SUPPORT TO NEW ROUND FROM "EMINENT PERSONS".

Mar 28, 1985

SUPPORT TO NEW ROUND FROM "EMINENT PERSONS".

GENEVA, MARCH 27 (IFDA/CHAKRAVARTHI RAGHAVAN) – A group of seven "eminent persons" in a report to the GATT director-General have come out in favour of launching "a new round of GATT negotiations, provided they are directed towards the primary goal of strengthening the multilateral trading system and further opening world markets".

The GATT Director-General Arthur Dunkel had named the group in 1983 to study and advise on problems facing the international trading system.

Chaired by the former chairman of the Swiss National Bank, Fritz Leutwiler, the group has warned has against increasing trends towards restrictions to international trade, and said if this trend continued "the sustained economic growth we seek will become impossible", and the current signs of worldwide recovery would turn out to be "only a sad illusion".

The alternative, the group has said, "is a new commitment to open trade, backed by improvements in the operation of the GATT system".

"But better trade policies alone cannot put the world economy securely on the path to growth. That will require the wise use of monetary and fiscal policies and of debt and development policies".

On the controversial U.S. drive for liberalising "trade in services" and bringing it into GATT, the report is slightly guarded.

"Governments", it says, "should be ready to examine ways and means of expanding trade in services, and to explore whether multilateral rules can appropriately be devised for this sector".

Governments should look into the policy issues raised, partly because of the obvious importance of the services sector and partly because, if multilateral rules are not developed, discriminatory bilateral or regional rules would be developed.

"But we are also convinced that there will be no progress on services without substantial progress on trade in goods. There is no future for an effort to involve GATT in services while neglecting its central and essential responsibilities".

"An attempt to extend a rule-based approach to new areas of economic relations, while permitting the rules for trade in goods to continue to decay would lack credibility".

The basic principles for trade policy, the report argues, "is the need for trade to be based on fair competition - i.e. on genuine comparative advantage, the need to bring trade policy into the open, recognition that non-discrimination is the core of the multilateral trading system, the need for clear and accepted the multilateral rules to govern trade policies, and recognition that trade policy is only one part of overall economic policy".

The formulation of trade policy in each country should be brought into the open, with the costs and benefits of trade policy actions analysed through "a protection balance sheet".

Private and public companies should be required to reveal in their financial statements the amount of any subsidies received, and public support for "open trade policies" should be fostered.

Agricultural trade should be based on clearer and fairer rules, with no special treatment for particular countries or commodities. Efficient agricultural producers should be given the maximum opportunity to compete.

Quotas and other restrictions affecting access to markets for agricultural products, including restrictions maintained under past waivers and other exceptions from GATT provisions, should be subject to strengthened rules.

Measures such as variable levies (used by the EEC), and minimum import price arrangements not specifically covered by GATT, should be brought under effective discipline, and progressively greater scope provided for the interplay of market forces in agricultural trade.

A time-table and procedures should be established to bring into conformity with GATT rules, voluntary export restraints, orderly marketing arrangements, discriminatory import restrictions, and other trade policy measures of both industrial and Third World countries, which are inconsistent with GATT obligations.

Trade in textiles and clothing should be fully subject to ordinary rules of GATT, and the expiry of MFA-III in July 1986, should be used to set in place procedures to bring this trade within normal GATT rules "over a clearly defined time period" and a gradual transition.

Rules on subsidies need to be revised, clarified and made more effective. When subsidies are permitted, they should be granted only after full and detailed scrutiny.

Actions against subsidies should also be brought under clearer rules, to eschew some of the currently illegal and unfair actions against subsidies and dumping, and there should be clarification of the "injury" test.

The GATT "codes" governing non-tariff distortions of trade should be improved and vigorously applied to make trade more open and fair.

The rules permitting customs unions and free trade areas, which have been distorted and abused, need to be clarified and tightened up, to prevent further erosion of the multilateral trading system.

While viewing the EEC and EFTA arrangements as meeting these criteria, the report questions the EEC agreements with lone countries or the preferential trading arrangements with the Mediterranean and other countries, but is silent on the U.S. Caribbean basin arrangements.

At the international level, trade policy and functioning of the trading system should be made more open, and policies and actions of countries should be subject to "regular oversight or surveillance".

When emergency "safeguard" protection for particular industries is needed, it should be only in accordance with rules.

It should not discriminate between different suppliers, should be time-limited, should be linked to adjustment assistance, and subject to continuing surveillance.

Third World countries receive special treatment in GATT, but such special treatment is of limited value.

Far greater emphasis should be placed on permitting and encouraging Third World countries to take advantage of their competitive strength and on integrating them more fully into the trading system, with all the appropriate rights and responsibilities that this entails.

Additional help should be given to the least developed countries of Africa and elsewhere, in developing their trade, with removal of obstacles to their agricultural trade as a primary target.

GATT’s dispute settlement procedures should be reinforced by building up a permanent roster of non-governmental experts to examine disputes, and by improving the implementation of panel recommendations.

Where bilateral agreements impair GATT objectives, third parties should use their GATT rights to complain.

To ensure continuous high-level attention to problems in international trade policy, and to encourage prompt negotiation of solutions, a permanent Ministerial-level body should be established in GATT, and sessions of GATT Contracting Parties held at Ministerial level every second or third year.