NEGOTIATING GROUPS BEGIN WORK.

Feb 12, 1987

NEGOTIATING GROUPS BEGIN WORK.

GENEVA FEBRUARY 11 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The negotiating groups on tariffs and non-tariff measures, under the Uruguay Round, Multilateral Trade Negotiations (MTNS) in Trade in Goods, held their first meetings Tuesday, and essentially had a preliminary exchange of views, on the organisation of their work in the initial phase, to be completed before end of 1987.

The group on tariff held its meeting in the morning, while that on non-tariff measures met in the afternoon.

The next meeting of both the groups are being scheduled for the week of April 27.

Lindsay Duthie of Australia was elected by both groups as chairmen of their respective groups. Duthie is also the chair the separate groups on natural resource-based products and on textiles and clothing, both of which are due to meet Wednesday.

Third world diplomats said that at the Tuesday meetings of the groups on tariffs and non-tariff Measures, there was an effort by some of the major industrial nations and trading blocs, to project the work of all four groups as "overlapping" and to characterise them as in effect "a market access group".

At one stage in the months of tortuous negotiations before the negotiating structures and negotiating plans were approved on January 29, there had been concerted efforts to merge all the groups, but this has been resisted by the third world countries, who were worried that by this process, as in earlier GATT rounds, the specific and different problems faced by the third world in each of these areas would get siderailed.

Third world diplomats said that there was also an effort by Japan, EEC and several other industrialised nations to suggest that some of the work of these groups in effect overlapped those of the committees on agriculture, tropical products, and/or the surveillance body, and should be referred to them and dealt with there.

Several third world participants however are reported to have made clear their opposition to such moves, with one of them, India, describing the constant reference to "market access" groups as a case of "illegitimate nomenclature", not sanctioned in the Punta del Este declaration or the negotiating structures and plans approved by the group of negotiations on goods (GNG).

The work in the initial phase in the negotiating group on tariffs, involves submission of proposals by participants on:

--A tariff-cutting approach/approaches, including elimination of tariffs,

--The elimination or reduction of high tariffs and tariff escalation in appropriate product areas , and

--Possible criteria to expand the scope of tariff concessions including the degree of tariff bindings.

The initial phase also involves work on broadening and updating of factual basis for the negotiations, and preparation of factual notes by secretariat and/or participants, as required, on the issues to be negotiated.

Much of the discussions would appear to have centred on the technical and factual data needed, both of tariff levels in countries and on the trade flows within the tariff classifications.

There is also the problem of the impact of the on-going negotiations because of the impending change-over from January 1, 1988 from the current four-digit CCCN (Customs Co-operation Council Nomenclature) classification or other systems the six-digit harmonised system (HD).

The transposition of any product for import from the CCCN to the HS might involve negotiation or renegotiations of tariff levels, and these negotiations have been going on for about a year now.

There were suggestions Tuesday that the Uruguay round tariff negotiations themselves should be based on the HS system. If accepted this would put pressure, mainly on the third world countries, who have not yet decided to change over to the new system.

However a more complicating factor is that the HS system would go into operation only on January 1, 1988, and the various tariff levels in various countries would not be known before then.

And information, in a sufficiently disaggregated way needed in negotiations, on the actual trade flows, the principal markets for the product, and the principal and secondary suppliers, would not be available before early 1990, the target for conclusion of the round.

While the U.S. suggested that the trade and tariff data under the HS could be "constructed" on the basis of the CCCN or other existing systems, the EEC is reported to have pointed out that detailed trade flows, which alone would identify for each product the principal market, the substantial and secondary supplier, etc., without which no negotiations were possible, could be "constructed" from CCCN into HS.

A better way perhaps could be to conduct negotiations on basis of existing data and classifications, and later transpose the outcome to the HS classifications.

There were also some exchange of views for negotiations to increase the number of "bound" tariffs – the tariff levels on each or a range of products that countries would put into a tariff schedule in GATT, and which could not be increased without agreement of others.

There were also views expressed on the question of eliminating tariffs on those items that carry a very low tariff, say below five percent, since in any event these have no protective value these days when the foreign exchange rates fluctuate much more in a short timespan.

Several of the third world and even some industrial countries also raised the issue of tariff escalation, with every stage of processing, and the need to address this in the round. The issue of tariff peaks was also raised by some.

While some participants like Japan are reported to have suggested that the tariffs on agricultural products should be addressed in the agriculture committee, others saw no reason for this.

This issue of "over-lapping" came up in sharper way in the afternoon meeting of the negotiating group on non-tariff measures, according to one participant, and showed the tactics that the major trading blocs are likely to adopt vis-à-vis the high protectionist barriers erected against imports from the third world, both through measures legitimate in GATT and others which are per se illegal.

The issue of non-tariff measures, including quantitative restrictions (QRS) has been a major unresolved issue that third world countries have been agitating about in GATT since the late 1950’s. Every successive GATT round started with promise of tackling them, and each of them ended without promises being redeemed.

In the initial phase of work in this group, participants are mandated to undertake a first examination of the issues, including the relationship between the negotiations in this area and other areas of negotiations.

Other issues to be tackled in the initial phase involve participants presenting proposals about particular problems they want to address and the techniques to be used (bilateral, plurilateral or multilateral).

These proposals would then be examined in order to reach a common understanding on appropriate techniques and procedures – bilateral request and offers, subject to procedures to ensure transparency, multilateral approaches – and on subjects to be dealt with multilaterally.

The U.S. is reported to have noted that major attention would have to focus on the NTMS, since tariffs are not longer a major fact in the industrial world, and in effect the tariff and non-tariff issues of liberalisation should be considered together.

Such a combination would give the U.S. a relative advantage, since it has already low tariffs and thus could "trade-off" some non-tariff concessions to secure tariff concessions for its exports from others. Third world countries have not agreed to this.

Japan would appear to have suggested that several of the NTMS would have to be tackled by different groups of the Uruguay round: those in the area of agriculture by the group on agriculture, those relating to government procurement in the negotiating group on MTN agreements and arrangements.

There was also the suggestion that some of the measures would have to be referred to the surveillance body.

Some third world participants however noted that considerable work on NTMS and QRS had been done in the separate GATT group in the past, but much of its efforts had been frustrated by similar arguments.

Both the Punta del Este declaration, as well as the negotiating structures and plans now approved however were clear on which group would deal with what.

Where the NTMS maintained were inconsistent with the GATT provisions, these would have to be dealt with in terms of the Ministerial declaration, as part of the rollback commitment and in the surveillance body. There would be no question of trying to negotiate and obtain some quid pro quo for removal of such measures.

Also, the group on MTN agreements and arrangements had been only directed in the negotiations to aim "to improve, clarify, or expand, as appropriate" the agreements and arrangements under the Tokyo round.

The NTMS maintained in the individual sectors, and the negotiations to remove them, were completely within the purview of the group on NTMS and should be addressed in an overall coherent way.