Nov 3, 1984
THIRD WORLD BRACING ITSELF AGAINST NEW U.S. PRESSURES.
GENEVA, OCTOBER (IFDA/CHAKRAVARTHI RAGHAVAN) -- With President Reagan signing into law the new U.S. omnibus trade bill, Third World countries are bracing themselves against renewed U.S. pressures on them on "trade in services", "investment", and other issues.-Since 1981, the U.S. has been trying to promote a new round of trade negotiations in the General Agreement on Tariffs and Trade, and to include within it measures for "liberalising trade in services", and doing away with performance requirements in Third World countries on foreign investments.- In effect the U.S. wants the Third World countries to open up their markets for supply of a variety of "services", including banking insurance, advertising, etc., by U.S. corporations, and to rescind requirements on such corporations, as a condition for investments, about export performance or other conditions.- At the 1982 GATT Ministerial meeting, the U.S. failed in these efforts, and was only able to obtain a call to interested governments to undertake national studies on "services", and for exchange of such information with other countries, inter alia through international organisations such as GATT.- But with several Third World countries specifically challenging GATT jurisdiction and entering reservations, the Ministers were only able to agree that the GATT Contracting Parties (CPs) at their 1984 session (November 26-29) would review the results of the examination of such studies, along with information and comments of relevant international organisations, and consider "whether any multilateral action is appropriate and desirable".- U.S. efforts since then to set up a working party of GATT to look into the services issue, in order to move towards negotiations, have been blocked by the Third World countries.- Japan formally proposed, at the CPs meeting in November 1983, the launching of a new round, but this too has been blocked by the Third World.- Since then, the U.S. trade representative Bill Brock set up informal meetings of Trade Ministers of key countries, from the north and the south, to discuss these and other issues. Two such meetings have been held, one in Washington in May and the other in Rio de Janeiro in October.- At the meeting of the GATT’s Consultative Group of 18 (CG-18), here in Geneva last weeks the U.S. supported by Japan, Canada, Sweden among others, sought to push these ideas forward, but the Third World countries would not agree, and stuck to their joint position paper of May 1984.- In this paper, the Third World countries called for implementation by the Industrial countries of their past commitments in a number of areas of concern to the Third World.- Without a "demonstrated and sustained" implementation over "a period of time" of these past commitments, and the GATT work programme for the 80’s fully implemented in this manner, any initiative for a new round in GATT "would be lacking in credibility and devoid of relevance particularly to developing countries", the Third World joint paper said.- At its meeting last week, the CG-18 is reported to have discussed five issues on GATT work programme – agriculture, safeguards, services, counterfeit goods trade, and dispute settlement procedures.- None of the issues that the Third World views as priority areas for action, as outlined in the May 1984 joint paper, were on the agenda, according to Third World sources.- These include the textiles and clothing trade, Quantitative Restrictions (QRs), trade in tropical products, and implementation of part IV of GATT relating to special and differential measures to favour Third World trade, and the issue of standstill and rollback and conformity with GATT obligations incorporated in the 198w GATT Ministerial declaration.- In all these areas, there has been no progress in the GATT work programme, and merely some procedural decisions to continue with the work.- The agriculture issue is deadlocked primarily over differences between the EEC on the one hand, and the United States, Australia and New Zealand on the other.- On safeguards, where the Ministerial declaration of 1982 called for a "comprehensive understanding", at Rio the U.S. had apparently tried to promote the idea of a "limited" understanding, incorporating the points on which there is agreement, adopting a so-called "building block" approach.- The "limited" approach would have meant the understanding or agreement covering only issues like "transparency" and notification by members of both safeguard actions taken under article XIX and some, but not all, of the "grey area" measures of voluntary restraints, etc.- It would not cover the basic Third World concerns about most-favoured-nation or non-discriminatory treatment in safeguard actions, strict definition of "injury test" to be applied before safeguard actions are taken, degressivity of such measures over an agreed time-frame, and effective multilateral surveillance.- The Third World countries along with Australia are reported to have turned down the U.S. approach, arguing that it would be at best a "pr approach", and could not provide a secure foundation or building block.- On the issue of counterfeit trade, while all GATT members agree that there should be no counterfeiting of trade-mark or patented goods, the basic difference is on how it could be dealt with in GATT.- The U.S. and the EEC have been pushing for a working party in GATT on this issue, leading to some agreement.- The Third World countries have not seen the need for such priority or the type of actions sought.- In the GATT framework, country "A" could act against country "B" in respect of imports from "B" into "A" if it affects domestic producers in "A".- But what in effect the U.S. and EEC want is that in the case of "counterfeiting" if country "A" interests are affected in third countries by the actions of country "B", the third countries should take actions, rather than the concerned parties in country "A" seeking judicial actions in the third countries concerned under normal laws relating to these matters.- Australia would appear to have pointed out in the CG-18 that this would be a revolutionary approach in GATT, and wanted to know why it could not be applied in other sectors, like agriculture where subsidised exports by the EEC to third markets affect Australian export prospects in those markets.- On services, while the U.S.A., Japan and Sweden would appear to have pushed for setting up of a working party, the Third World countries demurred.- They underlined that the studies, some of which had been circulated only in October, dealt more with "structure" of services rather than trade, and in any event the basic issue of competence of GATT had first to be resolved, and this could not be prejudged by setting up a GATT working party.- Only Jamaica, among the Third World countries, would appear to have suggested a compromise of a joint GATT-UNCTAD working group.- The EEC, which has am ambivalent attitude on the issue, merely noted the lack of a consensus and need for a "pragmatic approach".- Canada would appear to have argued that with recovery slowing down, the overall economic climate was becoming "cold", and pressures for protectionism were building up.- In this situation there was need for multilateral action in GATT, and perhaps a special meeting of the CPs in May/June 1985 should be envisaged leading to launch of the new round of negotiations.- The Canadian view would appear to have found favour with Japan and Sweden among other Industrial countries.- The U.S. would appear to have underlined the need for "political perspective" on the new round of negotiations, and the domestic pressures on the administration for such actions, including on services and investment issues.- Whatever the state of implementation of the GATT work programme, it was necessary to launch negotiations in 1985, in the U.S. view.- If there were no multilateral negotiations, the U.S. would move through plurilateral and bilateral measures, and even unilaterally, with those not willing to cooperate with the U.S. being left behind by the wayside.- India, supported by Brazil, Egypt, and other Third World countries, would appear to have questioned the "impatience" of the Industrial countries in a limited number of areas covered by the GATT work programme.- The CG-18 meeting itself had not considered the issues on the work programme of concern to the Third World, which too was impatient for action, particularly since many of these were hold-over items dating back to GATT promises and commitments of 1963.- The Third World was still persevering with faith in multilateralism, but could not be expected to yield on a "take it or leave it" approach of multilateralism on a limited range of issues alone.-