statement at the bottom said: “WTO Discussion Papers are presented by the authors in a personal capacity and should not in any way be interpreted as reflecting the views of the World Trade Organization or its Members”.

Somewhat curiously, when there were reports that some of the members (who would lose the benefits of the quota regime) were asking the WTO to undertake and publish a study, those on the other side of this argument appear to have met the WTO head to advise him that in such a controversial issue, the secretariat should only undertake any study asked for by the relevant body.

At that time, two or three days before August 12, the WTO head either did not tell those who met him about the soon-to-be- published ‘Discussion paper’, or even showed awareness of it.

The study, its simulation exercises using the GTAP database and modelling, became controversial - with those nations wanting in some form the continuance of benefits and rentier incomes that accrued to them during the textiles and clothing quota regime to continue citing them in support, and those who have been subjected to a discriminatory quota regime and had negotiated, as part of the overall balance in the Uruguay Round agreements, a final end to the discrminatory quota regime, challenging the facts used in the study and its conclusions.

Apart from the problems with the GTAP model and its modelling simulations used by ‘free trade theorists’ to sell their policy advises with seeming ‘facts and figures of benefits’, the WTO discussion paper/study was also found to be very defective, full of errors of assumptions and omissions, and complaints were voiced privately that it seemed to be a study with pre-conceived conclusions in search of ‘facts’ to back it.

GTAP is a consortium based at Purdue University in the US, and is sponsored and funded among others by the World Bank, WTO, UNCTAD and various other international organizations.

After the controversy over the WTO Textiles and Clothing study ‘discussion’, and reports on the defective GTAP data base and modelling emerged, GTAP issued a note to its users and sponsors about some of the problems (including GTAP classifying some clothing items under Textiles), and that these problems were being explored and that in the meanwhile, ‘users should be made aware of it.’

It is not clear what the WTO secretariat did with this GTAP advice.

(Earlier reports on the study and the textiles and clothing issue can be found in SUNS #5636 and #5639, #5646, #5657, #5658, #5659 and #5675).

In a posting on its website, there is now a note generally qualifying the ‘WTO Discussion papers’:

“Discussion papers are presented by the authors in their personal capacity and opinions expressed in these papers should be attributed to the authors. They are not meant to represent the positions or opinions of the WTO Secretariat or of its Members and are without prejudice to Members’ rights and obligations under the WTO. Any errors or omissions are the responsibility of the authors.

“Any citation of these papers should ascribe authorship to staff of the WTO Secretariat and not to the WTO.”

The original posting on the WTO website on Discussion Paper No.5, carried this note:

“This paper assesses the likely impact of trade liberalization in the Textiles and Clothing sector with the end of the import quotas on 1 January 2005, when the sector will become subject to the rules of the General Agreement on Tariffs and Trade 1994”.

The modified posting about the Discussion Paper No.5 (the textiles study), in describing what the study is about, has this paragraph:

“This paper, written under the exclusive responsibility of a member of the WTO Secretariat in a personal capacity, assesses some of the possibilities with respect to the potential impact of trade liberalization in the textiles and clothing sector with the end of quotas on 1 January 2005. The paper REPRODUCES (emphasis added) simulation estimates of the effects on trade flows of quota removal, using standard general equilibrium modelling techniques. It then argues that the estimates thus derived tend to ignore certain industry characteristics and policy factors. The paper does not purport to reflect a comprehensive list of such factors. The paper ends by offering an alternative estimation technique. The fluidity of the commercial and policy environments affecting trade in this sector, and the consequent difficulty in assessing the impact of trade liberalization, should be borne in mind when reading this paper.”

The posting on the website gives no explanation on the use of the term ‘reproduces’ and from where, nor about the fact that the original note has been modified and why.

During the discussions at the CTG on 1 October, under the item ‘post-ATC Adjustment-related issues’ - an item put on the agenda on the basis of a letter from Mauritius and eight other cosponsors - the representative of the World Bank (one of the sponsors of the GTAP, and whose trade simulations and advice and policy papers make extensive use of the GTAP data base and modelling), cautioned against over-simplifications of ‘winners and losers’ based on GTAP and other models used for these forecasts, and said the outcome of such general equilibrium analysis and partial equilibrium estimates should be taken with a pinch of salt, as they only illustrated the directions of estimated adjustment trends (SUNS #5659).

While the problem about the end of the textiles and clothing regime originally surfaced as difficulties that some LDCs and some small economies who have become dependent on the quota regime, and an element of sympathy with their plight came out, it soon became clear that hiding behind them were the European and American textiles and clothing industries and their lobbies (seeking continued protection), as also some like Turkey and Mexico (who had benefited by their political, economic and strategic links with the US, and want to preserve the market share so gained).

Whatever the merits of this controversy, and the efforts of those who have benefited so far to hold on to their benefits, the ‘study’ and the way it was published, and the way the study and its conclusions are now modified or qualified and posted on the website without any explanation, has done some damage to the credibility of the WTO secretariat. - SUNS 5695

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