SUNS  4330 Tuesday 24 November 1998



US-EC PRODUCT LIST FOR ITA-2 FAILS TO GARNER CONSENSUS

Geneva, 21 Nov (Chakravarthi Raghavan) -- Consensus for an ITA-2 accord, to include more products on which tariffs will be eliminated appears to be eluding members of the Information Technology Agreement (ITA), and a new deadline of 11 December has been set for a meeting of
the ITA committee, trade officials said.

An accord among US, EC, Canada and Norway to confine the number of products to be covered to some 200 items -- excluding from the list all those items to which the US and EC have objected -- was circulated before the Committee Friday, but met with strong objections from India and Malaysia.

The Committee is chaired by Mr. Martin Harvey of New Zealand who had at earlier meetings presented lists of some 400 items, but which had met with objections from one side or the other.

The new list of about 200 items is reported to have been evolved after meetings and consultations involving the United States, the European Community, Canada and Norway, and was placed before the meeting without an indication of its sponsors, leaving the impression of a chairman's text.

Mr Harvey presented the text to the participants, without any indication of its source and thus leaving the impression it was a chairman's text. He suggested that participants should forward it to
their respective governments for their consideration, as well as for consultations with local industry, and that the committee should meet on 11 December for a final decision.

India's ambassador, Mr. S. Narayanan is however reported to have questioned the status of the document and asked pointedly whether it was a chairman's text. And if it was not a chairman's text, Narayanan wanted the countries sponsoring the text to be identified.

Thereupon Harvey reportedly said that the texts he had presented at earlier meetings had failed to get a consensus, and affirmed that the new text was not his text, but one put forward by a group of countries. Harvey in effect invited the sponsors to own the authorship.

However, participants said, the US and EC did not own the text.

India expressed its serious concern that the text presented included three categories of products to which it had objected at earlier meetings: radar equipment, navigation equipment and some satellite
parts. Nevertheless these had been included, while items which had been objected to by others at earlier meetings had been deleted.

Narayanan also expressed concern that India had not reaped full benefits from ITA-I because of problems that existed over technology transfers and export restrictions maintained by some countries on technology exports.

In effect, India thus indicated that it would not be able to accept the present list as it stands.

Malaysia also expressed its serious concern that the products which it had sought to include had not been included in the list. Malaysia could not accept the list of items proposed for ITA-2 unless products of interest to it were also included.

In the earlier informal meetings, Thailand is also reported to have strongly objected to ITA-2, arguing that the economic crisis that it faced made it impossible for the country to participate. However, Thailand did not appear to have repeated its objections at the formal meeting - and its objections at the informal meeting would not hence be recorded, trade officials indicated.

Among other speakers, the Philippines told the formal meeting that the government would need to conduct a public hearing soliciting views on the products included in the list, and it would not be able to complete this work within the 11 December deadline.

The ITA Committee chairman had also presented at the meeting another text which provided that for ITA-2, members would have a four-year schedule -- starting 1 July 1999 and ending 1 January 2002 -- for the elimination of all tariffs on products included. But there will be flexibility in the time frame for countries which requested it till 2007.


Latin America: Bankers want vaccine against Intern'l crises!

Panama City, Nov 20 (IPS/Silvio Hernandez) -- One thousand Latin American bankers and IMF Managing Director Michel Camdessus called here for greater controls on the world financial system in order to avoid a repetition of the current crisis.

Supervision, discipline, control, transparency, information and non intervention of governments in the banking and financial system were the suggestions proposed by Camdessus and banking representatives to overcome the international financial crisis.

Some 1,000 bankers from the Latin American Banking Association (Felaban) meeting this week in Panama's capital to discuss measures with which to overcome the crisis, do business and deal with the institutional affairs of this organisation.

Camdessus, speaking at the inauguration of the meeting, said that the current financial, Camdessus repeated, was based "on the incestuous relationship" between the governments and banks in various Asian countries, including Japan and Russia.

[While the IMF's chief thus repeated the earlier 'crony capitalism' view of the Asian financial crisis -- that view has been rejected by most mainstream economists, while some critics have pointed to the
'incestuous' relationships between the US Treasury, Wall Street and the IMF. And after the New York Federal Reserve orchestrated rescue of the Long Term Capital Management (LTCM) fund, the crony capitalism charge linking several of the fund's management and executives with those in
authority have been publicly documented.]

The situation created by the crisis, above all in the so-called emerging markets, raised the issue of capital movements and the fragility of the banking and financial institutions lacking adequate
supervision, added Camdessus. But in the economic ambit "this is still more serious, because very few countries have benefitted from globalisation."

Both of these issues have created a problem of economic unsustainability, whereby "it is always the poorest who suffer the consequences," said the IMF head.

In the case of Latin America, Camdessus stated the "correct measures" to control the fiscal deficit taken this month by Brazil's President Fernando Enrique Cardozo, "auger well" for the beginning of a recovery.

After stating that the IMF had provided Brazil with 41 billion dollars to resolve its financial crisis, Camdessus said this makes "regional outlooks more hopeful."

However, he insisted on the need to separate public policies from those of the banking and financial system.

After recommending the governments avoid bailing out troubled banks in future, Camdessus pointed out that the banking system must resolve its problems in the market and that shareholders must assume responsibility for the losses.

Camdessus warned the bankers and governments that the future will bring "an IMF more curious and inquisitive with controls, supervision and discipline" when its officials visit Latin America to revise the policies they foster.

Meanwhile, Brazil's Sebastiao Cunha, president of Felaban, called on the IMF, the bankers and governments of the region to "build on the experience of the present crisis."

Although he praised the measures taken by Brazil and the IMF bail-out programme, Cunha said this country should further reduce its fiscal deficit, keep tighter control over the exchange rate and "stop
depending so much on foreign capital for its development."

He also recommended Brazil and the other countries of the region constitute "citizen committees" so that adjustments can be carried out with greater efficiency than at present on the basis of discussion and exchange of opinions.

Similarly, he called for shared responsibility between the rich and poor countries to avoid the shocks produced by the current adjustments and crises."

Cunha's statement was backed by Chairman of the Panamanian Banking Association, Juan Antonio Nino, who said that, despite the seriousness of the current crisis, "the industrialised countries are still undecided over the adoption of concrete commitments in their domestic systems."

Alluding to the supervision and control mechanisms suggested by Camdessus, Nino stated the bankers do not deny "ever greater supervision of the financial institutions is required each day."

"But I ask myself whether in reality participants of the financial markets are under any control," he added.

"Hence we find the proposal of French President Jacques Chirac so interesting and worthy of consideration, as it establishes a mechanism discouraging speculation with certain short term capitals, encouraging the long term flow instead," he stated.

The latter, said Nino, "really will contribute to promoting development in the developing countries."

Meanwhile, Panama's Planning and Economic Policy minister, Guillermo Chapman, said the current financial crisis "does not appear to have any quick and easy solution."

As well as agreeing with Camdessus, Cunha and Nino said that regulations be adopted "on the health of the financial systems," Chapman called for "a rapid help line, as was offered in the case of
Brazil, to avoid the crisis affecting the other countries" of Latin America.