Nov 28, 1984

ILLS CAN'T BE CURED BY THE WITCH-DOCTOR OF BILATERALISM.

GENEVA NOV 26 (IFDA/CHAKRAVARTHI RAGHAVAN)— U.S. threats of resort to bilateralism, if it could not have its way in getting GATT to be involved in new activities like "trade in services", was sharply criticised Monday by the chairman of the Contracting Parties, Amb. Hans Ewerlof of Sweden.-

Opening the 40th annual meeting of the CPs, Ewerlof said bilateralism as an alternative to multilateralism was a medicine worse than the illness, and was like a patient "avoiding the search for fundamental cure and looking instead for a witch-doctor".-

Ewerlof did not name the U.S. and referred merely to the view expressed in some quarters". But most CPs saw it as a reference to the U.S., and the views expressed by it in the GATT Council and in informal consultations over the weekend on the GATT work programme.-

The U.S. has sought to link decisions by the CPs to continue further work on the GATT work programme with agreement to move into the "new areas" which are either not central to the work programme or where GATT jurisdiction and competence is questioned by several CPs, including Third World countries.-

Reviewing the state of the world trade environment and the GATT multilateral system, Ewerlof referred to what he called "a certain lack of confidences in some quarters at least, in the multilateral system that, up to now, has served us well".-

"We increasingly hear statements", Ewerlof said at suggest impatience with the system so deep that allegiance to it is in question. In particular we hear the view expressed that while multilateralism is the preferred and wise choice, if it does not provide results then a bilateral alternative is unavoidable".-

Ewerlof added: "while I understand to an extent, the evident feeling of frustration, the medicine sounds very much worse than the illness - or to be more medically apt: some of the patients seem to be avoiding the search for a fundamental cure and are looking instead for a witch-doctor".-

"We must uphold and strengthen the multilateral approach - in bilateralism we can look forward only to further fragmentation of the world economy, less fairness not more in world trade and, ultimately a reduction in the economic opportunities of all nations".-

At the same time, Ewerlof stressed that GATT was not and could not be "a static, unchanging entity".-

"It has been extending its horizons and refining itself ever since its inception and the process of change cannot stop here. The world changes daily as does the nature of international trade and its problems.-

"This is an institution that, uniquely, has responsibility for administering and evolving a set of binding rules of trade. We are not here to cope with the world trading system of the late 1940’s or the 1950’s or 1960’s. This is 1964, and we must face up to the last half of the 1980’s in which the nature of international trade is going to continue the process of change".-

Ewerlof noted that in the first nine months of 1984, world trade had increased in volume by 8-1/2 percent over the same period of 1983.-

This was largely due to the vigorous export performance of a number of Third World countries and a rapid export growth of over ten percent of the Industrial countries as a group.-

But the export performance of the oil-exporting Third World countries, the eastern trading area and many African countries had lagged behind the worldwide growth of trade volume.-

The U.S. with its vigorous recovery had been the driving force behind the recovery of the world trade, with U.S. imports in value in the first nine months of 1984, being one-third higher than in the first nine months of 1983.-

But growth in the U.S. was fairly weak during the third quarter, and it was the consensus among economic forecasters that the U.S. economy was entering a stage of more moderate growth.-

"Yet neither in Europe nor in Japan is economic growth expected to accelerate in 1985. There is little hope, in spite of some revival of import growth in Europe, that the dwindling stimulus from the U.S. will be fully compensated by vigorous growth elsewhere in the world economy".-

"This prospect", Ewerlof underlined, "is particularly worrisome for the highly indebted developing countries which need rapid export growth to cope with their debt-servicing problems".-

The climate of international trade relations was currently "very uncomfortable indeed" and it was necessary to improve the climate to make progress.-

While in some capitals, very hard battles had been fought and won in resisting protectionism. "In some instances - too many - governments have found it impossible to withstand the pressure".-

"In summary, while trade has improved significantly in the recent past, only if commitments made at high political levels are translated into action will trade policies actually improve. If this does not happen then the current upturn in world trade could be short-lived".-

Referring to the view that 1985 was "a window of opportunity" and the "last chance for a lengthy period to reconstruct and push forward the horizons of the trading system", Ewerlof concluded: "I do not think that we should take the apocalyptic view that it is 1985 or never. Nevertheless, I can see both political and economic sense in the idea that 1985 may be propitious".-