Apr 11, 1990

NORTH-SOUTH DIVISIONS SURFACE AT URUGUAY ROUND GNG MEET.

GENEVA, APRIL 9 (BY CHAKRAVARTHI RAGHAVAN) -- The growing North-South divisions within GATT and the Uruguay Round of multilateral trade negotiations surfaced clearly Monday at the meeting of the Group of Negotiations on Goods (GNG) as it reviewed progress in the negotiations in individual areas.

Over a score of delegations reportedly intervened to review and comment on the status of negotiations in the 14 individual areas covered by the GATT MTNs in goods. A more political assessment is expected to be made Tuesday by these and others at the meeting of the Trade Negotiations Committee, the overall body entrusted with the running of the negotiations in goods and services.

The viewpoints and assessments of delegations who spoke were clearly along North-South lines, participants in the closed door meetings said.

Third World countries highlighted lack of progress on market access issues and the failure to agree on the modalities for integrating textiles into GATT or the timespan within which this was to be achieved. Delegates also expressed their opposition to attempts of leading industrial nations, in rule making areas to destroy the fundamental non-discrimination concept of the GATT (as over demands for selective safeguards) and upset the balance of rights and obligations (through demands for changes in the provisions applicable to the Third World for safeguarding balance-of-payments) and the attempts in TRIPs and TRIMs that would jeopardise development of the Third World.

The U.S., EEC and other major ICs brushed aside these complaints, and insisted that for them the negotiations must result in satisfactory agreements to enhance intellectual property protection, prohibit some investment measures and discipline others, and increase "disciplines" on use of GATT rights for balance-of-payments considerations.

There was also talk from the EEC about "trade-realities" (in justifying the demand for right to take selective safeguard actions) and from the U.S. about accepting "the inevitable" in terms of TRIPs and TRIMs negotiations.

Chile, which opened the discussions, stressed the need for a safeguards agreement without selectivity and ensuring tariffs as the only instrument for safeguard actions.

Yugoslavia’s Amb. Marco Kosin complained that the standstill had been disregarded while there had been no results on rollback either. On Textiles, there was still no agreement on the modalities for integrating Textiles into GATT or for a timespan within which this was to be done. As for tariffs and non-tariffs, Yugoslavia had already liberalised extensively.

Nigeria too made the same point about the "contribution" already made by it in its trade liberalisation measures and said Nigeria should now receive concessions in the area of particular interest to it, Tropical Products, and not be subject to demands for contributions.

Canada agreed that there was no room for complacency since considerable work remained to be done and negotiations should be accelerated. Canada was disappointed with the tariff offers made and in the product coverage.

Peru too stressed the tariff cuts, already made by it and expressed disappointment at the state of the negotiations on textiles. Any agreement in agriculture must be in harmony with the interests of Third World countries, with concrete measures to offset the effects of liberalisation on the net food importing countries.

Hong Kong (where 40 percent of employment is in the Textiles and Clothing sector) drew comfort from the fact that all except two (U.S. and Canada) had agreed to use the MFA as the basis for reform, and that that selectivity ideas in safeguards had received little support.

India said that it hoped to submit shortly its own "initial" list of offers on tariffs, but regretted that the unblocking of modalities for tariff negotiations had not unblocked negotiations in other market access areas.

There had been no real progress in Textiles and Clothing, Amb. B. K. Zutshi says. The scope of negotiations was still being disputed and there was "a lot of foot-dragging" by certain major players. Any further delay in deciding on techniques for elimination of MFA restrictions would prove disastrous for negotiations in this group and for others. There could be no successful outcome for the round without a commitment on total and final abolition of the MFA and its derogation from GATT, the Indian delegate, warned.

In Agriculture, for the negotiations to be meaningful for the large number of Third World countries, there should be commitments to eliminate all exceptional treatment (under waivers, protocols of accession or other derogations). Third World countries should also get special dispensation and given flexibility to enable them to assist and promoting agricultural development.

Proposals for selectivity in safeguards would completely undermine the very foundations of GATT and India could never agree to the lodging of such a destructive virus into GATT.

India was concerned over moves to change Article XVIII to curtail the flexibilities available to Third World countries to handle their BOP problems, and alarmed at attempts to hasten the pace of negotiations on TRIPs and TRIMs and expand the mandate. Transitional arrangements or time-derogations would not suffice to provide for the development dimensions and unless these concerns were accommodated, the results in these negotiations would not command wide acceptance.

The focus in TRIPs should be on "trade-related" aspects, with autonomy and flexibility to Third World countries in adopting intellectual property norms and standards suited to their development needs, "in the same manner as was available to the developed countries of today during the course of their development". India was also opposed to linking results of TRIPs with GATT. Only trade-related aspects could be lodged in GATT, India said.

In its proposals before the TRIPs group India has identified trade in counterfeit goods and corporate practices and abuses of IPR owners as the only trade-related issue that could be dealt with in GATT.

On TRIMs, India rejected the notion of prohibition of any investment measure.

India was interested in the success of the negotiations, and was actively and constructively engaged in them but was being subject to "excessive and unreasonable demands, not warranted by any reasonable and balanced interpretation of the mandate, and with a certain degree of insensitivity to our genuine concerns about development needs and special and differential treatment of developing countries".

Brazil’s Amb. Rubens Ricupero referred to the courageous reform measures in trade and exchange rates embarked by his country, requiring painful sacrifices from the Brazilian people and stressed that its success would depend on a satisfactory settlement of the debt burden and matched by significant results from the trading system.

Brazil had already made substantial reductions or elimination of tariff and non-tariff barriers and would need a reasonable degree of flexibility at the present juncture. In tropical products the contribution of Third World countries should be evaluated on the basis of overall balance and creating conditions for their participation in the tariff negotiations while protecting their own needs.

The issue of access to resources being raised in the Natural Resource-based Products went far beyond trade considerations. In Textiles, it was necessary to have a framework agreement by July, including a definition of the modality for integration of the trade into GATT. Brazil was prepared for the modality of phasing out MFA restrictions.

In Agriculture, it was necessary to define precisely the scope of internal support measures, the trade distortive practices to be reduced and phased out. In export competition issues there should be faster progress and export subsidies should be ended, using the indicative list in the subsidies as the starting point for negotiations.

Negotiations on GATT articles should be on basis of issues identified by consensus, and areas of disagreement should be avoided. Negotiations as "appropriate", as mentioned in the mandate, did not mean negotiations would take place whether or not there was agreement on the need for them.

In safeguards a comprehensive agreement could not legitimise selectivity. In anti-dumping measures, rules should be clarified on assessment of injury or causality etc, for elimination of ambiguities and arbitrariness of interpretation, and ensure they did not create new trade barriers to penalise legitimate exports.

On TRIPs, Brazil underlined the need for some "creativity" in the search for positive results. Brazil was committed to protection of IPRs in such a manner as to balance need to reward creators and pursuit of public policy objectives. Certain aspects of IPRs would continue to have to be discussed in specific fora, others would remain in the realm of national legislation, and only aspects related to international trade could be dealt with in the round.

The negotiations would be a valid opportunity to secure technological benefits for all participants and there should be multilateral control of abusive and anti-competitive commercial practices of IPRs.

In TRIMs, discussions should allow a thorough assessment of existing instruments to address trade distortions and impediments, and evolve a suitable method of cooperation to enable the multilateral trading system to control anti-competitive practices of private operators which distort trade.

Amb. Tran Van-Thinh, of the EEC, suggested that the progress so far "had not been bad". Negotiations in tariffs, he insisted, must restore "balance" and Third World countries must prove their good faith in negotiations by making offers. On the view of Third World countries that Article XVIII was not negotiable, Tran said the EEC did not want new disciplines but clear disciplines. The negotiations in antidumping must result in effective instruments to counter dumping. Tran spoke about "trade-realities" in referring to criticisms of EC positions on antidumping and demand for selective safeguards.

U.S. delegate Amb. Rufus Yerxa said that common ground should be found on agriculture without further delay. The pending U.S. farm bill did not in any way derogate from the administrations authority to negotiate. All of U.S. farm policies were on the negotiating table, including its waiver, but the U.S. was not ready to unilaterally eliminate its policies without equivalent action by others.

In Textiles, the U.S. was for "eventual" reintegration of the trade in this sector into GATT, and the negotiations now were about practical options. The U.S. was not seeking to frustrate the negotiating process nor throwing roadblocks in the way of developing a framework agreement by July.

On safeguards, the U.S. was not "inflexible", but an eventual solution should provide a credible means for safeguards for adjustment, Yerxa said reflecting the U.S. ambivalent position on selective safeguards.

On anti-dumping, the outcome should be a balanced one maintaining ad measures as credible deterrents to injurious dumping and deal with problems of "circumvention" and "repeat offenders".

The U.S. saw effective protection of intellectual property as an essential condition for development and "far-reaching results" on IPRs as inevitable in the negotiations. Hence the negotiating process should not be delayed.

As for TRIMs, in the U.S. view, the Uruguay Round mandate would not be fulfilled if most trade-distorting TRIMs were not prohibited.

The U.S. proposals for changes in Article XVIII were not "outrageous" and aimed at preventing abuse of GATT. The greatest risk to the negotiations lay in the resistance of some Third World countries for a more universal integrated system of rights and obligations, and a better understanding on use of all trade measures, including BOP measures.

Responding to the U.S. and EEC, Indian delegate Zutshi said there was no "inevitability" about a TRIPs accord. India would agree only to an accord that was in its interest, and India would define for itself its "vital interests". The issue in Article XVIII was one of overall balance of rights and obligations between groups of countries, and the proposed changes would upset this balance.