Nov 8, 1985

CHANGE IN THINKING OVER RBPS IN INDUSTRIAL WORLD?

GENEVA, NOVEMBER 6 (IFDA/CHAKRAVARTHI RAGHAVAN)— The group of seventy-seven Wednesday expressed its concern over the worsening situation about use of Restrictive Business Practices (RBPs) in international trade, and called for actions to reverse this "negative and extremely dangerous trend".-

The spokesman of the group, Mahmoud Assran of Egypt, was speaking at the UN Conference to review the set of multilateral principles and rules for the control of RBPs (the set).-

Given the increasing resort to use of RBPs as a protectionist measure in international trade, it was important to clarify government attitudes to the issue, he said.-

"The Conference should adopt a declaration, asking states to avoid using RBPs as a means of circumvening their trade liberalisation commitments under the GATT", Assran added.-

Industrial countries, he said, should also commit themselves to repeal and refrain from adopting any legal, judicial or administrative measures that allowed or encouraged resort to RBPs by enterprises, particularly TNCs, and instead enact measures to combat such practices.-

The G-77 spokesman complained that since the adoption of the set in l980, when everyone had seen the need for control of RBPs, there was now apparently a change in thinking and approach to such controls in major industrial countries, and cited in this connection developments in the U.S.-

The U.S. delegate, Craig W. Conrath, of the U.S. Justice Department's Anti-Trust Division, however replied that there had been no letup in U.S. enforcement measures, and more people had been sent to jail under the Reagan Administration than before or in any other country.-

Cornath however conceded that U.S. thinking on vertical integration had changed, and some of these had been allowed on an examination of each individual case and this was because it had been found that through such vertical integration a better competition among equals had been brought about.-

Soviet delegate, Gennadi Kuzmin however challenged the U.S. response, and said that while more people might have been sent to jail in the U.S., it was for practices affecting the U.S. domestic market and not for those in international trade.-

Kuzmin supported the G-77 contention that since the adoption of the set five years ago, there had been a change in thinking in the U.S. in the basic philosophy towards RBPs.-

Such a change, he noted, had come about when the so-called "young Turks" among U.S. economists were justifying protectionism as a philosophy.-

There was also a double standard involved, Kuzmin said, in curbing RBPs affecting domestic markets and encouraging or permitting them in relation to foreign markets.-

Earlier, Assran said that since the adoption of the set five years ago, there was an apparent lack of political will to tackle the hard issues and reach specific and concrete results, as evidenced at the Preparatory Committee to the review Conference.-

The Conference, he said, must condemn "in no uncertain terms" the increasing protectionist practices and arrangements that continued to erode even the few benefits that had accrued to the Third World countries as a result of liberalisation of traditional trade barriers.-

Since the adoption of the set in 1980, instead of improvements from its implementation, there was a change for the worse in the resort to RBPs in international trade.-

This would mean that the set was being applied but was ineffective or inadequate, or the set was not being implemented.-

The G-77 was willing to go along with the second explanation, and on that basis would work to improve the application and implementation.-

But for this it was necessary to recognise the "important changes" taking place in some of the larger industrial countries -about the necessity for control of RBPs.-

For instance there appeared to be some "rethinking" in the U.S. on the rationale behind RBP control.-

When the set was negotiated, both the industrial and Third World countries, had a consensus on the need to combat RBPs in international practice.-

But to the "dismay" of the G-77, even some of the strongest protagonists of RBPs apparently no longer considered RBPs to be hampering growth and development.-

In the U.S. vertical restraints in trade of all kinds were now considered acceptable, while many other industrial countries had "trimmed" their RBP control offices.-

While governments were entitled to do what they liked within their countries, it was an indication of a "dangerous" change in the basic philosophy that had made the set possible in 1980.-

Unlike five years ago, there was now "an increasingly lenient approach" even for RBPs occurring within these countries, and "a tremendous increase" in use of these practices in international trade transactions.-

Many countries were authorising export cartels under various conditions or notification procedures when they affected domestic markets.-

Questioning this approach, Assran asked: "how is it possible for enterprises to engage in collusion with respect to export cartels without at the same time exchanging information leading to collusion on the internal market as well".-

Other industrial countries did not even require notifications, and even when registration of export cartels were maintained, it was done "in secrecy".-

Over the last five years, some countries had encouraged the formation of export cartel arrangements in many sectors, including construction and engineering services offered to the third world countries, and law, had been adopted giving immunity to enterprises engaged in RBPs abroad.-

There was also the tendency of governments "to give respectability" to RBPs through the so-called voluntary export restraints, usually imposed on the weaker trading partners.-

Industrial countries reluctant to take overt protectionist measures in tariff and non-tariff areas, were now frequently resorting to negotiating solutions based on RBPs.-

While sometimes these were through bilateral government accords (and thus beyond the purview of the set), often they were at enterprise levels, and maintained in secret.-

Referring to the provision of multilateral technical assistance programmes, envisaged under the set but for which no funding had been made, Assran said it was regrettable that excepting for Sweden and Norway, none of the industrial countries had come forward with offers of funds.-

On the issue of consultations, the G-77 spokesman welcomed the recognition by the OECD countries of the need for detailed exchange of views at intergovernmental level on the application and implementation of the set.-

But such consultations should be based on a better knowledge and understanding of RBPs affecting the international trade.-

This knowledge was possible only if states systematically collected information by requesting notification by their enterprises on the RBPs affecting international trade.-

Such notifications should be made public "to increase transparency", and an appropriate mechanism established at international level to maintain and update an international registry of RBPs affecting trade, and particularly the trade and development of the Third World.-