STANDSTILL AND ROLLBACK, A MUST FOR LAUNCHING NEW ROUND.

Apr 18, 1986

STANDSTILL AND ROLLBACK, A MUST FOR LAUNCHING NEW ROUND.

GENEVE, APRIL 16 (IFDA/CHAKRAVARTHI RAGHAVAN) - Agreement on a standstill and rollback commitment, couched in concrete terms, has emerged as a sine qua non for progress towards a new trade round in the GATT Preparatory Committee, according to participants.

The Committee, chaired by GATT Director-General Arthur Dunkel, ended three-days of meetings this week, after devoting its attention to the issues of standstill and rollback of protectionism, the question of safeguard, and differential and more favourable treatment to the third world countries in any new round.

The Committee is due to meet again from May 5-7, but informal consultations on the standstill and rollback question are expected to continue in the interim.

Participants in this week meeting said that the major trading nations, and especially the U.S., now appear to have realised that the issue of standstill and rollback of protectionism, involving concrete and credible commitments satisfactory to third world participants, would have to be solved to assure progress.

The Preparatory Committee has been asked to complete its work, and prepare, by mid-July, recommendations for a programme of negotiations.

While Ministers, when they meet on September 15, could be faced with "alternative formulations" on other issues, if there is no agreement on standstill and rollback by mid-July, it would completely derail efforts to launch a new round, some third world delegates suggest.

A GATT spokesman said later "at least on standstill we have to reach a conclusion here (in the Preparatory Committee)".

A rollback, he added, could be more complex, since the inconsistency of some of the trade measures with GATT provisions might involve areas where the GATT rules themselves might be in question, and thus might have to be dealt with in the trade round.

One third world delegate said that while no one within the committee had opposed standstill and rollback commitments before the launching of a new round, the difficulty lay in some of them, like the EEC, fighting shy of concrete commitments that would lend credibility to third world countries.

Past commitments, including those in the 1982 GATT Ministerial Declaration or at UNCTAD-VI in 1983, have been breached with such abandon by the major industrial countries, especially in measures directed against their weaker trading partners from the third world, that more concrete and monitorable commitments and actions are now needed, the third world delegate said.

Brazil, on behalf of a group of third world countries, has tabled a joint paper before the Preparatory Committee, formulating concrete proposals for a global commitment on standstill, rollback and safeguards.

The Nordic countries, Austria and Switzerland, have also tabled their own proposals on a standstill commitment.

Without making specific proposals, the U.S. has reportedly come out in support of standstill and rollback commitments, and underlining the clear linkage between standstill and rollback.

Earlier, the U.S. had taken the position that rollback of existing protectionism inconsistent with GATT would itself have to be negotiated in the new round.

However, repeated interventions by the European Community apparently brought out that the EEC is not willing to go beyond the provisions of the 1982 GATT Ministerial Declaration.

In Part 7 (I) of their 1982 Ministerial Declaration, the GATT Contracting Parties undertook, individually and jointly, "to make determined efforts ... to refrain from taking or maintaining make any measures inconsistent with GATT and to make determined efforts to avoid measures which would limit or distort international trade".

At that time, while the industrial countries and the GATT Secretariat had hailed this as a major action against protection, third world delegates and observers had complained that the declaration in fact had reduced the contractual obligations in GATT, and put it on a mere "best endeavour" clause basis of international law.

A GATT Secretariat note to the Preparatory Committee has pointed out that acceptance of GATT itself "entails an obligation on all Contracting Parties not to introduce trade restrictive measures not in conformity with the general agreement", and the 1982 declaration also contained provisions on this.

Nevertheless, the Secretariat’s note said, at the time of the launching of the new round, all participants should reaffirm at Ministerial level their existing obligations not to introduce any restrictive measures not in conformity with GATT, and undertake not to improve their negotiating position during the negotiations by increasing the levels of protection or trade distorting measures.

Third world delegates say that this would not be sufficient.

In 1982, the EEC had entered reservations even to the Ministerial Declaration on standstill and rollback, and has now offered to lift its reservations as a gesture to help launching the new round.

However, third world delegations have made clear that they would no longer accept such loose and vague commitments.

Brazil, India and several other third world countries had at one stage insisted on concrete commitments on standstill and rollback as a pre-condition for the setting up of a Preparatory Committee, but in a compromise gesture, at the annual meeting of the GATT CPS in November 1985, they had agreed to take up the issue in the Preparatory Committee.

The chairman of the GATT CPS had said in November, after the decision to set up the Preparatory Committee had been taken that the questions of standstill and rollback, treatment of third world countries and safeguards "should constitute important issues for the work of the Preparatory Committee".

Some of the other third world countries like South Korea, closely allied politically to the U.S.A. and hence providing support to the U.S. efforts to launch a new round, in the discussions prior to the setting up of the Preparatory Committee, had taken some equivocal positions over the demand for concrete commitments on standstill and rollback.

However, at Tuesday’s meeting of the Preparatory Committee, South Korea is reported to have come out in support of the Brazilian paper, and said that unless there were firm commitments on standstill, rollback, and safeguard, "there is nothing in the new round" for the third world countries.

Several other third world delegates who intervened are reported to have supported the ideas in the third world join paper, and said the standstill and rollback should apply to all sectors of trade, including trade in textiles and clothing, and in agriculture.

The EEC representative, while claiming that it supported standstill, and was not necessarily "ill-disposed" to rollback, apparently insisted that there could be "no automaticity" on standstill and rollback.

In the EEC view, governments on these issues could only act on an autonomous basis, and to the extent possible.

India is reported to have pointed out that the EEC’s position was no different from what was contained in the 1982 Ministerial Declaration, and this would not be sufficient for the launching of a new round.

Australia and Chile had earlier underscored the applicability of standstill to all sectors, including agriculture, insisting that it should cover the EEC’s system of variable levies.

Under this, the EEC levies such tariffs on imported farm products as are necessary to raise import prices to level of its domestic support prices under the common agricultural policy.

The EEC however argued that such a standstill on its agricultural tariffs, even before the new round would begin, amounted to asking the EEC to abandon its common agricultural policy, and this was unacceptable.

The EEC would also appear to have questioned the applicability of standstill to the textiles and clothing trade, which was covered by a separate arrangement.

But other third world countries argued that restrictions on textiles and clothing, even under an MFA, would be incompatible with trade liberalisation through a new round of standstill commitments prior to the launching of such a round.

Both India and Brazil would appear to have said they were willing to engage in informal consultations over the issues, but for this to be possible, the EEC would have to formally put down on paper its own draft, but going beyond "generalities".