Apr 12, 1985

THIRD WORLD STILL AGAINST NEW ROUND.

GENEVA, APRIL 25 (IFDA/CHAKRAVARTHI RAGHAVAN)— Third World countries in GATT appear to be standing firm on their position that they could not agree to a new multilateral trade round in GATT, before completion of work on the unfinished business of the Tokyo Round and the 1982 GATT Ministerial declaration and work programme, including the standstill and rollback commitments.-

Despite the failure to get an endorsement for the new round at last week's Washington meeting of the IMF/World Bank Development Committee, the U.S. and some other western countries have initiated a media campaign to the effect that the Third World countries, at the Washington meeting, have lifted their objections to the new round.-

While some of the western press reports out of Washington, immediately after the Fund/Bank meetings, underlined the north-south division on this, there have been further reports since then, quoted to unnamed western sources, projecting a contrary view.-

In an informal talk with some newsmen here Thursday, Shrirang P. Shukla, India’s Ambassador to GATT (who had attended the Washington meetings), expressed some surprise at such reports.-

Shukla is also the spokesman of the informal group of Third World countries in GATT.-

He noted that while the draft communique originally had included language to provide endorsement and support to the new round, the final text agreed upon did not do so.-

The communique, he added, even reflected to some extent the position of the Third World countries and called for implementation of the past commitments and completion of unfinished business of the Tokyo Round and the GATT Ministerial declaration and work programme.-

The Development Committee had in effect said that if these were done, it "could" lay the basis for "a general participation of all countries" in the trade negotiations round on which a number of countries had decided to embark (a reference to the OECD Ministerial communique in Paris).-

The wording, Shukla explained, reflected the lack of consensus in the Washington meeting and the differing positions of the Industrial and Third World countries, and thus not a go-ahead for the new round.-

At the Washington meeting, the U.S. treasury secretary is reported to have circulated "notes of his speech", wherein he had referred to a GATT high level meeting on July 20 to agree on the preparations and launch of the new round.-

But the idea of the July high level meeting was not actually brought up or discussed at the meeting.-

Since then, Mike Smith of the U.S. Trade Representative’s Office has also been reported as saying that the U.S. would now be formally proposing this at the GATT Council.-

The agenda of the GATT Council for April 30 has, as one of the items, a statement (to be made) by the GATT Director-General on the report of the "independent expert group", appointed by him, on "trade policies for a better future".-

Among other things the report has given support to the idea of a new round.-

Shukla noted that this was not a report to GATT, nor that of a GATT body, and in the light of the Director-General's statements, governments would have to consider any issues raised, and respond if any actions were called for.-

Apart from the GATT Council meeting, the GATT Consultative Group of 18 (CG-18), an informal high-level group that discusses broad trade policy issues but does not take decisions, is due to meet on May 13-15.-

By then the Bonn western summit would have taken place, where the U.S. is seeking an endorsement for the new round.-

In the light of this, the U.S. might bring up the issue of a new round before the CG-18.-

Also in June, the informal group of Trade Ministers from major trading countries of the north and south, who have previously met in Rio de Janeiro and Washington, will be meeting in Stockholm, where again the issue night come up.-

But so far, neither the issue of a new trade round, nor of setting in motion the preparatory process for it, has been formally brought on the GATT agenda.-

Shukla himself noted that while at the 1984 November meeting of the GATT Contracting Parties, the European Community had referred to a possible high level meeting nothing has so far been formally put on the GATT agenda - including its purpose and scope.-

The position of the Third World countries including India, he said would depend very much on what such a high level meeting was to be about.-

As far as the issue of new trade round was concerned, Shukla said the Third World group had put forward their position in November 1984 at the time of the meeting of the GATT Contracting Parties.-

In this document, they had clearly said that on completion of the unfinished business, and restoring life to the GATT system by implementing past commitments, the group itself would take the initiative of proposing trade negotiations, but that such negotiations should be confined to trade in goods.-

"We have put our position on the table in GATT, and we are still awaiting the reactions of our partners in the north to it", Shukla said.-

"While there is lot of talk outside GATT about a new round, the only proposal before GATT is ours, and so far it has not been discussed".-

Even at the last meeting of the CG-18 in March, when the Third World joint paper was on the agenda, there had been some questions, but very little discussion.-

Only in the light of full discussion, "we can decide on our further steps", he added.-

On the reports in the press that the U.S. and other Industrial countries would go ahead with their new round, with or without the Third World, Shukla noted that the European Community's own position was that such a new round required the participation of the Third World countries.-

The Third World's share in world trade now was not insignificant, unlike the situation they had faced when the Tokyo Round was launched without much discussion with the Third World.-

The idea of a new round in GATT, and thus subject to GATT rules, without Third World participation, was a hypothetical one, and Third World countries could formulate their positions and course of action only if this happened, Shukla said.-

On the purported view that all the Third World "demands" could be considered in the new round, Shukla said the Third World had gone through this experience in the past, and empirical evidence and logic showed this was futile.-

It was during the Tokyo Round negotiations for trade liberalisation that the worst regime in the Multifibre Arrangement (MFA-2) came into being.-

The Tokyo Round declaration had also talked of priority to Third World trade interests - issue or safeguards, liberalisation of trade in tropical products, and the issue of escalation of tariffs on processed and semi-processed goods.-

No attention was paid to these, and this was part of the unfinished business of the Tokyo Round still to be implemented.-

As to the idea that the future of MFA would be one of the bargaining chips in the new round and for launch of a new round, Shukla said that the exporting third world countries had said the best solution to trade in this sector was a return to GATT rules and principles.-

Far from the MFA being a kind of "standard bearer" for new suppliers and poorer countries, the discriminatory restrictions under MFA were being applied against the poor countries and new suppliers.-

Even Bangladesh, a least developed country, was under restraints under the MFA now.-

The MFA erected illegal barriers not sanctioned by GATT.-

"No compensation was paid to U.S. for erecting these barriers, and there can be no question of our paying any compensation now for their removal. We do not thus see it as part of a compromise for a new round".-

Nor could there be equality in liberalisation of trade by removal alike of illegal restraints and legal restraints sanctioned by GATT.-

As for the issue of services and its inclusion in a new round, Shukla said that India did not see this issue as being amenable to GATT jurisdiction.-

The international community had clearly recognised jurisdiction and competence of the UN Conference on Trade and Development in the area of services.-

In GATT, the 1982 Ministerial declaration left this issue "wide open".-

There had been no development since then to justify a GATT competence or involvement in services namely GATT jurisdiction over "trade in services", and application of the most-favoured-nation and national-treatment of imports of services.-