Mar 12, 1991

LITTLE RESULTS, FAR-REACHING NEGATIVE CONSEQUENCES UNCTAD.

GENEVA, MARCH 11 (BY CHAKRAVARTHI RAGHAVAN) After more than four years of negotiations, the Third World is still to achieve results compatible with its interests in a number of (traditional) areas, while in negotiations on "new issues", it faces "far-reaching" consequences in terms of development aspirations.

This assessment is in an UNCTAD note on "Developments and issues in the Uruguay Round of particular concern to developing countries", circulated as a conference room paper to the Sessional Committee of the Trade and Development Board (TDB) which began the Second Part of its 37th session Monday.

The Sessional Committee is to undertake its annual review of issues relating to protectionism and structural adjustment and in that context review Uruguay Round developments. The extension of the Uruguay Round, the note suggests, could serve to provide more time for an effective examination, including by the TDB, to ensure that particular development concerns are fully understood and reflected in the results and that these contribute to a strengthened and dynamic international trading system responsive to the needs of the Third World and supportive of its accelerated economic growth.

The extended negotiations should assist in achieving the objective of a balanced outcome and facilitate taking into account the development dimension of various issues, both in achieving improved access to markets for products of the Third World and in designing rules and principles consistent with their economic, social and developmental objectives. The scope of the Uruguay Round negotiations, UNCTAD points out, extends beyond the traditional issues related to reduction of barriers to trade in goods at the border, to the new issues related to the evolving international structures of production, trade and trade in services.

The outcome thus was bound to have "significant impact on influencing the patterns of trade, competition, production, investments, domestic regulations, etc., in the course of this decade". "A satisfactory outcome of the Uruguay Round is thus crucial for the interests of developing countries and the prospects for their resumption of an accelerated process of development". Despite the differing nuances and emphases placed by Third World countries on individual subjects and issues of interest to them, as well as the emergence of issue-based coalitions such as in agriculture, by and large these countries had been pursuing a set of common objectives.

They had accorded top priority to obtaining more liberal and more secure conditions of access for their products into the markets of the Industrialised Countries, seeking specific concessions with respect to tariffs and non-tariff measures and strengthening multilateral rules, principles and disciplines to reduce the possibilities for trade restrictions or harassment. Their efforts have been aimed at strengthening the multilateral trading system so as to protect and underpin trade liberalisation through full respect to the principle of non-discrimination and unconditional MFN, effective contribution of the international trading system to their development process, including flexibility in their use of trade measures and expansion of their exports to international markets.

They have also sought the prohibition of all arrangements for market sharing and managed trade, prohibition of any unilateral action outside the legal framework of the GATT and maintenance of a strengthened and fully effective system for dispute settlement.

"However", UNCTAD observes, "after more than four years of negotiations, it appears that in a number of areas results compatible with the interests of the developing still remain to be achieved, despite their active participation in the different groups and the unprecedented extent to which they have contributed towards a successful outcome of the Round". In the negotiations on so-called "new issues" (TRIPs, TRIMs and trade in services), Third World countries "are confronted with far reaching consequences for their developmental aspirations", especially since issues concerning investment, intellectual property rights and services have been linked to trade.

"This is bound to consolidate the position of developed country transnational services suppliers, whose competitiveness is based on financial strength and mastery over technology". Third World countries, the note adds, would naturally wish to avoid any result that would have the effect of limiting their access to technology and to international investment or which could prevent the development of their service industries crucial for accelerated development. Hence the concentration of their efforts in these areas towards achieving overall balanced results which would effectively promote their future development prospects.

The evaluation that the Group of Negotiations on Goods (GNG) has been called upon to make, in terms of the principles and objectives of the Punta del Este Declaration and to ensure effective application of the differential and more favourable treatment for Third World countries, should provide the possibility of introducing corrective measures to ensure balanced outcome. The secretariat note has put forward a number of suggestions in various negotiating areas to achieve a balanced and successful outcome of the Round.

Market access: There should be a substantial package of concessions which promotes trade liberalisation and effectively expands opportunities for Third World exports into world markets and a clear definition of the means of compensation for erosion of existing preferences;

Trade policy: There should be acceptance by all participants of higher levels of discipline over their resort to trade policy measures, on a mutual and equitable basis, taking into account the importance of flexible application of trade policy measures - especially in relation to BOP problems as a component of coherent development strategies - and the impact of the disciplines on countries at a lower level of development;

Implementation of results: The legal structure for implementation of the Uruguay Round results should preclude both resort to unilateral trade actions outside the GATT framework and possibilities of cross-sectoral retaliation between trade in goods and measures relating to services and intellectual property protection;

Textiles and Clothing: There should be an agreed programme, within a reasonable time-frame, for reintegration of trade in textiles and clothing into GATT which progressively reduced the flexibility of importing countries to restrict and discriminate against Third World exports; Agriculture: GATT rules on agriculture should be reformed to provide Third World countries with improved and secure access to markets for their exports, and with provisions recognising the special developmental role of agriculture in their economies and mitigating any negative impact on them, particularly on net food importers.

Tropical Products: fullest liberalisation of this trade should be achieved on a non-reciprocal basis; Safeguards: Any agreement should exclude any possibility of discriminatory action in violation of the MFN principle; GATT Rules: Rules for applying antidumping and countervailing measures should be refined so as to significantly reduce scope for harassment of Third World exports; TRIPs:

Any agreement should promote rather than impede Third World's access to technology and development of indigenous technological capacities and not oblige these countries to protect IPRs to an extent that would distort competition or would undermine public policy and social objectives; TRIMs:

Any agreement should clearly recognise the right of Third World countries to promote development objectives or to counter anti-competitive practices through imposing conditions on foreign investors as long as such measures did not cause injury to trading partners; Services:

Any multilateral framework for trade in services should be based on MFN treatment and universal coverage.

Under such a framework, any liberalisation commitments by the Third World countries would be made in the light of the progress made in the strengthening of their domestic service sectors and the means given to them for this - transfer of technology and conditions imposed on foreign suppliers - and on granting effective access to industrial country markets, including through movement of labour.