"BREAKTHROUGH" IN URUGUAY ROUND POSSIBLE CLAIMS NEW REPORT.

Jul 22, 1989

"BREAKTHROUGH" IN URUGUAY ROUND POSSIBLE CLAIMS NEW REPORT.

GENEVA, JULY 20 (BY CHAKRAVARTHI RAGHAVAN)— Major progress on north-south trade issues may be possible in the remainder of the Uruguay round, claims a new non-governmental report published Thursday.

The report on "developing countries and the global system", is the outcome of a research project financed by the U.S. ford foundation and coordinated by the "centre for study of international economic relations" of Canada.

A blurb for the report says that the project had involved fourteen scholars from eleven third world countries and a smaller number from the industrial world, who prepared country studies and broader thematic studies, all of which are being published along with the report.

The report, it says, draws on these studies and on a large number of meetings, interviews and group discussions, but does not indicate whether the authorship and responsibility for the report is of the participating scholars or the centre or someone else.

Without clarifying these questions, a press release on the report characterises it as a "joint developing-developed country report", thus providing some "legitimacy" for essentially a northern perspective.

The 211-page report (84 pages of text and 12 appendices) deals mainly with what are called "traditional GATT" market access issues, and while making references to the new themes (intellectual property, services and investments), in just about a page and a half, there is scarcely any analysis and discussion.

There are references to the mid-term review process of the round, but again with no appreciation or references to the generally widely expressed view of the third world negotiators about the further asymmetry in the system and the negotiations that have resulted.

And whit presenting the concern of third world that in the new areas the outcome might be "undesirable" for them, the report poses the question whether third world countries "would be worse off under bilateral pressure applied outside a GATT framework of rules negotiated in GATT, and thus whether it is in their interest to participate in the negotiations to weaken the adverse impact of developed country pressure."

The implication is that the answer would have to be affirmative.

However, the report underscores the common interest of third world countries and does hint of possible joint stands being developed, though elsewhere it favours more the interest and other broad coalitions of medium countries both of north and the north ALA the cairns group.

The report notes that previous seven GATT rounds made only "limited progress" in achieving trade liberalisation between industrial and third world countries, and that third world countries did not share in the benefits.

The report also notes that in recent periods third world countries have taken unilateral trade liberalisation measures, albeit under the IMF/world bank structural adjustment programmes and that they could get some market access benefits by "binding" these measures.

It also points out that third world countries have been more actively involved in the negotiating processes of the round, and their greater involvement should be encouraged.

"Developed countries," the report says, "must now decide how to respond, in the knowledge that their response will be critical to the continuation of these developments ... a positive response will demonstrate they are genuinely interested in a relationship based on reciprocal responsibilities, while a negative response will confirm suspicions that the demand for greater participation of developing countries has been used to justify their own departures from GATT disciplines (through trade restrictions on textiles and other products)".

The "logical approach" for industrial countries, the report suggests, would be to "move swiftly" in areas such as tropical products, promptly begin "positive implementation" of the rollback commitments, and be "as accommodative" as possible on such issues as giving credit for unilateral liberalisation and its binding.

While making references to the discriminatory special arrangements governing trade in textiles and clothing, which have been in existence since 1963, and the more recent but proliferating voluntary export restraints and other "grey area" measures, the report is somewhat vague in its recommendations on what the industrial countries should do on the integration of MFA into GATT and the issue of non-discriminatory safeguard provisions.

It merely says "developed countries should also look hard at textiles, agriculture and safeguards in the negotiations, and foster continued forward momentum by an accommodative stance."

The report, refers to a cost-benefit analysis by third world countries of the GATT system, and their view negative view hitherto on these matters, but suggests that they should now "make a different calculation of costs and benefits with regard both to the present GATT system and that likely to emerge from the Uruguay round."

"In sum, there is no doubt that developing countries have an interest in a GATT trading system that can deliver benefits at a reasonable cost," the report says.

The report suggests in one of the tables that if the safeguards negotiations does not result in provisions for non-discriminatory safeguards based on MFN principle and if negotiations do not lead to halting of trend towards managed trade, third world countries may have little interest in offering or seeking new concessions in other groups.

It also brings out third world concerns over the continuance of the discriminatory MFA regime, and need to bring this entire trade back to GATT rules and disciplines.

But when it comes to suggested course of actions, it merely says that industrial countries "should look hard" at textiles, agriculture and safeguards in the negotiations.

There is no reference to the U.S. administration's commitments to continue the MFA regime and enforce its restrictions, a similar stand in the EEC, and their increasingly common stand for "selective safeguards".

Nor is there any discussion of what is now openly posed in many third world countries whether without a non-discriminatory safeguards agreement and integration of textiles and clothing trade "into GATT, third world countries at all benefit from a continued GATT system, particularly when in new areas like services, intellectual property and investment, the new rules really amount to "reverse protection" in the markets of third world countries for imported capital, technology, and consumer products from industrial countries, as against indigenous capital, enterprises and products.

The report has some critical references to bilateral pressures by the major industrial countries, but carefully avoids commenting or dealing specifically with the U.S. S. 301 powers and procedures under the omnibus trade and competitiveness act of 1988, and the earlier trade law, or of the U.S. trade representative’s "crowbar" approach to opening foreign markets for U.S. exports.

Beyond the Uruguay round, the report says, industrial countries should be willing "to discuss" issues like debt and trade linkages, commodities and restrictive business practices (RBPS).

But here again it does not address the failure of the "discussions" on all these matters in other fora, or the "toothless" RBP code that has been adopted in UNCTAD over a decade ago, and on which the U.S. and other leading industrial countries refuse to provide teeth or undertake obligations to ensure that the TNCS and enterprises of their countries obey the code.

Much of the discussions and ideas in the north on the debt-trade linkages have been on the basis that indebted countries are able to gain access to markets, and export more and earn more to service debts, but not in terms of earning more to invest and develop, and improve the standards of living of their peoples, and objective of the indebted countries when they have been raising the debt-trade links.