U.S. MOVES FOR HIGH LEVEL GATT MEETING ON NEW ROUND BLOCKED.

Jun 7, 1985

U.S. MOVES FOR HIGH LEVEL GATT MEETING ON NEW ROUND BLOCKED.

GENEVA, JUNE 5 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The U.S. push for a new round of Multilateral Trade Negotiations (MTNs), including on trade in services, and for a high level GATT meeting to prepare for it, appears to have received a further setback Wednesday at the meeting of the Council of the general agreement.

India, on behalf of a group of some 22 Third World Contracting Parties (CPs), presented a joint position paper before the GATT Council.

The joint paper showed a further hardening of their positions against the U.S. moves for a new round, its efforts to promote "new themes alien to GATT", and at "event planning" - seen as a reference to the U.S. call, supported by the OECD and Bonn Summit, for a high level meeting of GATT Contracting Parties (CPs) "before summer" to prepare for the new GATT round.

The Indian statement and joint paper was on behalf of the major trading nations of the Third World, excepting for the countries of the ASEAN and South Korea, who have political and security links with the U.S.A. and find themselves increasingly difficult to openly oppose the U.S. moves.

A separate ASEAN statement, by Singapore, appeared neither to specifically support the U.S. moves for a new round, nor explicitly distance itself from the joint paper of the 22, and in some respects, like implementation of past commitments, even took the same stand as the twenty-two.

South Korea however would appear to have supported the U.S. demands for a new round.

The statement on behalf of the 22 Third World countries, reiterated the joint stands of the informal group of the Third World countries in May and November 1984.

While largely following the same lines, and again reiterating the willingness of these countries at a future point to propose specific multilateral trade negotiations in GATT, confined to "trade in goods only", the new statement laid down in more specific terms several pre-conditions, including implementation of specific past commitments undertaking by the industrial countries.

These covered the areas of standstill and rollback, the future of the Multifibre Arrangement (MFA), liberalisation of trade in tropical products, removal of quantitative restrictions (QRs), subsidies, safeguards, and reforms of the international monetary and financial systems.

The statement on behalf of the 22 was made by Indian Amb. Shrirang P. Shukla, and was the first when the Council began Wednesday afternoon a consideration for the issue of progress in implementation of the GATT work programme and the future of the multilateral system.

The U.S., in its intervention later, would appear to have conceded that while it had sought a decision at this meeting on the convening of the high level meeting of the CPs, its was clear that no such decision was now possible, since it lacked consensus.

The Council’s consideration of the issue continues on Thursday.

The joint statement of the 22 CPs, recalled their earlier stands that the restoration of the credibility of the GATT multilateral system was a pre-requisite to its strengthening, and that this credibility could be restored only by prior implementation of past commitments and of the 1982 GATT work programme.

While this "basic task" continued to be neglected, the joint statement complained, the attention of the major trading partners was being increasingly focussed "on planning events, which by themselves cannot lead to solutions".

Also new themes, "alien to jurisdictional competence of GATT" (a reference to the U.S. moves for trade in services, etc.), were being systematically promoted at the expense of the central area of responsibility of GATT.

As a result, the implementation of the 1982 GATT work programme, and particularly in areas of interest to the third world countries, had been brought "to a virtual halt".

And while the pace of work in programmes relating to new themes were sought to be accelerated, "even the modest progress" on long outstanding issues in areas of tropical products, textiles, QRs, agriculture and safeguards, was being denied "on the questionable ground that further progress in these areas was possible only in the context of wider trade negotiations".

The approach of the Third World countries in their May and November statements, was with the fundamental objective of "removing the asymmetry in trade relations between developed and developing countries which has resulted from non-observance of the general agreement".

This implied a proper sequence of actions to restore the credibility of the GATT multilateral trading system.

The industrial countries, the joint statement of Third World countries noted, had been recently calling in various fora for a new round of MTNs.

But the objectives and agenda for such a round seemed far from clear, and there was "little evidence" to show that such a new round would "reduce or eliminate the basic asymmetry in trade relations between industrial and Third World countries".

There were however indications that these negotiations would go far beyond the charter of GATT, and divert attention to new themes alien to jurisdictional competence of GATT.

The move was also characterised by "undue emphasis on event planning and is devoid of concrete and demonstrable actions towards fulfilment of the previous commitments, which alone can restore the credibility of the multilateral trading system".

Third World countries had a high stake in the system and could ill-afford to ignore the proper perspective for trade negotiations or overlook the crucial importance of "the sequence of actions to restore the credibility of the system".

They would be prepared to make a proposal for "specific multilateral trade negotiations, confined to trade in goods only, to be conducted under the terms of the relevant provisions of the general agreement".

Such a specific MTN should cover manufactures and semi-processed goods, natural resource products and agriculture, with particular emphasis on substantial liberalisation of the latter.

The negotiations should encompass totality of tariff and non-tariff barriers.

They must also secure significant enlargement of access for Third World exports to markets of industrial countries, and ensure effective protection and enforcement of the rights of Third World countries.

Techniques and modalities for such negotiations should be established, including the concrete quantification to the extent possible, of the GATT provisions for special and more favourable treatment to the Third World countries.

However, in order to ensure that these specific MTNs could be carried out in the correct perspective and follow a proper sequence of actions, there should be prior agreement for actions in a number of areas.

Firstly, the joint statement said, there should be "a firm and credible commitment, supported by appropriate legislative sanction where necessary" for a standstill on trade restrictive measures contrary to GATT, and for a rollback of such measures forthwith, or at least through a time-bound programme for phase-out.

Secondly, there must be prior commitments to actions in a number of areas where there had been intensification of restrictions against third world exports despite the commitments to the contrary in the 1982 GATT Ministerial declaration.

-- A categorical and unconditional commitment to the full application of GATT rules and principles to the textiles and clothing trade now covered by the MFA (and negotiations on whose future are due to begin in July), as a first step towards meaningful negotiations in this area.

The actions in this area should lead to "a significant and substantial liberalisation" and for a rollback of protectionist measures introduced since the 1982 Ministerial meeting.

-- Establishment of a short and special time-table for liberalisation in tropical products, QRs and other non-tariff measures affecting exports of the Third World in the markets of industrial countries, as well as for reduction of tariff escalation (on processed goods).

Action in these areas must be concluded prior to, and independently of the results of negotiations on other products.

-- Strict observance of GATT disciplines on subsidies, when used, subsidies should not adversely affect interests of the Third World. There should also be utmost restraint, under suitable GATT surveillance on use of export subsidies, which compete, with exports of Third World countries to third markets.

-- Utmost restraint under GATT surveillance, in recourse to anti-dumping and counter-vailing procedures against imports from the Third World, and no recourse to such measures against imports subject to QRs.

-- A comprehensive agreement on safeguards, based on the provisions of the GATT, and concluded within an agreed time-frame.

-- Improvement of the GATT dispute settlement and enforcement mechanism, in order to introduce greater equity and protect rights of the Third World CPs.

On the issue of GATT provisions for differential and more favourable treatment for Third World countries – which a recent report of "wise men", endorsed by the GATT Director-General, called for abolition – the third world statement said these principles were "an integral and inalienable part of the general agreement, and of the MTN codes, and as such must be strictly adhered to".

The joint statement also demanded prior commitments, before the launching of specific MTNs:

-- For the start of a "parallel process" to review and reform the international financial and monetary system, to be conducted in appropriate fora to be agreed upon by all interested countries, and

-- To examine in depth in GATT all effects of exchange rate fluctuations on international trade.

On these last issues of money and finance, the joint statement said that linkage between development, trade, money and finance was widely recognised.

The Third World countries were gravely concerned over the decline in flow of financial resources to them, the debt situation, the high level of interest rates, the misalignment and volatility of exchange rates and stringency in liquidity.

Due to these factors, the economic and financial situation of the Third World remained severely constrained.

They shared the view that solutions to imbalances whose origin lay in the monetary and financial areas could not be found in trade negotiations, and "determined and concerted action is therefore required in the monetary and financial fields".