Apr 23, 1985


GENEVA, APRIL 22 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Industrial countries, and especially the U.S., appear to have failed to get and endorsement from the IMF/World Bank Development Committee for the launching in 1986 of a new round of Multilateral Trade Negotiations in GATT in 1986.-

The U.S. has been pushing for this, and at the Paris OECD Ministerial meeting, got an endorsement of sorts for the start of the preparatory process for launching such a new round in GATT.-

The entire effort of the U.S. at the Washington meeting of the Development Committee, which concluded an extended two-day session on April 19, had been to get the committee to endorse this new round being launched in 1986.-

The communique issued by the Committee shows that this attempt failed.-

Perhaps even more, and for the first time in the history of the Development Committee, the communique reflected the viewpoints of the Third World.-

In effect the communique has supported the Third World stand in GATT that there should be prior implementation of past commitments and unfinished business of the Tokyo Round and prompt implementation of the undertakings in the 1982 GATT Ministerial Declaration for lifting "any measure inconsistent with GATT or not based on specific GATT disciplines".-

The Committee also called on governments to resist protectionism and roll back existing barriers to trade, and engage, as matters of priority, in "serious efforts to carry forward the unfinished business for the GATT work programme".-

The Committee said this "could" lay the basis for general participation of all countries in the trade negotiation round on which a number of countries have decided to embark under the auspices of GATT.-

The Committee also noted that full participation in the round would be encouraged by quick action to improve market access for the Third World.-

According to reports received by Third World here from Washington, the draft communique (normally prepared by the secretariats and the chairman), reflecting the Industrial country views, had originally endorsed the new round, and this was sought to be pushed through.-

However India objected and sought to disassociate itself by entering reservations, and this was followed by other Third World members.-

After tough negotiations, a compromise wording of the communique, suggested by the IMF managing director, it would appear was agreed to.

And even this became possible only after he had explained that it merely noted the OECD view to embark on such negotiations and that the Third World countries may or may not join such a round, but that their participation "could" be made be possible if standstill, rollback and prior commitments were carried out.-

An attempt by the GATT management to get the Development Committee to endorse and support the report of the "eminent persons" on trade policy reforms also appeared to have failed.-

The communique in its references to trade policy issues said:

"The growth and adjustment prospects of developing countries are closely linked to the expansion of world trade. Trade liberalisation is a part of a coordinated effort aimed at securing a better economic environment. In its discussion of trade policy developments and issues, the Committee benefited from a presentation by Mr. Arthur Dunkel, Director-General of GATT. Mr. Dunkel also referred to a report by a study group commissioned by him entitled ‘Trade policies for a better future-proposals for action’. Members regretted that, in spite of some limited initiatives, the onset of world recovery has not yet led to an easing of protectionist pressures, indeed they seem to have increased. The proliferation and continuation of non-tariff barriers, especially those applied in a discriminatory fashion, was harmful to the multilateral trading system and impeded the growth prospects of all countries".-

"The Committee called on all countries to promptly implement their undertakings to lift any measure inconsistent with GATT or not based on specific GATT disciplines, given the fast that these practices have in particular the effect of restricting exports of developing countries to trade markets. The Committee also stressed that the central role of the GATT in promoting an open trading system and ensuring the effective functioning of multilateral trade rules and disciplines should be strengthened. The Committee also called on governments to resist protectionism and, to the extent feasible, rollback existing barriers to trade. The Committee endorsed the idea, to engage as matters of priority, in serious efforts to carry forward the unfinished business from the 1982 GATT work programme. This could lay the basis for a general participation of all countries in the trade negotiation round on which, it was noted, a number of countries have decided to embark under the auspices of GATT. It was also noted that full participation would be encouraged by quick action to improve market access for developing countries. The Committee invited the GATT Director-General to continue to keep it informed about further developments. The respective competencies of GATT and UNCTAD were reiterated".-

An IPS report from Washington adds:

The carefully worded communique came late friday after six hours of debate, large between the Indian delegation, speaking for the Third World "Group of 24", and the United States.-

The Committee’s communique reflected the position of the Third World nations here that the Industrial countries have failed to meet all their commitments under previous multilateral trade talks.-

It came at the end of this week’s joint IMF/World Bank meeting here.-

On other matters, the Committee "encouraged" the World Bank to "hold further discussions in order to reach an understanding among governments for the creation" of a new one billion dollar Multilateral Investment Guarantee Agency (MIGA).-

The MIGA, which Bank President A. W. Clausen friday insisted had ample political support, would seek to improve the investment climate in developing nations by using guarantees against non-commercial risks.-

Nonetheless, a number of Latin American nations, including Mexico, Brazil and Argentina, and Britain remained lukewarm towards the idea.-

The committee also urged the World Bank management to present a report next September on the need for a General Capital Increase (GCI).-

The United States has repeatedly expressed reservations about the need for such a capital increase, arguing that demand for World Bank loans falls neatly within current capital resources.-

Trade dominated Friday’s deliberations, however.-

U.S. officials said a compromise was worked out Thursday night among Industrial and Third World country Ministers at an informal dinner and they expected smooth sailing when it came to drafting the language for Friday’s communique.-

Essentially, the Third World Ministers agreed to endorse a new trade round in exchange for acceptance on the part of the United States that a first step should be to look at the failures of the last GATT work programme.-

But, said one senior U.S. trade official, a number of the Ministers attending the thursday night dinner left friday before the Drafting Committee began deliberations.-

"The next day a group of functionaries started taking a hardball G-24 position", said the official. "The Indians took the lead and the Latins" supported them.-

But one Indian delegation member said Third World delegates here objected to the notion put forward by U.S. negotiators at the Thursday dinner that the "Organisation of Economic Cooperation and Development" (OECD) countries would go ahead with a new GATT round "whether the Third World likes it or not".-

The "seriousness and utility" of a new GATT round was in question, said Development Committee chairman Ghulam Ishaq Khan of Pakistan, "until the developed countries fulfil their promises" made during the 1982 GATT work programme.-

U.S. officials reiterated to IPS late Friday that they were indeed planning to move ahead with a new GATT round that would include non-merchandise trade such as services.-

They hope to iron out the details at the May Bonn Summit of France, Japan, West Germany, Britain, Italy, Canada and the United States.-

But despite the apparent bridge that exists, Indian Finance Minister Vishanawanath Pratap Singh told reporters Friday that the language of the communique "takes care of everyone’s interests".-

The developing countries will continue to insist, he added, that trade in key Third World goods such as agricultural and tropical products and textiles are liberalised before a new round can begin.-

"Its not a compromise", Singh said of the communique. "It’s our document now".-

Third World delegates said late Friday, however, that they were not particularly satisfied with the outcome of this week's deliberations.-

Noting the lack of substantive action on several Third World demands, the vice chairman of the Group of 24, Tadesse Gebre Kidan of Ethiopia, told IPS that he thought the upshot of the meeting was "mostly bad".-