Congressional Leader Sees Downfall Of Trade Talks

One of Congress’ most influential international trade authorities believes the Doha Round of
trade liberalization negotiations is dead as a result of “irreconcilable differences” between the
United States and the European Union (EU) — an assessment, if accurate, that is bad news for both
textile manufacturers and importers.

Bill Thomas, R-Calif., chairman of the powerful House Ways and Means Committee and a
dedicated free trader, has urged the Bush administration to walk away from the worldwide trade
liberalization effort, and to concentrate instead on bilateral and regional trade pacts. While
everyone involved in the negotiations has conceded from the onset that they would be difficult,
textile and importer lobbyists in Washington and administration trade officials are not yet ready
to concede the talks will fail. However, Cass Johnson, president of the Washington-based National
Council of Textile Organizations (NCTO), told Textile World, “the Round is in trouble.”

Expressing his view that the EU is unlikely to alter its positions on trade, Thomas
concluded, “There comes a time when the United States simply must part ways with the EU.” He said
that despite objections from some quarters regarding bilateral agreements, they are “one of the few
tools remaining for the United States to gain access to the markets of other countries.” He urged
the administration to “reserve access” to the US market for those countries where it can be
determined that US manufacturers will benefit from greater market access. He added that bilateral
agreements could eventually lead to regional pacts.

Looking toward the November elections, Thomas, who has decided not to run for reelection,
expressed his concern that the anti-free trade factions will prevail.

A breakdown of the talks would present numerous problems for both textile manufacturers and
importers. Eric Autor, the Washington-based National Retail Federation’s vice-president and
international trade counsel, says importers have viewed the Doha Round as “the best opportunity”
for meaningful expansion and market growth — not only for textiles and apparel, but also for a
number of consumer products. Importers have been disappointed in the results of the various free
trade agreements the Bush administration has negotiated because of restrictive rules of origin.
Autor refuses to say the Doha Round is dead, but he admits a great deal of work needs to be done if
the 2006 year-end deadline is to be met.

While textile manufacturers have been concerned about the tariff reductions that inevitably
will result from the Doha Round, they are more concerned that a demise of the negotiations would
seriously jeopardize their highest priority issue — creation of a permanent safeguard mechanism to
help prevent China and perhaps one or two other Asian nations from completely taking over the US

If the Doha Round breaks down at this point, NCTO’s Johnson believes there might be an
extension of deadlines or perhaps a less ambitious and less far-reaching new round of negotiations.
He hopes revised negotiations as well as those currently underway would include a textile and
apparel safeguard mechanism.

April 11, 2006