30 March 1993

BOARD CALL FOR EARLY, SUCCESSFUL CONCLUSION OF ROUND

Geneva 27 March (Chakravarthi Raghavan) -- The UNCTAD trade and Development Board has called on the participants in the Uruguay Round, in particular the major trading nations, to exercise their responsibilities and leadership and ensure an early conclusion of the Uruguay Round.

The appeal, in a message adopted at the second part of the Board's 39th session which ended on Friday, said that a successful conclusion should be viewed as a "pre-requisite to a return to the path of growth, trade expansion and an improved world economic climate" and the only way to "strengthen the international trading system" at present.

The message adopted by the Board by consensus called for the finalization of the Draft Final Act in a "balanced manner" taking into account all issues of interest to developing countries and their development, financial and trade needs" in accordance with the Punta del Este Declaration and supplemented by a "comprehensive market access package" on goods and services, in particular covering items of export interest to the developing countries.

Special attention should also be given to the problems of the LDCs with a view to integrating them into the global trading system, the message says, drawing attention to the fact that the Punta del Este Declaration foresees an evaluation of the results from the point of developing countries.

The message added: "The members of the Board recognize the urgency of all governments participating in the Uruguay Round, and in particular the major trading nations, exercising fully their responsibilities and leadership, and attributing the highest political priority to bringing these negotiations to an early and successful conclusion."

The decision to send a message came as a result of discussions at a sessional committee of the developments and issues in the Uruguay Round. The Board had also heard the views of the GATT Director-General and Chairman of the TNC, Arthur Dunkel, at an informal meeting on 22 March.

According to the report of the Chairman of the sessional committee to the Board, the UNCTAD's role in following the developments in the Uruguay Round was emphasized and the Board was asked "to study the substantive developments in the international trading system, inter alia, relating to significant modifications in trade policies of both developed and developing countries with a view to identifying problems and opportunities in international trade in the 1990s."

The report of the sessional committee with the substantive views expressed in the committee on the discussions is to be considered at an Executive session of the Board on the Uruguay Round on 27 April.

In a note to the Board on the Round, the UNCTAD secretariat had said that the extent to which the objective of further liberalization and expansion of world trade for the benefit of all countries, particularly the developing countries, had been met still could not be addressed in view of the notable absence of agreement on specific commitments in the area of market access. And, while elements did not exist to make any calculation on the benefits, the scope and intensity of multilateral disciplines "should" inevitably lead to an increase in export- oriented investment and strengthen the international adjustment process.

The Round, the secretariat has argued, is not only aimed at achieving trade liberalization and increase in world trade, but aims to "manage trade relations and reduce the possibility of trade conflicts" arising out of previous trade liberalization and the intensity of trade and economic relations arising from them. UNCTAD attributes the proliferation and intensification of free trade agreements at regional and subregional levels to this same phenomenon and suggests that acceptance of similar disciplines at multilateral level would reduce the discriminatory aspects of such agreements.

The secretariat paper notes the strong interest of developing countries as weaker trading partners in clear international disciplines to provide them security of access to export markets and shield them against bilateral pressures and suggests that the Uruguay Round has achieved this objective.

The main outstanding question, in the secretariat's view, is only whether "meaningful improvements" would be provided in access to markets for products of export interest to developing countries.

It adds, though, that the extent to which the major trading entities would actually respect their obligations and not abuse the flexibility provided into various agreements and renouncing efforts to obtain concessions through bilateral pressures including threat of punitive retaliation would be seen by their "willingness...to faithful incorporation of the multilateral obligations in their domestic law."

The UNCTAD paper has also referred to the challenges to the international trading system from the "emerging" national, regional and international policy agenda and suggestions for negotiating subjects for the future including trade and environment, competition policy, "fair international labour standards".

During the discussions, Ecuador (on behalf of other Latin America banana exporting countries) complained about the EC's new banana regime and the EC's attempt to use the Uruguay Round to "legitimize" its protectionist measures and substantially worsening the market access conditions for products of export interest to the developing countries.

Bangladesh, for the LDCs, complained that the DFA gave "the illusion"of an overall enabling instrument for special and differential treatment for the LDCs, but such provisions were not clearly defined in the various instruments. In some areas these were only "best endeavour" provisions and not concrete commitments. The LDCs, Bangladesh said, should be totally exempt from obligations of TRIMs and enabled to use TRIMs for development of their domestic export base, for BOP reasons and protection of infant industries. Similarly they should be exempt from all commitments in TRIPs, and from making any initial commitments in services.

In Brazil's view the DFA, while not entirely satisfactory to everyone, currently represented the balance that it was possible to obtain without risking the collapse of the Round. But some major partners were still seeking modifications that would cause irreparable damage since the modifications sought would affect security of market access concessions by lessening disciplines on trade remedies that were being used with a clear protectionist intention.

The assumption that the conclusion of the Round would address market access problems of developing countries would only be borne out if important changes were made in the negotiations. No serious negotiations involving the developing countries had been held for a long time, basically because of lack of progress in US-EC negotiations and the deadlock on agriculture. Even after the deadlock was resolved and agriculture schedules were presented, the results were far from fulfilling expectations of developing countries with special export interest. On the ground that they were not the principal suppliers or in order not to benefit countries that were not parties to the GATT, requests from developing countries had not also received adequate consideration from major trading partners.

The European Community thought that despite present lack of activity in the Round, negotiations could be concluded within nine to twelve months provided political will could be found and a common effort made. On the complaint over its new banana regime, the EC representative noted that procedures were under way in the GATT on whether the EC had honoured its commitments. But the case could well illustrate the merits of the GATT dispute settlement system.

Korea said high energy prices, continuing unemployment and trade imbalances had spurred a desire for increased unilateral and bilateral protection of domestic industries, these often taking the form of anti-dumping and countervailing duty action and voluntary agreements to restrain trade. While the Uruguay Round had the potential to significantly shape the world trading system, it was now at an impasse on issues of critical importance to the developing countries -- market access, textiles and TRIPs. Its success depended on the renewal of US fast track authority and the evolution of the EC position after the French elections.

The United States representative said that the US goal was "a good agreement, not just a quick one". While President Clinton had decided to seek renewal of fast track authority to complete the Round, the timing and duration of the authority would be determined only after further discussions within the administration, and consultations with Congress and the private sector. But negotiations were not as close to completion as had been reported in early January (by the Bush administration). It would not be possible to reach agreement until some of the US problems with the DFA were dealt with seriously and effectively.

Bolivia was concerned that the basis for the development models of the majority of the developing countries seemed to be called in question. Concepts like competitiveness, environment, situation of workers, compensatory trade, subsidy policies and social security clauses could lead the trading community in a different direction. It was necessary to determine in which direction the international community was headed and whether, in the light of new developments, principles of free trade were still valid and whether those that maintained that free trade was the only way to achieve wellbeing still affirmed those principles.

Jamaica shared the view that the DFA and the Punta del Este Declaration should continue to form the basis of negotiations in its final phases, to be supplemented by a comprehensive market access package. But it was difficult to envisage concluding the round without a number of substantive changes to accommodate certain important concerns of several participants. The issue of the EC banana regime and its perceived implications for Latin American exports was of vital importance for Jamaica and several other ACP countries. Within the framework of the Round, Jamaica expected EC's overall contractual obligations under the Lome Convention would be honoured and respected.

Uruguay said the issues for possible future multilateral negotiations, identified in the secretariat note, should be considered by the Board separately..

The Uruguay Round agenda set at Punta del Este should be settled before negotiations were begun on other issues. There should be a "rapid and balanced" result in the Round -- 'rapid' in the sense of conclusion of the Round preferably before end 1993 and 'balanced' in that the results must involve both strengthening of GATT disciplines and its extension to areas such as agriculture and textiles. There should only be minimum modifications made to the DFA, Argentina said the developing countries were not responsible for current impasse and, in a reference to the suggestion of Arthur Dunkel for negotiations before the US fast track authority renewal, said Argentina shared the position of other participants that same issues should not be negotiated twice. The Argentine delegate underlined the importance attached by his country in agriculture to dismantling of subsidy regimes, both on production and exports, reduction in barriers to market access and multilateral standards for sanitary regulations. The TRIPs agreement had a high cost to developing countries, and though Argentina was not satisfied, it would be accepted in the context of the broad package of negotiated agreements.

India did not agree that the market access issues in the DFA were "all closed issues", having put forward its concerns as early as January 1992 (when the Dunkel package first came up before the TNC). Better market access in such fields as leather goods and textiles had to be addressed, in part through the DFA text.

Tanzania took issue with the US, EC contentions about the "free riders" in the Round and said that in agriculture developed countries had been allowed "free riding for nearly half a century as a result of its inbuilt GATT waivers and safeguards". In agricultural products while accumulation, vertical specialization and horizontal diversification continuing unabated in the industrial world, tropical products had been freely exploited by the market thus giving additional surplus value to products of industry. While no country was unaware of the significance of a multilateral trading system, such systems could be extremely unjust, particularly to undeveloped economies, if founded on accumulated power and wealth. It was for the Board, and the UN, to succeed in convincing those "with power to free the market when it suited them that it was much too easy to prescribe principles of good governance for the underdeveloped without adding up all their implications for resource transfer, given the arbitrary nature of market forces."

Egypt hoped that in the remaining period before the conclusion of the Round, the trading partners would take due account of legitimate concerns of the African group and accommodate these concerns. Egypt, on behalf of the African countries, had informally presented a number of modifications to the DFA in agriculture and in Trips with the aim of redressing the balancing the DFA. The UNCTAD study and several others had concluded that the African countries would be net losers. The Trips agreement had imposed severe constraints on developing countries and no consideration had been given for any special and differential treatment, other than a longer transitional period. The TRIMs agreement merely bound governments without equivalent obligations on private enterprises to control RBPs that significantly distorted trade. The conditions attached to MTO membership (in the DFA) would alter the existing rights and obligations for the GATT Contracting Parties, particularly small trading partners.