Nov 5, 1985

LITTLE SUPPORT FOR U.S. ON INVESTMENT AND HIGH-TECHNOLOGY

GENEVA, NOVEMBER 1 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The U.S. would appear to have got little support, at the current meetings of the senior officials group in the general agreement, for its efforts to include in a new round of negotiations investment issues, according to GATT sources.-

The senior officials group established by the special session of the GATT Contracting Parties has been discussing the various issues that could be the subject of a possible new round of Multilateral Trade Negotiations (MTNs) in GATT.-

In this process, a part from the topics listed in the GATT work programme and priorities for the 1980's, the group considered various ideas put forward by individual Contracting Parties (CPs) in their submissions to the GATT Council in July.-

Among such items were the U.S. efforts to get on to the agenda of a new round issues relating to "high technology" and "investment".-

U.S. efforts in 1982, during the GATT Ministerial meeting, to get these issues put on the GATT agenda and work programme failed.-

But the U.S. has renewed these efforts in the context of its current drive for a new round with new themes.-

Though it has not clearly spelt out its aims, in the high technology area the U.S. is apparently seeking to block, through a GATT code or agreement, financing of research and development in high technology by governments as in Europe or through publicly raised funds as in Japan.-

The effort is mainly to get such practices eschewed, while saving U.S. practice, where the Pentagon finances R and D in high technology in enterprises, who later recycle it for civilian purposes.-

In the area of investment, the U.S. wants "new GATT disciplines" on what it calls "trade-distorting" practices relating to foreign investment, such as requirements of countries as to extent of local content and export performance.-

The U.S. also seeks multilateral disciplines over practices that " distort or restrict" international investment flows, including "barriers to investment and other discriminatory measures".-

Through a combination of multilateral disciplines on investment and services, and with cross-linkage to trade in goods, the U.S. is essentially seeking a virtual free hand for its transnational corporations for their investments, production and trade, and profits in foreign countries, specially the untapped markets of the Third World.-

However, even some of the other industrial countries are chary of the U.S. proposals.-

At the senior officials group meeting this week, on the high technology issue, the U.S. would appear to have got little support, with only the Japanese expressing their own concerns over "access to high technology goods", but envisaging only "detailed examination" (and no negotiations) on the subject at the moment.-

On the investment issue, the U.S. would appear to have said that while some domestic regulations could be justified for domestic policy considerations, the entire range of barriers and regulations should be made transparent, and should be subjected to whether they were for genuine domestic policy reasons or for protectionist reasons.-

All others who spoke would appear to have taken the view that the issue was not covered by GATT.-

As the Community spokesman apparently put it, "you cannot attach ' trade' to anything and bring it into GATT" a logic that the Third World countries have been pointing out in relation to services issue also.-

Brazil in addition would appear to have made the point that investment was really a "financial issue", and if rules relating to investment were completely liberalised, it could even reduce trade and obviate the need for trade liberalisation.-

On the question of Ministerial involvement in GATT, and for regular Ministerial meetings, while Australia and New Zealand supported it, others were against such "institutionalisation".-India noted that while it would be good to involve Ministers substantive issues in GATT, there was no case for a Ministerial institution in GATT, and for Ministers to meet whether they had any work or not.-In agreeing with this view, the U.S. would appear to have noted that this was "only thing" on which they were able to agree with India.-