7:09 AM Sep 21, 1994

BOARD DISCUSSES URUGUAY ROUND OUTCOME

Geneva 20 Sep (Chakravarthi Raghavan) -- The initial assessment of the outcome of the Uruguay Round by the secretariat of UNCTAD in its Trade and Development Report 1994 and supporting papers received general, but nuanced, support at the UNCTAD Trade and Development Board.

While speakers saw the conclusion of the Round and the impending emergence of the World Trade Organization as a major achievement some of the interventions from developing countries also focused on the low level of market access opportunities on products of export interest to them and the high level of obligations developing countries will be assuming.

There were also a number of comments about the difficulties developing countries would be facing in implementing legislation and in taking on these obligations and need for continued technical support and further work in UNCTAD on these matters.

All speakers stressed the need and importance of countries, particularly the major trading partners, acting swiftly to bring the WTO into being by 1 January target date.

Malaysia speaking for the Asian group of countries said a more meaningful assessment of market access benefits would be possible only through individual country evaluation. The Uruguay Round outcome provided both challenges and opportunities, but in the process the least developed countries and the Asian developing countries had taken increasing obligations.

An issue of immediate concern was the slow process of ratification of the WTO by the major trading partners and the possibility that this might delay the establishment of the WTO. This could have negative implications to the developing countries.

The Malaysian delegate said that implementation of the results of the negotiations should be in accordance with the agreements and it was their hope that countries would not deviate from their commitments by way of laws that could negate potential market access.

He referred in this connection to what he called "unilateral determination" in some countries on rules of origin criteria. Though the Malaysian delegate did not name any country, the reference appeared to be over US implementing legislation.

Regional trading arrangements, though allowed by the GATT, could erode competitive position of third countries. And while most-favoured-nation tariff concessions in the Round might mitigate this situation, "We already see 'creative' instruments such as changes in rules of origin being employed to preserve the competitive and advantageous position of regional trading blocs."

Referring to some of the new issues, the Malaysian delegate acknowledged the importance of environment and sustainable development, but said the challenge was to ensure that there would be unimpeded market access and that trade would continue to flourish despite measures taken for environmental protection.

There was a need for balance between trade liberalisation, environmental protection and sustainable development. Environmental measures, under no circumstances, should be used as a guise for protection.

On the proposals of the United States and others for a social clause in the WTO, the Malaysian delegate said the Asian Group viewed the linking of labour standards with trade as unjustified and could become a new form of protection.

Determining international labour standards was the task of the ILO, taking into account development levels and adherence to labour standards should not be a condition for market access.

"The inclusion of a social clause will certainly overload the agenda in the WTO".

The Malaysian delegate noted that the Uruguay Round results were yet to be implemented, but the Quad (Canada, EU, Japan and the US) already had intentions to seek further commitments and concessions, especially in the area of services and particularly financial services.

For the Asian group, services liberalisation should be progressive and take due cognizance of the level of development and respect the principle of Special and Differential treatment.

The Asian group was also concerned over the attempt of donor countries to modify the conditions for granting GSP and use of non-trade related criteria. This approach would have negative implications for the future of the multilaterally agreed trade rules and disciplines.

The Asian spokesman said that in the implementation phase, there should be further elaboration of and practical effect given to the special provisions for LDCs to enable them both to enjoy the benefits of the Round as well as give them confidence in the multilateral trading system.

UNCTAD's useful support to developing countries during the negotiating process should be extended during the implementation phase and technical assistance should also be needed to developing countries, not now GATT members, to enable their integration into the multilateral trading system.

The United States said the trade policy reforms in the developing countries and in the transition economies needed complimentary international support, but viewed many of the Uruguay Round provisions as contemplating this reality. While the WTO and its bodies would have the sole authority to provide definitive interpretation of its provisions, UNCTAD could facilitate the understanding of the agreements and help building of the infrastructures needed in developing countries to expand the trading opportunities available to them, the US added. The US also flagged the trade-labour standards issue for the future WTO trade agenda and for UNCTAD to analyze this as part of the new issues.

China said it had noted the concerns of many developing countries over the lack of adequate reflection of their interests in the results of the Uruguay Round. The full participation of the developing countries in the new trading system was in the interest of all including the developed countries. "To neglect the special difficulties and interests of developing countries will actually obstruct their integration in the world economic progress... The international community, especially the developed countries, should take into full consideration the interests and special circumstances of the developing countries while implementing the outcome of the Round and take timely measures to improve their situation so as to reduce the adverse impact of the new system on them."

Though the implementation had not yet started, some of the analyses and projections had already indicated that some agreements might affect the interests of the developing countries in certain fields. With the implementation of the relevant agreements, these concerns of the developing countries would prove to be true, the Chinese delegate feared. Many of these concerns were not groundless and developed countries should give serious consideration and pay attention to their opinions and views.

The developing countries were also watching the concrete steps that would be taken by developed countries in some key fields to give effect to the WTO. In the area of textiles and clothing, it was clear that almost half of the textiles and clothing products would not be brought under the GATT system until the last moments of the ten-year deadline for phasing out the MFA. It was not difficult to foresee from this slow process that the developing countries would continue to pay tremendous costs in quite a long run. In implementing the results, the developed countries did have the potential and ability to reduce the damage and China hoped this would be done.

Japan wanted UNCTAD to address itself to make constructive policy proposals in area of trading policies and give high priority to its technical cooperation activities in this area. UNCTAD should also enhance its analsis in areas such as textiles and clothing, agriculture and services where developing countries had strong interest. It should also identify measures to overcome difficulties that some developing countries might face to utilize opportunities provided by the outcome of the Round.

The Russian Federation delegate commended UNCTAD's analysis of the outcome and supported the further expansion and strengthening of its analytical functions to facilitate international consensus-building and ensuring better understanding of existing problems at national levels. While the establishment of the WTO would need a new look on UNCTAD's role, in the Russian view, while ensuring complementarity with WTO and avoiding duplication, UNCTAD should continue to formulate approaches for solving problems of trade and development not covered by the existing agreements. It should also remain the forum for elaborating proposals and building consensus on trade and economic policy issues before they become the subject of negotiations in the WTO.

Switzerland thought the UNCTAD analysis should have paid more attention to the impact of the Round on developing countries. At the same the Swiss delegate did not share the secretariat's negative estimations on possible erosion of trade preferences of developing countries, particularly the LDCs, or on the limitations on development strategy options imposed by the Round on developing countries. But increased administrative burdens would be faced by developing countries and UNCTAD and other international organizations should help increase the capacity of developing countries for adaptation. The technical cooperation project for Africa should get the priority in this regard.