May 14, 1985

U.S. FROWNS ON ANY THIRD WORLD GROUPING IN GATT.

GENEVA, APRIL 10 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The U.S. delegate to the General Agreement on Tariffs and Trade, Peter Murphy, warned Friday against any Third World grouping in GATT.-

At a press conference, he was responding a question on the stand of the Group of 77 in GATT against the new round and their complaint that none of the important planks of the 1982 GATT work programme, such as on safeguards, had been implemented and that their implementation should be priority before launching a new round of trade negotiations.-

(There is no formal chapter of the Group of 77 in the GATT forum, but there is an "informal group of developing Contracting Parties", which meets from time to time to coordinate positions on important issues).-

Murphy said there was "no Group 77" in GATT, and each Contracting Party spoke for itself, though there had been a number of statements in GATT on behalf of "a number of developing countries".-

"But if you want to ruin GATT, the best way to do it is to speak in blocs", Murphy said.-

"I will not make any reference to any other institution, but it is pretty clearly documented", Murphy added, in what was seen as a reference to the UN Conference on Trade and Development.-

Earlier, in response to questions, Murphy said that the U.S. viewed "positively" outcome of the Bonn summit on launching a new round of trade negotiations in GATT.-

The participants in Bonn, he said, had agreed that these negotiations should be launched "as early as possible", and that a meeting of senior officials of GATT Contracting Parties should be held "before the end of summer" to agree on modalities and issues for negotiations.-

Downplaying speculations about next week's meeting of the Consultative Group of 18 (CG-18) in GATT, Murphy said the CG-18 could not set date for the high level meeting, but felt a date could be set easily elsewhere if there was agreement.-

Murphy also believed that a number of Third World countries were interested in launching the new round, and said the ASEAN countries, in a communication to the Bonn summit, had expressed support for the new round.-

Murphy also referred to a number of informal meetings due to take place in Stockholm and Toronto, and visits to capitals by missions from the EEC and Canada, to persuade other Third World countries to agree to the launch of the new round.-

He believed that the preparatory processes, on the modalities, priorities and subjects for negotiations, could be settled through a preparatory committee (which the U.S. wants the high-level meeting of the GATT Contracting Parties to set up) in 1985, well in time to launch the new round in 1986, as sought by the U.S. administration.-

And while the U.S. preferred multilateral negotiations in GATT, if it was not possible to launch it, the U.S. would have bilateral negotiations with "interested countries".-

South Korea and the ASEAN countries would be the "prime targets" for such bilateral negotiations.-

As to the Multifibre Arrangement (MFA), for trade in textiles and clothing, and whether its abolition would be one of the items on the agenda for the new round, Murphy noted that the negotiations about the future of MFA would start on July 23 in GATT.-

The current MFA-3 is due to expire at end of July 1986.-

The issue was also before a GATT working party, where the talks about liberalisation of trade in textiles is not only in respect of Industrial countries but Third World countries too.-

"If they have comparative advantage, they should not be averse to open up their own markets. But the large majority of them do not appear to favour it", Murphy said.-

While the U.S. position on this was yet to be decided, Murphy underlined that textiles and clothing imports into the U.S.A. had been increasing over the last few years, though there had been some slackening in the last few months.-

While he could not indicate the U.S. position at this stage, there were signs that the U.S. retail markets were "slowing down and becoming soft", and this would make "life difficult".-

He did not believe that it would be possible to adopt "a two track approach", of first negotiating the priority areas like textiles or safeguards, and then take up more complex issues, like "services".-

Unless there was an entire range of issues that could be dealt with as a package, it would be difficult to counter domestic protectionist lobbies in particular sectors in the U.S.A., he argued.-.

On the issue of French opposition to negotiations on agriculture and the EEC’s Common Agricultural Policy (CAP), Murphy said that the agriculture lobby in the U.S. was already pushing for export subsidies.-

The U.S. administration itself felt that trade in agriculture and subsidisation of exports should be brought under greater discipline, as in the case of trade in industrial goods, and would hence prefer multilateral negotiations in GATT.-

If there was to be a new round, it must cover agriculture.-

It did not make sense even for the EEC to spend so much of its budget on agricultural support.-

But if the EEC would not agree to negotiate on agriculture, and if the U.S. began subsidising its wheat exports and brought prices on the world market down, it would become an intolerable situation for the EEC.-

If the U.S. was pushed into this path, there might well come a time when the U.S. might not be interested in the negotiations on agriculture, Murphy warned.-

On the safeguards issue, Murphy noted the basic difference was over the "selectivity" issue (the right of a Contracting Party to apply import restrictions "selectively" against any particular source of import of a product).-

Under article XIX of the general agreement, when countries take emergency protective safeguard actions, this has to be on a non-discriminatory most-favoured-nation principle and apply to imports from all sources).-

Murphy said that the EEC, which had nearly 80 percent of safeguard actions outside the GATT provisions through voluntary arrangements, etc., was hence keen on "selectivity", while the Third World countries, which took actions under other provisions of GATT (for balance-of-payments reasons) were not prepared to agree to "selectivity").-

"That is why the issue is intractable, and some solution could be found only in the context of negotiations on a wider range of issues, and not in isolation".-

As to the French insistence on parallel negotiations on monetary reforms, Murphy said the U.S. was not against improvements in the monetary system, and the Group of 10 (major industrial country group in the IMF) was already discussing the issue.-

But he did not think those who sought reforms knew what they wanted.-

"If the U.S. dollar comes down in value, the Europeans will be the first to scream. Now due to the high value of the dollar, they are able to export to the U.S. markets and elsewhere in

competition with the U.S.", Murphy added.-