THIRD WORLD "NO" TO NEW ROUND-

Apr 11, 1984

THIRD WORLD "NO" TO NEW ROUND-

GENEVA, APRIL 7 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The focus of trade policy in the General Agreement on Tariffs and Trade (GATT) should be on completing the work programme and ensuring the fulfilment of commitments already undertaken, rather than launch any new round of negotiations, Third World countries made clear this week here.-

This Third World position would appear to have been presented at the meetings of GATT’s Consultative Group of 18 (CG-18) that ended Friday.-

The United States has been pushing for a new round, though not formally, in GATT. But U.S. trade representative, William Brock has convened a meeting of Grade Ministers of important countries, both developed and developing, in the U.S. in may in an effort to push this idea.-

Within GATT, Japan has made a formal suggestion, and tried to advocate this at the CG-18, according to participants. While it received some support from Canada and U.S., the European Community was apparently more cautious and reserved.-

Japan’s advocacy of a new round, according to Third World sources, is not only due to its efforts to support the U.S., but also motivated by its efforts to submerge bilateral pressures on it in a new round of multilateral trade negotiations.-

However, Third World representatives are understood to have made clear that if one viewed objectively the outcome of the work programme, emanating from the 1982 Ministerial declaration, the conclusion should be obvious that there had been no progress, and the record was one of "unfulfilled commitments".-

GATT activities, the Third World insisted, must hence concentrate on the fulfilment of these promises and completing the work programme, rather than "distract" attention from them by launching a new round.-

Two other issues that were reported to have been discussed related to the issues of trade/finance linkages, and the problems of "subsidies". The counter-trade issue, raised by the U.S., was not, discussed, but is expected to be brought up at the next meeting of the CG-18 in July.-

On the trade/finance linkages, while everyone recognised this linkage, Third World countries were more chary of trying to tackle this through "greater coordination" between the secretariats of the IMF and the GATT, going beyond the consultations now provided in GATT in respect of balance of payments issues.-

The idea of increased IMF/GATT cooperation was envisaged at the Williamsburg summit of the OECD countries, and on the basis of ideas put forward by the GATT secretariat, the CG-18 had discussed it earlier too, in October last year.-

As one Third World source put it, "the concerns being shown now, by those who have monopolised the world's finances, for the linkage and need to improve trade may be welcome, but their credentials for solving it are suspect".-

When the Third World talks of the trade/finance linkages, it is seeking reforms in the international monetary and financial system that would be supportive of growth in world trade and Third World development.-

The western countries, and specially the U.S., in seeking wider IMF/GATT coordination, are essentially seeking to mould Third World economic and development policies, through the GATT and IMF, in such a way that for the foreseeable future the Third World would remain "hewers of wood and drawers of water", the Third World sources commented.-

The sources note that at present there is an element of IMF/GATT cooperation involved, when the GATT Committee on balance of payments restrictions considers the trade restrictions introduced or maintained by members on account of the BOP considerations. These focus on the country's restrictions arising out of the BOP situation.-

What the western countries seek, and the GATT secretariat notes on the issue advocates, is a wider role in which the GATT consideration in the BOP Committee and the IMF’s "consultations" with countries under its "surveillance" role under its article four, as also IMF’s stabilisation programmes with a country, are all coordinated and act in reinforcement of each other.-

While the IMF wields its "conditionality" stick to force the developing country to remove import restrictions (which are not invalid in GATT for the Third World), GATT would provide the "carrot" that if the Third World does so, the Industrial countries would "reduce" their trade barriers on products of major export interest to them.-

The inequity, as one Third World source put it, would be that the import restrictions of the Third World are valid in GATT, not only for bop reasons, but also for development and infant-industry protection and industrialisation.-

With scarcity of foreign exchange, licensing and import restrictions ensure imports of necessities (whether for consumption or investment) and restrict luxury consumer goods, and thus ensure equitable allocation of resources in public interest.-

The trade barriers of the Industrial world, most of them now non-tariff, are in any event illegal, and their illegality would be "reduced" for the Third World giving up its "legal rights".-

As Third World sources see it, the coordination would be merely to further enforce "conditionality", with the GATT in effect "monitoring" how countries carry out the IMF’s conditionality on the trade side, and thus change Third World development policies to be in tune with the "private enterprise" dogmas of the two institutions.-

From this perspective the Third World countries have taken the position that existing cooperation via the BOP Committee would be enough, and the GATT should not become a wing of the IMF.-

What was being sought to be achieved in the western ideas would merely fight the shadow rather than the substance of the trade/finance linkages. Merely, fighting the shadow would result only in raising "expectations" that could not be fulfilled, Third World sources note.-

The only way to tackle the substance would be through the proposed international conference on money and finance for development, as called for by the non-aligned .-