May 25, 1985

THIRD WORLD "DISCOVERS" GATT.

BY CHAKRAVARTHI RAGHAVAN, GENEVA, MAY 23 (IFDA) – By the mid-l960’s, the number of Third World Contracting Parties in GATT had gone over 40, as against the original eight.

But between 1950 and 1965, according to the UNCTAD handbook of statistics, the Third World share in world trade had fallen 30.8 percent to 19.6 percent. And if the exports of the major petroleum exporters were excluded, the share had fallen even more, from 23.6 to 12.5.

World trade, and that of the other groups of countries grew faster than production, growth and trade of the Third World.

The GATT secretariat in its l963 trade review, drew attention to this and said that between 1953 and 1962, the aggregate export earnings of the non-industrial areas had only increased by 31 percent, compared to 76 percent increase for industrial areas and 98 percent for socialist countries.

The increase of the non-industrial areas worked out to an average annual 3-4 percent, and to 2.4 percent if the exports of the major petroleum exporters were excluded by an average.

In 1962, GATT’s "Committee III", which later became the Trade and Development Committee (TDC), took up the issues of tariff cuts, QRs and other non-tariff barriers, and other problems creating obstacles to third world exports.

The Committee reported in November 1962 that while some minor changes favouring the Third World had taken place, restrictions on products of major interest to the third world continued to be maintained.

Some 18 CPs from the Third World, in a joint move, then presented a programme of action for elimination or reduction of barriers to trade of the Third World, over time.

These called for standstill on new tariff and non-tariff barriers, elimination of QRs by December 31, 1965, duty free entry for tropical products, elimination of tariffs on industrial raw materials, reduction and elimination of tariffs on semi-processed and processed products, and progressive reduction of internal charges and revenue duties.

There was resistance, from the U.S. and other industrial countries, to a specific programme, and ultimately a Ministerial declaration was issued in May 1963.

The declaration, accepted some of the proposals in the programme of action, but on the basis of "understandings" of individual CPs which diluted the text, and with reservations by the EEC and a few others on the time-table for elimination of QRs.

The Trade Ministers of the Third World expressed their "disappointment" with the outcome.

But even this declaration remained largely unimplemented.

The dissatisfaction of the Third World countries with GATT was already led to their move for convening the UN Conference on Trade and Development, and this met in June 1964 and led to the creation of UNCTAD.

At this time, preparations were on for the launching of another new round of negotiations in GATT, "the Kennedy Round", and the Third World countries were told that their problems would be easier of solution in a general MTN.

The Kennedy Round was launched in May 1964 and was concluded on June 30, 1967.

Before it was concluded, the Third World found itself in the position of to agree to an extension of the LTA by another three years till September 30, 1970, and after the Kennedy Round, for another three years till end of 1973.

As a result of UNCTAD-I, and the development consensus evolved there, the GATT itself incorporated special provisions favouring the Third World, into the general agreement, in Part IV.

These included specific binding commitments for:

* Reduction and elimination of barriers to products of particular export interest to Third World, including customs tariffs and other measures discriminating unduly between primary and processed products,

* Standstill on introducing or increasing customs duties or non-tariff import barriers on products of particular export interest to the Third World,

* Refrain from imposing new fiscal measures, and give priority in any revision to reduce or eliminate those, that hamper significantly growth of consumption of primary products.

There were also provisions for review, consultations, and joint actions by CPs to secure the fulfilment of the objectives of Part IV and the specific commitments.

These provisions became effective in 1966, but remained paper provisions.

After six rounds of GATT MTNs and their trade liberalisations at the end of 1970, according to UNCTAD data, the Third World share in world trade had fallen further to 17.9 percent, and to 11.3 percent when the exports of the major petroleum exporters were excluded.

Renewed complaints of the Third World met with more promises.

The annual meeting of the CPs at the end of 1971 decided to "maximum efforts" directed towards expansion of export earnings of all Third World countries, and to give priority consideration to, and taking immediate steps towards, solving the trade problems of these countries.

The Third World countries complained that the preoccupation of industrial countries with their own problems resulted in less attention being paid to the problems of the Third World, and hence separate consideration should be given in GATT to the Third World’s problems.

If no new general negotiations were possible, specific negotiations for serious efforts for positive actions in favour of the Third World should be taken, the Third World said.

The industrial countries, agreed to take priority actions to remove QRs "on a preferential basis" in favour of the Third World countries, pending the commencement of multilateral negotiations, but would not consider specific negotiations focussing on third world issues only.

By the end of 1971, the TDC noted some improvements, but complained of increased discriminatory import practices against the Third World (by France and West Germany), no action on removal of internal duties and fiscal charges inhibiting consumption, continued tariff escalation on processing.

In 1972, the U.S. again called for a new MTN, and ultimately resulted in the Tokyo Round.