DON’T BE CARRIED AWAY BY MAGIC OF 1992, SAYS EEC.

Jul 1, 1988

DON’T BE CARRIED AWAY BY MAGIC OF 1992, SAYS EEC.

GENEVA, JUNE 29 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The EEC negotiator in the Uruguay Round in Tropical Products Group, Mr. Falkenberg, reportedly advised participants this week not to be carried away by the magic of 1992.

1992 has been announced and talked about, both within the Community and outside, as the date when the Community will have a unified market, involving free movement of goods, services, capital and labour.

This unified market is seen as an important step in unifying Europe internally, but a step that is likely to create further barriers to the trade of others.

The EEC negotiator’s remarks about 1992 reportedly came in the consultations this week on tropical products, when several of the third world countries suggested that the EEC should "contribute" to the tropical products negotiations by abolishing internal consumption taxes (in those member-states that levy them) on such products, and particularly the tropical beverages.

This had been envisaged in 1963 as part of the GATT Ministerial work programme on tropical products but has not been carried out.

In some of the EEC member states, the domestic consumption taxes on tropical beverages like coffee are pretty high.

In the consultations, third world countries would appear to have made the point that since the EEC would in any event be ending such taxes by 1992 – as member-states would be obliged in order to bring about a unified market – the EEC could as well do it a little earlier, and thus contribute to the success of negotiations in tropical products in the Uruguay round.

It was in response to this that Falkenberg reportedly told the delegates not to be carried away by the "magic date" of 1992. He also reportedly told them that the unification of the internal market need not mean elimination or abolition of such duties, but only their harmonisation.

Colombia however reportedly pointed out that a part of the 1963 agreement was that the level of taxes would not be raised or new taxes levied, and the EEC views about "harmonisation, and not necessarily elimination", would imply that those countries not now having such taxes or at very low levels would be imposing such taxes or increasing them.

This, Colombia pointed out, would go against the 1963 commitment in the GATT.

In response the EEC reportedly indicated that it was willing to negotiate the reduction or elimination, but as a part of its own approach to negotiations in this sector.

The second round of consultations on tropical products which is continuing in GATT this week has reportedly not yielded any results so far in finding a common negotiating basis.

Without an agreed common negotiating basis, no negotiations for "fullest liberalisation" in the trade in this sector, envisaged in the Punta del Este mandate, is possible.

Of the various negotiating issues on the agenda of the Uruguay round GATT MTNS, tropical products are one specifically envisaged for reaching early accords.

Third world countries have been pushing for early negotiations and agreements in this area in time for the mid-term review to be held at the Ministerial session of the Trade Negotiations Committee at Montreal in the week of December 5.

Third world participants said that throughout this week, the group has been meeting every morning, formally and informally, to discuss the techniques and modalities for negotiations, and in the afternoon for bilateral and plurilateral consultations.

However neither of these have apparently led to bridging the gap among the various protagonists.

The U.S. continues to insist on its approach, and insisting on tying progress on tropical products to progress in negotiations on agriculture.

The EEC continues to talk about "contributions" form others, including third world countries.

The EEC would also appear to have raised the issue of export taxes levied on raw material exports by some of the producing countries, and cited the case of Colombia’s export taxes on coffee.

The Colombia tax, in the EEC view, acted as a protectionist measure and favoured the exports of processed coffee.

Colombia reportedly wondered whether the EEC was trying to export coffee to Colombia.

Sri Lanka reportedly said that the entire range of tropical products had been identified in GATT for quite some time from the viewpoint of their export interest to the third world countries, and the focus on liberalisation was aimed at increasing the export earnings of these countries.

The tropical beverages group consisted of products that were produces exclusively in the third world countries and exported to industrial countries.

Liberalisation of trade in this sector had to be carried out by the industrial countries.

Japan, which has been opposing a general formula approach to improving market access and liberalisation, would however appear to have shown a more flexible approach.

Japan would appear to have indicated that in addition to its preferred "request/offer" approach, it was ready to look at other possible elements.

Japan would also appear to have indicated that as part of the their budget programme, they intended to eliminate some of the internal consumption taxes on tropical products.