Feb 2, 1988

TROPICAL PRODUCTS GROUP AGREES ON NEGOTIATING-PROCEDURES

GENEVA, FEBRUARY 1 (IFDA/CHAKRAVARTHI RAGHAVAN)— The GATT Negotiating Group on Tropical Products agreed Friday to procedures and a timetable for negotiations that could lead to concrete results in this area and their early implementation by end of 1988.

GATT spokesman David Woods, announcing the agreement in the tropical products group, told newsmen friday that the tropical products issue was of considerable interest to the third world countries, and the decision of the negotiating group would be part of what could become "the so-called mid-term review package".

Some thought, he said, was being given also to adoption of partial agreements in some other areas.

However, the carefully crafted text, full of what Norway later called "constructive ambiguity", and the varying interpretations placed upon it including by the united states, left some doubts as to whether in fact the objective of early accords and implementation would be achieved.

The United States reportedly told the negotiating group, after the adoption of the decision, that as far as it was concerned early implementation of agreements in this sector was linked to the agricultural negotiations.

Separately, at a press conference, the U.S. Trade Representative Clayton Yeutter made clear that the mid-term review package would have to include "services" and some other areas of priority for the U.S., and ruled out any possibility of "separating other negotiations and services for the mid-term package".

He also linked concessions by U.S. in "goods" to concessions by third world countries in services and other areas.

Though he put it in the context of agriculture and U.S. continuing its own subsidised exports in absence of EEC actions, Yeutter also hinted that the present administration could not commit the next one, to take over in 1989, to any particular course of action.

One third world participant in the Uruguay round told IFDA that the U.S. Administration had no authority for trade negotiations since January 1, and anything it "offers" or "agrees" to would be subject to detailed approval and changes by the U.S. Congress.

This, he said, explains U.S. reticence and non-committal attitudes on issues where it would have to make concessions - tropical products, textiles, etc. - but its insistence on progress in areas where-it has to make no concessions - services, intellectual. property rights, investment issues, changes in GATT articles, functioning of GATT System etc.

The issue of liberalisation of trade in tropical products, and providing market access to such exports from third world countries - both by removing tariff and non-tariff barriers and by eliminating or reducing domestic levies inhibiting consumption - has been on the agenda of GATT since late 1950’s.

In 1963, GATT Ministers agreed on a programme of action for removal of barriers and full liberalisation of trade to be achieved within a of one year - with the EEC entering reservations arguing that to enhance export earnings of the third world it was not enough to do this, but it was necessary to stabilise commodity prices and earnings also.

While there was some limited progress by some countries, overall the promises of that programme of action were not fulfilled.

And since then, there have been more promises in every successive round or GATT work programme, all of them remaining paper promises.

The Punta del Este Ministerial Declaration launching the Uruguay round, on tropical products, recognised the importance of this trade to a large number of third world countries and agreed that "negotiations in this area shall receive special attention, including the timing of the negotiations and the implementation of the results".

In the general principles of the MTNS, while treating the launching, conduct and implementation of outcome as parts of a single undertaking, the Ministers agreed that "agreements reached at an early stage may be implemented on a provisional or definite basis by agreement prior to formal conclusion of the negotiations".

Within the TP Negotiating Group, there have been three major issues holding up negotiations - agreement on modalities and techniques, issue of "extended coverage" of markets, and a timetable.

There has not been much dispute on latter since most are agreed on priority for this.

On modalities, the differences relate to the issue of whether there should be a general multilateral approach or bilateral/plurilateral "request/offer" basis (insisted upon Japan), whether the focus should be the traditional focus of liberalisation by industrial countries (in fulfilment of past commitments) or trade liberalisation in this area by third world countries too.

Industrial countries have all been demanding "extended coverage", covering markets of third world countries - the secretariat collating and providing material, and countries concerned providing data on their trade policy.

The negotiating group has sought to get around some of the substantive questions involved, by adapting procedural decisions and a programme of work.

Without agreeing on any particular approach to the negotiations, the TP group agreed that to facilitate the process of "fullest liberalisation of trade in tropical products", participants should be invited to submit "indicative lists".

Such lists should elaborate on general approaches, formulae and measures covering both tariff and all non-tariff measures, and/or contains product/country specific requests.

The general approach formula is supported inside the group by everyone except, Japan, which favours "request/offer" negotiation since this would enable Japan to more easily continue protection for "sensitive" products.

Participants have also been invited to submit "indicative offers or broad indications to a successful outcome of negotiations taking into account all relevant factors in determining such contributions".

Initial indicative lists are to be submitted by March 31, but participants would not be precluded from modifying these lists or submitting lists later.

The reference to "individual contributions" is intended to cover the view of U.S., the EEC and others that liberalisation in this sector had to be done not only by industrial world but by third world countries too. The EEC has said that its actions would be dependent on "burden-sharing" by other industrial countries, centrally planned economies, and more advanced third world countries.

Several of the latter have said that any "contribution" of theirs would be in the context of on-going negotiations for the GSTP, where the first round is to be concluded by mid-April.

GATT participants, involved in GSTP, would have to bring them into GATT framework in terms of the enabling clause.

Several of the third world countries are thus planing to open up their markets for tropical products from other third world countries in the GSTP, and show this as well as other unilateral liberalising actions they have been taking (under IMF/'World Bank adjustment programmes) as their "contribution".

In a timetable aiming at early agreements, the negotiating group agreed to meet on April 25-26 to review action taken.

Two rounds of multilateral consultations covering all seven product groups covered in TP negotiations are to be organised in the weeks of may 30 and June 27.

These consultations are to aim at the fullest liberalisation of trade in tropical products in accordance with the Punta del Este declaration, and in the light of different techniques and modalities put forward by participants.

The TP negotiating group would be convened at least once in each round of consultations.

The group would meet, after the two rounds of multilateral consultations, from July 6-8, to review the results of consultations, including any conclusions regarding applicability of different approaches and arrangements for further conduct of negotiations.

Negotiations will then take place "with a view to achieving concrete results before the end of 1988 and their -implementation at the earliest possible date" as provided in the Ministerial declaration.

The negotiating group is to review the progress towards achieving concrete results at a meeting to be held in autumn (September -October) of 1988.

In statements after adoption a number of third world countries made clear that there could be no question of "reciprocal concessions" by them in tropical products sector's, and there was enough information available to proceed towards negotiations, and requests for additional information could not be made a precondition for consultations or negotiations.

Earlier, Austria reportedly indicated the areas in which it was willing to make concessions to liberalise tropical product imports - by improving the GSP, and in reducing or eliminating MFN tariffs subject to some limitations. Austria said it had no non-tariff measures, whether by way of quantitative restrictions or domestic consumption taxes or otherwise, but was willing to negotiate on individual products if any restrictions were brought to its notice.

In individual statements, several of the third world countries underscored their view that the focus of the negotiations was liberalisation by imparting industrial countries, and that the Punta del Este declaration had fully recognised the importance of the trade to a number of third world countries.

All of them noted that tropical products was the only sector specifically mentioned in terms of early agreements and their implementation, ahead of the conclusion of the MTNS in goods as a single undertaking.

India pointed out that the subject had a 25-year history in GATT, and tropical products had become a symbol of third world aspirations for improved market access in industrial countries. This was the reason why it had always been recognised in the MTNS as a separate sector.

The negotiations had to promote the interests of third world exporters, and the decisions adopted by the group and, in the light of the Punta del Este mandate, could only mean that it was for third world exporters to submit indicative lists of requests, either in terms of general approaches or formulae or for specific measures.

Rebutting the argument that the mandate of "fullest" liberalisation meant actions by all, India and others reportedly noted that the Tokyo round declaration had used similar language, but third world countries had not been called upon to liberalise.

After the Tokyo round this was treated as an unfinished business, and entire work programme since then had been on this basis of liberalisation by industrial countries in the seven product groups specifically identified as of particular interest to the third world exporting countries.

The mandate called for "fullest" liberalisation, and this had always been understood as removal of tariff, non-tariff barriers including domestic consumption taxes, and not "extended" liberalisation, meaning all markets.

Brazil, Yugoslavia, South Korea, Mexico, Cuba, Pakistan, and Sri Lanka were among those who took this position and made similar statements.

Sri Lanka and Pakistan noted that only one country (Japan) was opposed to a multilateral approach in the negotiations, and appealed to that country to review its position.

But Japan reportedly stuck to its position and insisted on bilateral/plurilateral negotiations on basis of "requests/offers".

The U.S. for its part reportedly said that it expected participants to address requests to it on the basis of U.S. proposals, namely that "all participants should eliminate all measures".

The U.S. also reiterated its position about relationship of negotiations in this area to the agricultural negotiations, and said implementation of early agreements would be possible only if the basic objectives in agriculture could also be achieved.

The EEC reportedly expressed its concern over the statements of interpretations and understandings, and said it subscribed to the text entirely and would not re-interpret it.

Philippines, speaking for the ASEAN countries, said requests for additional information and extended coverage should not create any preconditions for negotiations. Also, linkages with negotiations in other groups should not erode the importance of tropical products sector.

Speaking for Nordic countries, Norway reportedly agreed that this was the only sector singled out for special treatment both in terms of timing and implementation. The Nordics could live with "some constructive ambiguity".

While they were willing to work within the compromise, the Nordics would have liked to see all barriers against trade in tropical products dealt with, and "with the broadest possible participate and fullest possible data base, but without prejudice to the various modalities for negotiations".

Australia and New Zealand supported the multilateral approach, and said they looked to "all participants" to enter into "bindings" (of their tariffs) on tropical products.