Mar 2, 1984
THIRD WORLD LIKELY TO STAY FROM INFORMAL GATT
CONSULTATIONS ON TRADE IN SERVICES.GENEVA, FEBRUARY 29 (IFDA/CHAKRAVARTHI RAGHAVAN) – Third World countries were consulting among themselves Wednesday about their participation or otherwise in "informal consultations" in the General Agreement on Tariffs and Trade on the issue of "trade in services".-The expectations were that most of them will stay away, while some may send junior-level diplomats with instructions not to discuss any substance.- The informal consultations, whose status itself was not clear beyond that it would be held in the GATT building, are slated for Thursday and Friday.- An earlier meeting, some months ago, called by the U.S.A. and Canada, was boycotted by the Third World countries.- The November 1982 GATT Ministerial meeting had adopted a decision on the services issues, calling for national studies by interested countries and for exchange of information through international organisations such as GATT.- The issue of whether any further action in this area is needed is to be addressed by the GATT Contracting Parties at their meeting in November 1984.- While willing to discuss "procedures", the Third World countries have been opposed to any attempt to discuss within GATT the substance of the issues.- At the 1982 Ministerial meeting, and since then, the Third World countries have taken the position that the "services" issue is not within the ambit of GATT, and the GATT principles relating to "trade in goods" could not be extended to "trade in services".- The services issue was pushed at the 1982 meeting mainly by the United States, and got some support from Canada and Japan.- The European Economic Community was initially cool to the idea, and according to Community sources, the EEC is still to decide whether any "liberalisation" in the trade in services would be useful and beneficial to the Community states.- Work within the Community on a proper collection of statistical data, beyond the narrow sectoral details so far available, is presently in the results are expected sometime this spring.- The preliminary studies would appear to indicate that "services" is an important element in the Community countries, has been growing and, during the current recession, has helped to mitigate the unemployment in their countries.- According to these preliminary studies, if the trade in services within the Community is excluded, the EEC has a 36 percent share in the world "export of services", compared to a 12 percent of the United States.- Several of the Community members have a large surplus in their trade in services in relation to the size of their countries, and others have a small surplus. Only West Germany has a deficit in this trade.- Community sources suggested that the 36 percent EEC share in the world trade in services would not by itself warrant a EEC decision to participate in negotiations for "liberalising" the world trade in services.- If such liberalisation would result in merely a "zero sum game", there would be no incentive for the EEC.- The EEC’s final judgement would depend on positive answers to four important questions: -- How important are the obstacles to the trade in services, and whether they restrain the trade? Many of the obstacles are due to larger policy considerations of countries, and not as restraints to trade and hence not easily amenable to removal.- -- If the obstacles were removed would there be potential benefits to world economy in liberalising the trade in services, as happened in the liberalisation of trade in goods under GATT? -- Would the competition in the trade in services benefit the Community? -- And what sort of negotiations would lead to liberalisation of the trade in services? Commission sources suggest that at present, the Community did not even have a clear indication of how its 36 percent export trade in services, was directed and to which group of countries.- Implicit in this is a view that if the EEC’s present position is due to export of services to the Third World, would any liberalisation benefit the EEC, or merely open up a market for the U.S.A., and whether the EEC would gain by joining the U.S.A. and the Third World to open up its market in services.- The Third World countries, some of their policies against foreign participation in their domestic services sector are rooted in basic development policies and objectives.- Also, in the "trade in goods", when they joined GATT and its liberalisation of trade thesis, and set up production and emerged as potential suppliers, the Industrial countries have quickly applied a variety of tariff and non-tariff restraints against Third World suppliers (as in case of textiles, steel, shipping, leather products).- Would the Third World countries stand to gain by enabling international negotiations in GATT in the services sector and opening up their economies to "international trade in services", until they are able to play an equal role and could insist on rules of the game fair to them? A connected issue for them is whether the last objective would be achieved by participating in any negotiations at the outset, or by blocking such negotiations in GATT, while pushing the on-going work in some of the service sectors like technology and shipping in UNCTAD and other organisations, where not merely "free trade" theories but development issues are addressed?