May 2, 1985

MIXED RECEPTION FOR WISEMEN.

GENEVA, APRIL 30 (IFDA/CHAKRAVARTHI RAGHAVAN)— The report of a seven-man group, chaired by Fritz Leutwiler, on "trade policies for a better future", got mixed response at the meeting of the GATT Council Tuesday.-

The report of the group, commissioned by the GATT Director-General, was published by the GATT secretariat in March.-

Most delegations who commented on the report, gave their preliminary views, and reserved the position of their governments on the 15 recommendations in the report.-

A GATT spokesman summed up the discussions as "generally friendly, constructive and positive", and in favour of substantive discussions later at the level of the GATT’s Consultative Group of 18 (CG-18) and or a special meeting of the GATT Council, but these would be the subject of "consultations".-

However, other participants at the meeting, viewed the outcome as mixed, with some of the major Third World trading countries having serious reservations on several of the recommendations, including the idea of a new trade round in GATT and an end to the special and differential and preferential treatment to the Third World.-

While some of the Third World countries spoke in support of the report's criticism of protectionism and discrimination, even they were clearly opposed to the report's call for end to the special status of the Third World countries within GATT.-

In presenting the report to the Council, the GATT Director-General, Arthur Dunkel (extracts from whose speech was available to the press), placed considerable importance to the issue of transparency in the GATT system and in trade policies of countries.-

He commended the report's recommendations for greater powers to the secretariat "to carry out surveillance of trade policies" of countries.-

Dunkel also supported the recommendations on institutional matters, including on dispute settlement procedures in GATT, for "closer and continuing involvement" of Trade Ministers in the work of GATT.-

All the other recommendations, he suggested, involved better observance and strengthening of GATT rules.-

Dunkel also praised the consistency of the group's position in favour of "non-discrimination" in the trading system.-

This, Dunkel said, was reflected in their recommendation for roll-back of discriminatory Quantitative Restrictions (QRs) and other illegal restrictions, on the phasing out of the Multifibre Arrangement (MFA) regime for textiles and clothing trade, on safeguards, and on the treatment to the Third World (where the group has favoured end to the special, differential and preferential treatment to the Third World countries).-

As GATT Director-General he was bound to be sympathetic to restoration of non-discriminatory principle in GATT.-

While no one could under-estimate the practical difficulties involved, he hoped the GATT Contracting Parties (CPs) would take very seriously the objective.-

"The basic rules of the trading system cease to have meaning if the number of special departures from them exceeds a certain minimum, and in my view we are close to that point now", he added.-

The recommendations on agricultural trade, subsidies, MTN (Multilateral Trade Negotiation) codes, and on customs unions and free trade areas, called for clarification or renegotiations, and more effective application of the GATT rules.-

Underlining the group's views on "trade in services", Dunkel said that "the extension of multilateral rules into new areas of cooperation would serve no purpose if observance of the existing rules continued to decline".-

Dunkel also supported the group's view on the need for better coordination of trade, financial and macro-economic policies, for increased flows of development finance and for satisfactory resolution of the debt problem.-

"Action at the level of trade policy alone will not be effective", Dunkel added, "even in terms of the preservation of the trading system itself, if these wider problems are neglected".-

Implementation of the recommendations of the group would need negotiations, and it was hence not surprising that the group supported the launching of a new round in GATT.-

But their provision, that "such negotiations should be directed towards strengthening of the multilateral system and further opening of world markets, is in my view very important, and if accepted, it would imply a very different kind of negotiation from any previous round", Dunkel added.-

Canada’s Amb. Alan Beesley, viewed the report as "very positive".-

Peter Murphy for the U.S., viewed the report as "a clear indictment of protectionism", and underlined that the 15 recommendations should be viewed "as a package, as otherwise it would get nowhere".-

Japan, Sweden, Switzerland, and Finland also gave general support to the recommendations.-

Tran Van-Thin for the European Community did not comment substantively, saying the report was being studied by the Community its member-states.-

Norway’s Martin Huslid, in what participants saw as a sarcastic remark, thought it was "a feat" on the part of the wisemen in having written a report on the trading system and trade policies "without once mentioning the UN Conference on Trade and Development".-

The failure of the report to take note of the realities of the world trade, and the role of the Transnational Corporations (TNCs), even if they would not have reached different conclusions, was a weakness in analysis.-

Huslid differed from the report's recommendations on the status of the Third World countries, and said the provisions for special, differential and preferential treatment to the Third World countries and for the Generalised System of Preferences, was an integral part of the system. The approach of the report for ending this special status was not a wise one.-

Norway, Huslid added, was not also happy with the wisemen's failure to recognise the assymetries in the international trade relations.-

India’s Shrirang P. Shukla underlined that the report was one commissioned by the GATT Director-General on his responsibility, and not a GATT report, and his authorities were considering it and reserved India’s position.-

Taking the same position, Brazil's Amb. Paulo Nogueira Batista, objected to the fact that the report had first been given to the media before its availability to the GATT CPs, and an impression created through the media that the report had general support of GATT CPs.-

Batista also complained that it had first been discussed elsewhere (in the IMF/IBRD development committee in Washington), before it was brought up before a GATT body. This was a matter that created concern, when the report's aim was supposedly the restoration of credibility of GATT.-

Egypt’s Mohmoud Abdel-Bari Hamza also took a similar procedural stand, while reserving his country's position on the substance the report and its recommendations.-

Earlier, Colombia’s Felipe Jaramillo, viewed some of the recommendations "positively", and commended its analysis that the Third World countries had been subject to discriminatory import restrictions, as a result of which they had lost markets. But he regretted the failure of the report in dealing with the issues of commodity trade adequately.-

Uruguay’s Amb. Lacarte Muro also viewed the report positively, but regretted some issues had been ignored, particularly in relation to the problems of the Third World countries. Some aspects of the report were "simplistic and did not take a global view" of the problems of the trading system.-

Hong Kong, Chile and South Korea were among the Third World countries that viewed the report positively, and as setting a for future work in GATT.-

Hong Kong in particular underlined the report's call for an end to the MFA. South Korea felt some of the recommendations to be not against the interests of the Third World, but supported the analysis of the report on the erosion of the most-favoured-nation treatment as primarily responsible for the erosion of the GATT system.-

Yugoslavia's Kazimir Vidas and Argentina's Lopez Noguerol reserved their country's position.-

Jamaica’s Anthony Hill had a mixture of praise and condemnation for the report. In his view there was no use of strengthening the dispute settlement procedures, when there was no consensus on the rules and principles of GATT.-