NORTH BLAMED FOR GROWING DISILLUSION OVER GATT SYSTEM

5:18 AM Jun 29, 1993

NORTH BLAMED FOR GROWING DISILLUSION OVER GATT SYSTEM
Geneva 29 June (Chakravarthi Raghavan) -- In a swan-song, GATT Director-General Arthur Dunkel, who lays down office Wednesday, has blamed the industrialized countries for the growing disenchantment and disillusion among the generality of the GATT members and the newly reforming countries now flocking to the GATT.

In an introduction to GATT Activities 1992, Dunkel has criticised voices being raised favouring 'management of trade', and the efforts of the industrialized countries in calling for bilateral reciprocity or create "level playing" fields on labour and environment standards or ensure survival of their industries through anti-competitive commercial practices.

Given the philosophy advocated over the six-years of the Uruguay Round negotiations pushed by the GATT and Dunkel, namely, need for creating 'level playing fields' for the transnational corporations and their ability to compete on the global market, the introduction would be seen as a remarkable change, if it is really to be addressed across-the-board.

In a response to the view that the GATT as now was ineffective in trade relations and criticising the growing voices in industrialized countries blaming the GATT for the trade and economic problems, Dunkel said: "Periodically governments -- especially in the advanced industrialized countries, and even more so in times of recession -- seem to forget what trade really is, and what makes it happen. Put differently, there seems to be a difficulty in comprehending what the word 'competition' actually means."

"They seem to forget," the GATT official said, "that competition is epitomized by difference - differences in access to raw materials, in wage rates, in labour conditions, in education, in publicly-or-privately funded research and development, in exchange rates, in labour productivity, in investment, in standards of health care, in industrial and commercial structures and so on.

"Real competition is too often seen -- for largely protectionist reasons -- as an eternal balancing act. Put everyone on an equal footing with us, goes the theory, and our businessmen will beat the world. But if everyone else is not operating under the same conditions, then one way or another their exports must be suspect and some compensatory action must be considered. A recent refinement, where GATT commitments do not exist, is to offer market access only on the basis that similar market access exists in the opposite direction -- bilateral reciprocity.

"One can only say that had GATT tried to expand world trade, as it has over the past four decades and more, through such a philosophy, then the world would now be a very much poorer place," Dunkel added.

Not all differences among countries and firms that permit trade to take place were in themselves desirably. Nobody in GATT would encourage perpetually low labour rates and conditions, the absence of adequate environmental standards or the survival of outmoded and anti-competitive practices.

"But experience shows that trade brings economic growth, and economic growth brings change of many different kinds: social, political, environmental. This is not a static world, but the protectionists -- or to given them their modern title 'trade managers' -- seem to want to make it so."

It was tempting to see 1992 as the year of lost opportunity and 1993 as the year of the last chance, depending on whether one was looking at the Uruguay Round or the GATT, Dunkel said.

The GATT, as the multilateral trading system, was thriving in 1992 and continued to do so whereas the Uruguay Round or the multilateral trading system as it needed to be for future global economic development was and continued to be poised precariously on the brink of a final success, Dunkel said.

The GATT continued to operate effectively with respect to large tracts of international commerce and trade relations and was doing the job it was intended to do when established 46 years ago.

And while a large part of the work in 1992 was taken up by trade disputes, the fact that governments were prepared to put their faith in the multilateral trading system to secure redress was a source of strength and encouragement.

However, the dispute settlement system in GATT could work only as well as the member government want it to and "the failure of some governments to implement panel reports shows a worrying lack of commitment to the multilateral system."

Referring to the Uruguay Round, Dunkel argued that it was not an attempt to manage trade but an attempt to create or recreate the conditions of real competition in which trade would thrive.

In the last two or three years several opportunities to conclude the Round had been lost and at root it had been "a question of timing -- rightly or wrongly, the political winds were never quite right, never blowing in the same direction for everyone".

And while the major industrial countries have tried vainly to find "a politically acceptable point to settle", the rest of the world has had to wait with increasing frustration, Dunkel said, adding: "Let us hope the omens are right now, and that a settlement, and a good settlement at that, can be secured.

"In reality," Dunkel said, "there is probably never an idea time to make such a deal. There will always be a reason to give it just a few month months. (but) The time has now come for governments to face realities and live upto their responsibilities. I believe the deal can and should be done before the end of the year.

"For the alternative to making the multilateral system operate effectively through a good Uruguay Round settlement could, too easily, be the kind of situation in which some very old lessons of history will have to be learned again. All governments who have worked so diligently and far-sightedly over the past seven years will agree that the risks involved are too serious for their economies to afford."