Mar 16, 1990

ROUND WILL BE "DISMAL FAILURE" IF THIRD WORLD IS LET DOWN.

GENEVA, MARCH 14 (BY CHAKRAVARTHI RAGHAVAN) -- However the outcome may be projected by those who would gather at Brussels in December, the Uruguay Round will be a dismal failure if the Third World countries are let down, the Group of 77 said Wednesday.

The G77 views were made known at the UNCTAD Trade and Development Board's Sessional Committee during its consideration of issues and developments in the Uruguay Round.

Speaking for the group of 77, Amb. Kamalesh Sharma of India said that the negotiations had reached a cross-road and if the special needs of Third World Countries, including of the least developed, continued to be disregarded, in contravention of the Punta del Este commitments for balanced outcome, the essential interests of Third World participants would be undermine.

"If the developing countries are let down, however the outcome may be projected by those who would gather in Brussels, the Round will be a dismal failure".

"If, on the other hand, developing country interests and development dimension is fully integrated into all aspects of the outcome, if there is genuine trade creation in which developing countries can share and it is not at their expense, the Uruguay Round could be an unprecedented success".

"We hope that complacency and pursuit of parochial interests will give way to an enlightened appreciation of the interests of the weaker trading partners - the developing countries - and that participants would henceforth tread the path of genuine negotiations and success".

Earlier, in presenting the G77 assessment of the state of play in the Round, Sharma said the Punta del Este commitments on standstill and rollback remained largely unimplemented. Managed trade and restrictive sectoral arrangements continued to mar international trade, especially in sectors where Third World countries had export capacity.

The Uruguay Round negotiating process itself had been adversely affected by the U.S. S. 301 actions. Such unilateral measures to improve its negotiating position and pressure participants, as well as the declared U.S. intention to continue to use these procedures whether or not GATT consistent, amounted to a disregard and breach of both the Standstill and Rollback commitments and posed a serious threat to the intrinsic viability and credibility of the international trading system and the multilateral disciplines being evolved in the Round

Success in the Round would imply achieving goals that the participants had set for themselves and would mean establishment of a more open, viable, universal, durable and integrated multilateral trading system that would ensure improved adherence to GATT disciplines and rule out resort to bilateralism or unilateralism in international trade.

Third World countries, Sharma said, would measure success by the extent to which they, as weaker trading partners, would be enabled to secure their right against strong trading partners and whether the framework of rights and obligations would create the objective conditions for expansion of their export trade, considerably improve market access for products of current and potential export interest to them, provide vital inputs and resources for their development and address in a comprehensive and sincere manner their special problems, interests and needs.

The principle of differential and more favourable treatment for Third World countries was an integral part of the mandate and incorporated the inalienable right of Third World countries to safeguard their interests and realise their development objectives.

It had been the expectation that this principle would inform negotiations in all areas and be translated into operational commitments. Despite several specific proposals in each negotiating group, the Industrial Countries had not meaningfully addressed these proposals.

While Third World countries had expected movement and priority over the unfinished business of the Tokyo Round, the procedures in market access areas now demanded "admission fee" from Third World countries who were being asked to make "contributions" and "offers", and reciprocity had been brought up front in negotiations where there could be no reciprocity between vastly unequal trading entities.

On textiles and clothing there was an apparent lack of political will to integrate this sector into the GATT. While one proposal (that of the EEC) adopted the "parallelism" approach of phased integration hand in hand with selective safeguard actions, protection of intellectual property rights and reciprocity from Third World countries, other proposals (of U.S. and Canada) sought to convert country-wise product-specific MFA quotas into global quotas.

The preoccupation of ICs for a transitional phase for their domestic industries to adjust to free trade was an ironic inversion of the principle of special and differential treatment for the Third World, the G77 coordinator commented.

In Agriculture, Third World exporters of agricultural products had an interest in liberalisation of trade to get unrestricted access to markets of ICs while food importing countries need adequate measures to ensure they are not forced to pay higher costs for food imports. Any short or long-term reform measures should incorporate a development dimension, namely, clearer recognition of role of agriculture in development of Third World countries and fully preserve their autonomy to pursue appropriate production and trade policies.

On the claims about liberalisation of trade in Tropical products through the mid-term accord, the Indian delegate cited simulation studies of the actual trade creation effects to show that the trade-creation effect would only be two percent of the 1986 trade, with less than a third accruing to the Third World exporters. In the negotiations not only was there a reluctance on the part of the IC's to be beyond the mid-term offers but there were new demands of reciprocity from Third World participants.

There was also a pernicious linkage between grant of market access and unacceptable price for such access - as in the demand for access to natural resources in return for market access to natural resource-based products, a demand that went beyond the mandate and impinged on the sovereignty of Third World countries over their resources.

Contrary to the intention to review GATT Articles and improve the efficacy and integrity of the GATT system, ICs were proposing changes aimed at depriving Third World countries of their rights under GATT and altering their obligations in such a way as to leave them without any defence to deal with their development problems.

On safeguards, the ICs are pressing for an agreement that in the name of selectivity would result in discriminatory application of safeguard measures against Third World countries.

Referring to some of the proposals in the FOGs negotiations, the G77 coordinator viewed with concern suggestions to make GATT an implementing arm for the Fund-Bank conditionalities and making trade liberalisation a condition for grant of financial assistance.

In the area of dispute settlement, while some procedural improvements had been effected under the mid-term accord, a key question to be answered was to how to ensure enforcement of rights of, and obligations towards, weaker trading partners in a system depending on trade retaliation.

In the new themes, the G77 demanded that there should be no haste in arriving at multilateral disciplines and anything agreed to should fully take into account development needs and interests of the Third World countries who should not be expected to undertake obligations inconsistent with their individual developmental, financial and trade needs.

In TRIPs, the pressures to consolidate the hold and augment the returns of intellectual property rights owners could not be pursued in complete disregard of their obligations towards users of technology and considerations of public policy objectives of Third World countries. Also, IPR protection could not be addressed without addressing question of access to technology.

In TRIMs the suggestions to prohibit investment measures per se was unacceptable and unrealistic.

As for services, specific elements on development dimension should be drawn up and operationally incorporated into the frame-work and fundamental issues of interest to the Third World development of their nascent services sectors and making them competitive before exposing them to international competition as also Third World concerns about their deficits in trade in services had to be fully taken into account.

Earlier, the EEC in presenting its assessment of the Uruguay Round, in effect made clear that all participants would have to be bound by the agreements on new themes.

"In our view", the EEC said, "reinforced GATT rules and disciplines are essential if trade barriers are to be reduced and if protectionism is to be nipped in the bud. In the new areas trade in services, intellectual property and investment measures a reliable framework and a commitment by all participants to progressive liberalisation of trade in services should be an integrated part of the final outcome".