Oct 26, 1985

NORTH WANTS TO LEGITIMISE ITS ILLEGALITIES.

GENEVA, OCTOBER 24 (IFDA/CHAKRAVARTHI RAGHAVAN)— If the major Industrial countries have their way, the proposed new round of MTNs in GATT would result in re-writing of GATT rules to enable continuance of their present illegal trade practices and restrictions against Third World countries.-

This was the impression left on several Third World participants at the end of the second session of the "senior officials' group" in GATT which concluded Wednesday evening.-

The group which is looking at possible issues in a new round of Multilateral Trade Negotiations (MTNs), will meet again from October 30 to November 1.-

At the meeting this week, the group went through the various items on the GATT work programme and priorities for 1980's, set in the 1982 Ministerial declaration, and heard the viewpoints of various countries on the individual items.-

Several participants said there was no "dialogue", but merely a series of presentations, with some of the major industrial countries like U.S.A., EEC, Canada and Japan, merely going through the motions of discussing the issues.-

Among the items discussed were trade in agriculture, safeguards, dispute settlement, tropical products, Quantitative Restrictions (QRs) and other non-tariff measures (NTMs), tariffs, and operation of past MTN agreements and arrangements.-

A large number of Third World countries are reported to have made the pint at the meeting that before any new MTNs could start, there should be "precise indications" of the extent of "reciprocity" that industrial countries expect of the Third World countries in the new round.-

Part IV of GATT, providing for special and differential treatment, and non-reciprocity benefits for Third World countries, should be clearly operative in a new round, these delegations stressed.-

Several Industrial countries however argued for "graduation", saying that while they did not question the concept of part IV, it should not be a permanent benefit available to all Third World countries.-

Many countries saw agriculture as a priority issue for negotiations in a new round, with the principal aim of enlarging the market access for agricultural exports and bringing various types of agricultural subsidies under more effective GATT discipline.-

Several Third World countries complained that agriculture was central to GATT but remained an unresolved trade issue, while GATT attention and interest was being diverted to new areas and new themes.-

Australia and New Zealand made clear that without negotiation of issues in trade in agriculture, there could be no new round.-

The U.S. reportedly agreed with this view, but indicated there were some "contrary streams" at work within the U.S. on agriculture issues, and the administration would have to resolve them before embarking on negotiations.-

Third World delegations complained of the effect of the subsidy practices of the Industrial countries which were crowding out Third World exporters from third country markets.-

Sugar was cited as the glaring example, where the European Community's protectionist policies and subsidised exports had resulted in crashing of sugar prices on world markets, seriously affecting the sugar exporting Third World countries.-

Apart from sugar, the cases of wheat and meat were also cited, where Third World exporting countries have been shut out of their traditional markets due to the subsidised export policies of the European Community and the U.S.--

The European Community was reported to have made clear that it would not negotiate on its Common Agricultural Policy (CAP), but would contribute in a new round to restore stability and order on international markets.-

The Community would look at negotiations on agriculture in the context of a package emerging from the new round providing balanced results.-

A number of other Industrial countries (all of whom protect their domestic agriculture heavily) spoke of the legitimacy of their policies for ensuring security of supplies or the specific nature of agriculture.-

Several of the participants also spoke of the need to include in the negotiations the various waivers and protocols that provide "special treatment" in agriculture for several countries.-

The U.S. and Switzerland are some of the countries, which have obtained a waiver from GATT obligations in respect of their agriculture sector.-

The issue of safeguards or emergency protective action that could be undertaken by GATT Contracting Parties under article XIX was seen by all delegations as the most important issue to be faced in a new round.-

Without an effective safeguards arrangement, any trade liberalisation effects of the new round would be nullified in practice, they agreed.-

A large number of Third World countries saw this as a priority item and even a pre-condition for a new round, given its past history, and the unfulfilled promises of the Tokyo Round in this regard.

The issue of safeguards code was identified as a priority item for the Tokyo Round, which concluded in 1979 without any agreement on this issue.-

The 1982 Ministerial declaration called for a "comprehensive understanding" on safeguards based on the principles of the general agreement to be reached not later than 1983.-

The fundamental principle of GATT is that in article one for most-favoured-nation (MFN), treatment to all GATT Contracting Parties.-

Under article XIX, an importing country could take emergency restrictive actions to protect a domestic industry from serious injury, but by virtue of article one is obliged to take such action against imports from all sources of the product.-

As in the Tokyo Round, the European Community has been insisting on its right to take safeguard actions selectively, namely restricting imports from some sources and not all.-

Third World countries have refused to accept this, since such "selective" actions would be used in a discriminatory way only against the Third World countries.-

Negotiations have thus been stalemated.-

Several other Industrial countries, while professing sympathy for the Third World positions, nevertheless have been trying to promote an "understanding" on safeguards to meet the Community's point of view and that would avoid the issue of "non-discrimination" and in effect enable discriminatory actions to continue.-

In the discussions this week, Third World countries, and some of the Industrial countries (Australia, Czechoslovakia and Hungary) insisted that any safeguards code or understanding must be based -favoured-nation principle of GATT and on the fundamental most

should be non-discriminatory.-

On the question of liberalisation of trade in tropical products, an issue pending in GATT since the mid-60's when the Industrial countries promised to take action but failed to do so, Third World participants said this issue should not only be a major focus in the new round, but should be negotiated within a shorter timespan.-

In the Tokyo Round itself, third world participants had put forward "requests" to their industrial partners on this, but had no response.-

Since then, and particularly after the 1982 GATT Ministerial declaration, there have been various attempts to get negotiations under way.-

Third World countries have put forward request lists for changes in tariff and non-tariff measures affecting their exports of tropical products.-

However, there have been little or no-responses.-

In discussions in the senior officials' group this week, the U.S. would appear to have said the U.S. would respond to such requests provided it was able to get "good and adequate response" to issues of concern to the U.S. in a new round.-

This was seen as a reference to the services issue, and the U.S. demand that Third World countries should open up their economies to foreign investments in service sectors like banking, insurance, informatics, etc., and apply "free trade" principles, so that the foreign investors will not face any restrictions on their activities.-

On QRs and NTMs, a special working group in GATT has been looking at these questions, but without any progress so far.-

In the discussions this week on the subject, many countries insisted that the removal of illegal measures was not negotiable. Such measures should be removed by countries imposing them, and other contracting parties should not be expected to pay a price for such removal.-

The European Community however would appear to have argued that if the GATT rules were not being followed, it was due to some reasons, and "rules must be adapted in tune with realities", the EEC argued.-

India and other Third World countries refused to subscribe to this idea that GATT rules and principles should be adapted because some countries found it difficult to remove their restrictions or justify them in GATT.-

Trade liberalisation, these countries insisted, should start with removal of illegal QRs and NTMs, and there could be no bargaining or reciprocity between removal of illegal QRs and NTMs by those maintaining them in return for Third World countries removing or reducing their trade restrictions justified in GATT.-

On the issue of tariffs, Third World participants pointed out that despite the reductions in tariffs in successive trade rounds and specially the Tokyo Round, there were outstanding issues to be tackled in this area still.-

For instance there was the problem of tariff escalation on basic commodities, where the raw commodities faced no import duties or low duties, but faced very high duties when they were processed.-

Industrial countries, Third World sources said, did not respond to this, but complained of "uncertainty" in third world tariff rates, since most of them were "unbound" - the duty levels were not subject of a GATT agreement, and could thus be varied by the government of the country concerned.-

The U.S. wanted the new round to cover the problem of counterfeit goods in international trade.-

While the U.S. view was supported by a number of industrial countries, Brazil pointed out that the World Intellectual Property Organisation (WIPO) which administers the Paris Convention on patents, trade marks and other intellectual property rights, has set up a Committee to look into the Paris Treaty in the context of trade in counterfeit goods and how it could be checked.-