Apr 16, 1985

CHANGES IN GSP EXPLAINED BY U.S.

GENEVA, APRIL 12 (IFDA/CHAKRAVARTHI RAGHAVAN)— The renewal of the U.S. law for GSP was a "major achievement", and would enable continuance of preferential or duty free treatment to the imports of Third World countries to facilitate their development, the U.S. delegate told the UNCTAD Committee on Preferences Friday.-

Ms. Dorothy Dwoskin of the U.S. Trade Representative’s Office speaking in the Committee, which is having a general review of the schemes of Generalised System of Preferences (GSP) operated by various Industrial countries in respect of imports from the Third World countries.-

Apart from the general discussions of the GSP in the Committee, a number of bilateral and plurilateral consultations between preference-giving and preference-receiving countries are also taking place in parallel with the Committee meetings.-

Dwoskin explained the various changes introduced in the renewed U.S. schemes and said the U.S. was looking forward to a dialogue in the Committee and in the various bilateral consultations to clarify new provisions and the changes.-

In the debate in the Committee, a number of Third World countries spoke on their individual but general problems over the GSP schemes.-

All of them expressed concern at the gradual erosion in the concepts of generalised, non-reciprocal and non-discriminatory principles of the GSP, and the "graduation" moves, both product-specific and country-specific, being introduced in the various GSP schemes of the preference-giving countries.-

Several of the preference-giving countries also intervened in the debate to explain the changes introduced in their individual schemes.-

Placing the extension of the U.S. GSP law and the changes proposed in the U.S. GSP scheme in the context of the U.S. economic situation, Ms. Dwoskin underlined that the new statute retained many of the features of the original scheme.-

As late as the fl al week of the 1984 Congressional Session, "there was real doubt that Congress would approve any renewal of the U.S. GSP", Ms. Dwoskin said.-

"The revised programme represents a significant achievement for the executive branches and reaffirms the U.S. commitment to facilitate the development of beneficiary countries’ economies through an expansion of trade opportunities", she added.-

While the U.S. Congress had now imposed an upper ceiling in terms of per capita GNP for GSP beneficiaries, the extended transition period provided would mean that, practically speaking, the ceiling would not affect any of the current users "for the foreseeable future, and probably for the entire duration of the revised scheme", she declared.-

The U.S. recognised the importance of maintaining open markets for products from the Third World, and the U.S. GSP would contribute to these efforts.-

From a 3.2 billion dollars worth in 1976, the U.S. GSP imports rose to 13 billion in 1984, she noted.-

Duty free imports of agricultural products were valued at over one billion in 1984, while duty free trade under the GSP increased by 20 percent in 1984 alone.-

Since the institution of the programme, total U.S. imports from beneficiary countries had increased from 28 billion to 111 billion in 1984.-

On the other side of the picture, the Third World accounted a growing share of U.S. exports of goods and services, and exports to beneficiaries in l984 was valued at 69.2 billion.-

The U.S. was now confronted with a trade deficit of l23 billion in 1984, and with GSP beneficiary countries alone the trade deficit was 41.8 billion, and this was likely to continue at least in the short-term.-

. "This relationship conveys a sense of mutual responsibility", Dwoskin argued.-

The U.S. extension and continued improvements was based on this realisation and, the expectation that the benefits would lead to fuller participation of the beneficiaries in the trading system.-

While the program would continue to be modified on an annual basis, there would be major changes on the completion of a general product review in view in July 1987.-

There was now ample opportunity for beneficiary countries to share their views with the U.S. (in the Committee and in bilateral consultations) on the operation of the programme and how the current list of eligible products could be adjusted to be more responsive to their individual development needs.-

The major review would involve consideration of the competitiveness in the U.S. market of individual products from individual beneficiaries, and a beneficiary country's practices in the context of its general level of development.-

As a part of the general review the President had to consider a number of discretionary factors in GSP eligibility determinations.-

Explaining the various processes involved for waivers and eligibilities, Dwoskin asked interested parties and countries to make appropriate representations in time.-

"It is anticipated that the results of the two-year review and the application of lower competitive need for some products from some countries, determined to be sufficiently competitive, would replace the present discretionary graduation practised under the GSP and thus enhance the predictability over the long term", Dwoskin said.-

On the concerns expressed in the Committee about the use of the President's discretionary powers, Ms. Dwoskin said that a review of the past actions demonstrated that the U.S. government had been "sensitive to exercise this discretion in such a way as to protect the economic interests of the beneficiary countries".-

Such actions had been taken "in a very limited context after extensive opportunities for consultations under established procedures", she added.-

Canadian delegate, L. J. Edwards, in explaining the Canadian extension of its scheme for another ten years and the improvements made, noted that in the first decade of the scheme there had been the highest utilisation rate of 74 percent.-

Yugoslavia said the "graduation" being introduced in the schemes would jeopardise not only the whole system of GSP but also the international trading system and its rules, since it did not take account of the overall position of the Third World countries and their debt-servicing problems.-

Third World countries need a period of time to meet their international debt obligations without neglect of development and growth.-

On the issue of reciprocity, the Yugoslav delegate underlined alarming balance-of-payments difficulties faced by most Third World countries and asked "how can one expect or demand reciprocal concessions from developing countries faced with continuously debt problems, often for no fault of theirs".-

New Zealand in justifying the introduction of its graduation criteria of 70 percent of New Zealand per capita GNP, argued that it was the first country to have introduced the GSP.-

Since then, New Zealand's own international economic situation had changed dramatically.-

Third World beneficiaries enjoyed preferential or duty-free treatment on 98 percent of imports from them into New Zealand, and its schemes had cumulative rules of origin and no specific safeguard mechanisms.-

Trinidad and Tobago complained about the use of the per capita GNP criteria for exclusion in the U.S. and New Zealand schemes, and said if this was followed by others, the island country would lose GSP benefits.-

Singapore, another country expected to lose as a result of the New Zealand criteria, used some sharp language to express its concerns at the introduction of "graduation" based on per capita GNP of beneficiaries, in the U.S. and New Zealand schemes.-

"This is a deliberate attempt to undermine the unity of the Group of 77. The GSP is being used as a divisive tool against the common interests and unity of the Group of 77", the Singapore delegate said.-

Bangladesh complained that many preference-giving countries, and several of its trading partners, had not so far introduced the special measures favouring the least developed countries.-

Peru argued that if the GSP was considered to be beneficial for promotion of industrialisation, it should be placed on a stable foundation.-

Uncertainties created by various changes and modifications "discouraged investment in our countries and frustrates industrialisation policies", the Peruvian delegate complained.-