Apr 25, 1985

RBPS A MAJOR INSTRUMENT OF NEW PROTECTIONISM.

GENEVA, APRIL 22 (IFDA/CHAKRAVARTHI RAGHAVAN)— Restrictive business practices (RBPs) have become one of the main instruments of the new wave of protectionism, affecting the trade and development of the Third World countries, a senior official of the UN Conference on Trade and Development said Monday.-

The Deputy Secretary-General of UNCTAD, Mr. Jan Pronk, was opening the fourth session of the Intergovernmental Group of Experts (IGE) on RBPs.-

The IGE elected Mahmoud Assran of Egypt as chairman.-

The IGE is the custodian of the set of multilaterally agreed equitable principles and rules for the control RBPs (the set), adopted by the UN general assembly in 1980.-

The implementation of the set, which was adopted as voluntary guidelines, is to be reviewed by a UN review Conference in November 1985.-

The present IGE meeting has the main task of preparing for the review Conference.-

Among the proposals before the IGE, and the review Conference, are those of the Group of 77 for making the set a legally binding international instrument, and for making the IGE a special Committee of UNCTAD charged with the task of monitoring the application and implementation of the set.-

The Group of 77 is also proposing the convening of another Conference in 1990.-

Addressing the session, Pronk said since the adoption of the set the world economy had experienced the most severe recession since the 1930's, bringing with it a new wave of protectionism, and this was still there.-

The main aim has been to secure the position of domestic enterprises against import competition, and to strengthen the export position of domestic enterprises in world trade.-

RBPs have been the main instrument of this new protectionism.-

The Voluntary Export Restraint (VERs) and Orderly Marketing Arrangements (OMAs), involving agreements between enterprises in importing and exporting countries, have been used to limit import volumes or raise the prices of exported goods, and on production and price levels of goods.-

All these practices could have significant negative effects on the Third World countries - as in the case of textiles and clothing steel and ship-building.-

Another example of RBPs has been the use of anti-dumping and countervailing duty proceedings that were being instituted by firms in importing countries, and which were being terminated when the exporters from the Third World agreed to raise prices of their exports or to limit the volume of exports, thus affecting the trade, export revenues, production and employment in the exporting countries.-

In all such arrangements, Pronk underlined, there was a common element, namely establishment independently or in conjunction with governments of so-called acceptable levels for import.-

These inevitably involved freezing or reduction in market shares for the countries affected. The restraints also created difficulties for new comers to international markets.-

This new wave of protectionism was also threatening the functioning of the international trading system.-

For some Third World countries, Pronk underlined, such restraints affected more than one-half of the value of their exports, and have become a more important barrier to trade than the more traditional forms of government barriers like tariffs and non-tariff barriers.-

Moreover, such restraints were also used on a specifically discriminatory basis and contrary to the basic rules of the international trading system, namely for unconditional

most-favoured-nation treatment and on a non-discriminatory basis.-

"RBPs have thus significantly eroded the hard-won benefits achieved in past trade liberalisation activities", Pronk added.-

In the light of this situation, a fundamental issue was how the International Community could ensure that there was no resort to RBPs by enterprises.-

At its three previous sessions, the IGE had expressed concern at the persistent resort to the use of RBPs in international transactions and less than full implementation of the basic principles embodied in the set, and that their implementation had not been effective.-

This was true in policy formulations and in legislations in particular countries to implement the set.-

The provision in the set for multilateral technical assistance for helping countries to formulate rules and laws to implement the set was also an important subject that had not been implemented so far.-

All these raised two fundamental questions for the IGE:

Was the less than full implementation of the set due to the nature of the set, namely its non-binding character?

Secondly, what could be done to strengthen the implementation and effectiveness of the set.-

The IGE should squarely address these questions.-

The effective control of RBPs required all countries acting in concert within a multilateral framework, whether the set was t o be a legally binding instrument or a voluntary instrument to begin with.-

Speaking for the OECD Group of countries, Australia said that any proposals for improving the set should be directed towards its effective implementation rather than towards changing the wording of the existing set of principles and rules.-

Several years of "delicate negotiations" had to led to the acceptance by all states of the set, and the "delicate balance" struck in the final document should be appreciated.-

Proposals before the review Conference should not undo the results of these several years of negotiations "by upsetting that very delicate balance".-

Speaking for the Group of 77 on Tuesday, Abdulkarim Mohammed Najib of Somalia said the proposals of the Group for the review Conference "have the objective of ensuring an effective implementation and application of the set".-

"We do not wish, to reopen what has already been agreed in the set - rather we wish to see it fully implemented".-

This reasoning, he said, lay behind the group' s proposal to make the set legally binding and to create a new intergovernmental machinery to oversee and monitor the effective implementation of the set. -

On the question of technical assistance (where the OECD countries have so far been favouring bilateral assistance), Najib said that bilateral assistance could complement, but not substitute multilateral assistance.-

This was a priority area for action by the Conference.-

The agenda of the conference should be so framed as to enable it to consider proposals "for improvement and further development of the set", whether the IGE as a whole was now able to agree on such proposals or not.-