The following are the arguments stating that the textile proposals are not favourable to India:
1) India wanted the phased liberalisation of textile trade in six years. The proposal envisaged 10 years transition period.
2) The front-loading of liberalisation is inadequate. At the end of the seventh year only 1/3 of the world textile trade would be integrated into GATT. In the last three years 2/3 of the integration would take place.
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3) Liberalisation is not limited to restricted products alone. It encompasses the whole range of textile products. The major textile importers such as the US and the EEC may choose much products in the first two phases which are not under restraint. This may further limit market access.
4) In the transitional period, the textile exporting countries continue to face product quotas and coilings. These built-in rigidities of the MFA are not addressed.
5) Integrated textile products into GATT became subject to the operation of the GATT safeguard clause article XIX. So developed countries may apply ‘traditional safeguard’. However, the importing country is obliged to demonstrate serious damage following a sharp increase of imports.
6) India wanted to exclude from the scope of the agreement the bulk items such as carded wool and cotton. However, the product coverage has remained unchanged.
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7) While MFA will be phased out during the 10 year period, the real benefits of integration would be felt only after 10 years.
A.V. Ganesan, India’s Chief Negotiator in the Uruguay Round “In the textile and clothing sector, which accounts for nearly 30% of our exports, we are major gainer. Although the pace of dismantling the MFA, (Which has been in vogue for over 20 years now and which places qualitative restrictions on our textile and clothing exports) is concentrated towards the fag end of the transition period of ten years, it is a positive factor that the MFA would stand abolished and their sector would get integrated into GATT in ten years. What is more important is that we use this transition period to upgrade the technology and competitiveness of our textile sector because, with the elimination of the quota system, our export will face severe competition from China, Pakistan, Bangladesh, Srilanka, Vietnam and Indonesia”.
On balance it is not favourable to developing countries but at the same time it is not very much lauded in favour of developed countries also as the phase out period to 15 years is not accepted as they demanded.