URUGUAY ROUND DOESN'T SOLVE ALL PROBLEMS

4:28 AM Dec 21, 1993

URUGUAY ROUND DOESN'T SOLVE ALL PROBLEMS - OECD
Geneva 20 Dec (Chakravarthi Raghavan) -- The successful conclusion of the Uruguay Round does not resolve all trade problems and governments must build upon them to resist protectionist pressures and tendency for managed trade, the Paris-based OECD secretariat has said.

In introductory remarks at a press conference in Paris to release the OECD Outlook No 54, Kumiharu Shigehara, head of the OECD's economics department, said that the OECD economies continue to bear a "major responsibility" to ensure harmonious development of world trade and resist the wider threats to the multilateral trading system.

While he did not name the United States, the report has made a reference to the "Japan-US Framework for a New Economic Partnership" signed in July setting "objective criteria" in reducing trade imbalances.

Monday's newspapers also carried reports of Washington's complaints (and pressure on Japan) for not fulfilling the target of (specified share of the Japanese market) import of semi-conductors.

And in Tokyo, Monday, the second ranking US official in Commerce department, Under-secretary Jeffrey Garten, complained of Japan not implementing the July accord and particularly of the "very little progress" in the framework talks covering penetration of Japan's automobile and telecommunications markets.

The "historic agreement" in Geneva concluding the Uruguay Round, Shigehera said, went much further towards setting up a comprehensive rules-based international trading system than previous GATT rounds.

Once the agreement had been ratified by parliaments, there should be a significant improvement in the economic environment, not only inside the OECD area but also around the world.

"However, the successful completion of the Uruguay Round does not mean that all trade problems are solved," Shigehara said.

A number of long-standing problems had not been covered or only partially covered by the final agreement.

Firstly, there was the interaction between trade and measures seeking to protect the environment had emerged as sources of friction.

Secondly, in periods of economic difficulty, there were always new threats to the open multilateral trading system.

"Indeed, despite the evidence that this system has been an engine of growth and prosperity throughout the post-war period, protectionist pressures have been strong and will not simply vanish", he said.

"In recent years," he added, "there has been a perceptible drift towards 'managed' trade measures, under which administrative decisions replace market-based outcomes; towards 'results-oriented' approaches on a bilateral basis that attempt to guarantee market shares or specific changes in bilateral trade balances; and towards an environment in which vested interests are protected at the expense of the consumer and, in the longer term, of the protected industry itself by removing its incentive to innovate.

"The momentum for trade liberalization created by the Uruguay Round success should be fully used to address these issues and trends. It will be important for governments to resist these wider threats to the multilateral trading system by building on the success of the Uruguay Round to ensure that the trend towards liberalisation of the system is sustained. OECD economies will in the future continue to bear a major responsibility in assuring harmonious development in world trade."