Mar 13, 1986


GENEVE, MARCH 11 (IFDA/CHAKRAVARTHI RAGHAVAN) – There is "a widening hiatus" between commitments of industrial countries on protectionism and structural adjustment and in their implementation, the group of seventy-seven has complained.

The G77 complaint was voiced Tuesday evening by its spokesman, Amb. Srirang P. Shukla of India, while speaking in the sessional committee of the UNCTAD Trade and Development Board which is considering the issues of protectionism and structural adjustment.

To reduce this hiatus between commitment and implementation, a coherent framework should be devised for an analysis of the situation and trends and for concrete actions towards halting and rollback protectionism and eliminating trade barriers, the G77 spokesman said.

Earlier, the director of the UNCTAD’s Division on Manufactures, B. Das, while initiating the discussion, noted that the problem of protection and structural adjustment had been considered for a number of years in UNCTAD, and this had even yielded much common ground among governments, resulting in commitments.

The challenge now was to find ways for translating these long-standing commitments into concrete actions, leading to overall economic development, and in particular the accelerated development of the third world, the UNCTAD official underlined.

The problem of protection and structural adjustment was now a secular problem. Returns to high growth rates in the industrial countries had not removed the problem.

The improvements in economic performance in the U.S., for example, had not removed the protectionist pressures.

As a recent OECD study had brought out, changes in import penetration had been "a rather minor factor" in decline of employment in the industrial countries. A major factor has been capital-labour substitution accelerated by protection.

Also, restrictive trade policies were not creating new bases for growth but only redistributing incomes and employment.

The broad picture on the trade front was still one of trade friction, particularly in sectors like textiles, steel and agriculture, with the progress made in trade liberalisation outweighed by increased protectionist actions.

In the area of services, UNCTAD’s preliminary studies led to the conclusion that the third world countries should first develop "some critical services activities" to improve their competitiveness in manufacturing and other activities, and also improve their net foreign exchange earnings from trade in services.

On the advice to third world countries to lower their protection and liberalise imports, Das noted that however sensible this suggestion, "one result would be increase in the deterioration of their current accounts if these countries did not have an assured and expanded market access".

Underlining the hiatus between commitments and implementation, the G77 spokesman said that lack of adequate and co-ordinated policy measures in industrial countries in the areas of money and finance was aggravating pressures for protection.

Despite recovery, protectionist pressures had continues in many industrial countries, specially in sectors of crucial importance to the third world – agriculture, steel, textiles and clothing, leather and footwear, and petrochemicals.

In some sectors the protectionist measures had even intensified, Shukla noted.

There had been an intensification of the anti-dumping and countervailing duty investigations.

Ostensibly initiated to counteract "unfair" trade practices, these investigations often led to harassment and disruption of trade.

While the Belgrade decisions called for review of procedures by the industrial countries in order to remove impediments to third world exports, the latest evidence showed amendment of laws and procedures to widen the scope of application of these procedures. These gaverise to legitimate apprehensions on further adverse on exports of the third world.

There had also been no progress in GATT in reaching a comprehensive understanding on safeguards, while there was an increasing resort to "grey area" measures that eroded the multilateral trading system, the G77 spokesman pointed out.

The institutionalised discrimination against the third world, spanning over two decades, in the trade in textiles and clothing (through the MFA), was now being sought to be extended to other sectors like steel, footwear, leather, petrochemicals and consumer electronics.

"Unless these tendencies are arrested in time, the international trading system would become a web of market sharing arrangements rendering irrelevant the rules of non-discrimination and comparative advantage", Shukla declared.

On the agro-industrial sector, the market shares of the third world countries in most agro-industrial products (raw and processed) imported by the OECD countries had declined – particularly in cotton, cocoa, sugar, rubber, meat, copra and jute.

The tariff escalation and intensification of non-tariff measures had hampered third world efforts at enhancing higher value added export production.

Alto, the resort to large-scale subsidisation by the OECD countries of agricultural and agro-industrial production had been detrimental to the development of agro-industry and agriculture in the third world.

In order to reduce the GAP between commitments and implementation, the UNCTAD instruments for annual review of protection and structural adjustment should be made more effective.

The analytical framework should be refurbished, and should enable concentration on sector-specific analysis, choosing sectors of particular export interest to the third world and identification of new product areas of interest to these countries.

The analysis should also lead to recommendations of concrete trade policy measures to be adopted by the industrial world.

To facilitate concrete actions, the G77 suggested setting up of an intergovernmental expert group, to meet in between sessions, to carry out the sector-specific analysis and formulate recommendations for action.

Also, a concrete plan of action should be developed and implemented on the standstill and rollback commitments.

"This was an essential pre-requisite for any meaningful exercise on general trade liberalisation", the G77 spokesman declared.

Such a plan of action should involve:

--Strict adherence and full implementation of the standstill provisions in all sectors of trade concerning imports from the third world,

--Reaffirmation by the industrial countries of their commitments to reduce and eliminate quantitative restrictions and similar measures on exports of the third world.

--A short and definite agreed time-frame for rollback of protectionist measures not consistent with or outside the framework of non-discriminatory and open multilateral trading system,

--Liberalisation of the present trade regime in textiles and clothing, and its phase out over an agreed time-frame,

--Industrial countries refraining from subsidising exports of agricultural products competing with exports of the third world,

--Special attention to problems of the least developed countries,

--Collective commitment to negotiate on a priority basis a comprehensive safeguards agreement based on the principle of non-discrimination.