6:37 AM Mar 3, 1994
SUTHERLAND WARNS AGAINST MANAGED TRADE APPROACHESGeneva 3 Mar (TWN) -- GATT Director-General Peter Sutherland warned Thursday that the achievements of the Uruguay Round were being threatened, even before they become operational, by "misguided and dangerous" approaches of managed trade and by old-fashioned protectionism in the new guise of concerns about social, labour or environmental conditions of the developing countries. Sutherland was speaking in New York at the Swedish-American Chamber of Commerce. A copy of his speech was made available here by the GATT press office. Though the negotiations had concluded on 15 December, trade had not ceased to be a political priority. While the work of ratifying and implementing the Round's results still remained, a list of new issues were being proposed, to join existing problems still awaiting solutions, while a new outbreak of bilateral trade tensions was putting the achievements to test even before they were fully operational. Bilateral arrangements were inherently discriminatory, favouring the other partner against everybody else, and also lacked long-term certainty just like preferential arrangements applied to developing countries. Both on the import and export sides there were now pressures for bilateral or unilateral actions. On the import side, some old familiar concerns such as low-cost imports, and new ones about social, labour and environmental conditions in the developing world -- concerns that were little more than old-fashioned protectionism in a new guise -- were being used to advocate restrictions or penalties. On the export side there was the resurgence of concept of 'managed trade' which was a "misguided and dangerous approach from all points of view". In a reference to the US policies towards Japan, Sutherland said that managed trade was damaging to the multilateral trading system in several ways, including the potential for escalating trade conflicts by agreements outside the system. The agreements themselves could only be enforced by threat of trade sanctions which were very often incompatible with obligations of parties under the system. Also, it would be difficult to operate quantitative numerical targets for market share of foreign producers in a domestic market in a manner that would give all countries equal opportunity required by the MFN principle. While the GATT system had been far from perfect, it had been a milestone in international relations in that it had fashioned a stable system built on consensus, not conquest, and on principles of equity and legality. The greatest achievement of the Uruguay Round was that it would put right most of the defects and enable application of the system across practically the whole of world trade and the WTO of 1995 would be a multilateral system for the new century. The 15 December decision concluding the negotiations with the agreements in the Final Act was a choice by 116 countries to strengthen the commitment to multilateral framework for trade. Nothing showed the worldwide surge in favour of a multilateral approach than the recent surge in GATT membership and queue of new members seeking accession -- 24 new contracting parties since the Uruguay Round was launched and a further 19 seeking accession. It all added up to an overwhelming vote in favour of a strong multilateral system and a strong commitment to multilateralism. Also, it was only through effective international cooperation based on a strong multilateral system that any lasting solutions could be found to urgent problems crowding the world economic agenda and one of the most urgent of these was development. Referring to the situation in Russia and former Soviet Republics, as well as in other east European countries and developing countries, Sutherland suggested that the victory of liberal principles in trade, economics or politics should not be regarded as irreversible. And much of Africa was unable to participate effectively because of a vicious circle of poverty and dependence. While unilateral and individual efforts were doing much to relief immediate crises in such regions, this was no foundation for long-term development, while trade was. One of the most effective things that the industrialized countries could do would be to help and encourage rapid integration of these countries into the world trading system and give legal security to their reforms and their place in the world economy. Referring to the trade-environment questions, Sutherland said multilateral agreements were the only way of interpreting the relationship between trade and environment. "Unilateral imposition of one country's norms on others, or the erection of new trade barriers under the banner of environmental protection, is likely to be bad environment policy as well as trade policy." If the Uruguay Round had failed, and with it the credibility of the GATT system, it would have been understandable that countries might have sought to define these issues on their own without sufficient consideration to the interests of others. "But the Round has not failed and the multilateral system would be immeasurably more effective. There is simply no need to go outside it, whether to settle trade disputes or explore new policy areas." The new dispute settlement mechanism with automatic implementation of findings removed one of the main criticisms against the GATT in the past. The establishment of the WTO also meant making the multilateral negotiating process a continuous one, providing a permanent forum for addressing new issues or negotiating consensus to old problems.