Dec 10, 1985
THIRD WORLD TOLD TO REMOVE BARRIERS TO INVESTMENTS.
GENEVA, DECEMBER 6 (IFDA/CHAKRAVARTHI RAGHAVAN)— As a price for "more open markets" for their manufactured exports in industrial countries, Third World countries must reduce their barriers to private foreign investments and to "trade in services", the United States insisted Friday.-The U.S. Trade Representative, Clayton Yeutter, was addressing the "world economic forum", an organisation of European transnational business interests, formerly known as "European management forum".- In his appearance before the U.S. Congress recently, Yeutter had spelt out some U.S. objectives and had said: "whether a barrier is legal or illegal or not covered by GATT (provisions), if it is damaging to U.S. interests we should attacks it. We will do so in bilateral discussions and negotiations, and hopefully also in a new GATT round".-Yeutter had also told Washington newsmen at that time that if the Third World countries continued to block the U.S. efforts in the GATT, they would lose GSP (General System of Preferences) benefits on the U.S. market.- Yeutter did not go as far in his remarks here, but left little doubt of the new U.S. stance, warning third world nations that "a free lunch is just not in the cards".-Yeutter said the major industrial countries were in full agreement that a new round of Multilateral Trade Negotiations in GATT was absolutely essential.- He noted that the recent meeting of GATT Contracting Parties had led to the setting up of a Preparatory Committee for such a new round.- "We have yet to approach a full consensus within the world community on what our global trade priorities should be. We need to work toward that objective".-"We absolutely must convince the developing countries that their own economic progress depends on a healthy expansion of international trade, and that a comprehensive round of GATT negotiations is essential to achieving that goal".-Yeutter then went on to threaten the Third World that its access to industrial markets would be in jeopardy unless it yielded to the U.S. over extending GATT to new areas.-"The developing countries", Yeutter declared, "should, and will, press for more open markets in the developed world for their manufactured goods".-"But they must realise this is an unrealistic objective if they simultaneously reject efforts to reduce their barriers to investment flows and to the free flow of trade in services".-"Special treatment for developing nations is now a well accepted practice of the GATT, but a free lunch is just not in the cards".-Yeutter said the administration was committed to reducing the federal budget deficit by cutting government spending, but did not plan to change the policies that created strong economic growth, and secondarily increased the value of the U.S. dollar.- The U.S. trade deficit, he contended, did not result solely from U.S. macro-economic policies.- Other countries too had contributed to this problem "and must share in the solution".-He called for actions in this connection by Europe and Japan.- Policy changes were required in Europe to ensure economic growth through increased investments, while Japan should take steps to stimulate domestic demand and promote investment, particularly in social infrastructures like housing.- The U.S. macro-economic policies had also helped the third world countries to export to U.S. and earn foreign exchange to service their debts.- But the U.S. could not continue to do this, and if "a political explosion" was to be avoided, European countries and Japan must take a much larger share of Third World exports.- Third World countries should also reduce "burden of government" in their economies, encourage domestic savings and foreign investment.- Yeutter argued that the recent spate of "investigations" and initiation of cases against "unfair" trade practices of Japan, Korea, Brazil and the EEC, should not be interpreted as "aggressive provocation", but viewed as "a defensive strategy to correct long-standing inequities and to prevent protectionism".-"In the current context of a huge U.S. trade deficit", Yeutter explained, " we cannot tolerate violations of our trading rights. For that matter, we should not tolerate them even if we have a trade surplus".-