Nov 9, 1988

CRITICISM OF LINKAGES AND UNEVEN PROGRESS IN MTNS.

GENEVA, NOVEMBER 7 (IFDA/CHAKRAVARTHI RAGHAVAN)—Third world countries voiced their concern Monday over the efforts of major industrialised countries to forge linkages in the Uruguay round negotiations, as well as over the uneven progress on individual negotiating issues with little or none on issues of interest to the third world.

These third world concerns were voiced at the 45th annual session of the GATT Contracting Parties, which began Monday.

Speaking in what amounted to a general debate, the representatives of third world CPS underscored the importance for them of concrete progress and results at Montreal on such issues as tropical products, safeguards and textiles and clothing.

Several of them also expressed concern over attempts of the industrialised CPS to whittle away the principles and concepts of special and more favourable treatment for third world Contracting Parties, enshrined in GATT and the 1979 enabling clause and reiterated in the Punta del Este declaration.

Opening the session, the chairman of the Contracting Parties, Alan Oxley of Australia, gave an optimistic assessment of the world economy and the trading system, and of the Uruguay round.

Noting the increasing recourse of countries to GATT dispute settlements procedures - with 14 panels set up in 1988, compared to 7 in 1987 and an average of 2.5 till September 1986 - Oxley suggested that if governments made use of institutions, it showed they believed in them.

But he also injected a note of caution about "the brittleness of the foundations" on which the reinvigoration of dispute settlement processes rested.

He also spoke of the serious "and potentially fatal flaws" in trading environment such as no diminution in network of discriminatory export restraint arrangements (in motor vehicles, textiles and steel), unacceptably high levels of support for agriculture, and resort to unilateral or bilateral protection.

Brazil's Rubens Ricupero however suggested that there were really "two different worlds, two separate planets" - if one looked at assessments of the recent Latin American Summit at Punta del Este and of last Toronto Western Economic Summit.

Latin America faced the frustration of a decade lost for development, while the OECD countries had an understandable self-satisfaction at the buoyant performance of their economies.

There were no exaggerations or deliberate distortions by either side, but each was "expressing its own reality".

Two hundred years after the French revolution there was "more freedom, no fraternity and very little equality", Ricupero noted.

As the recent UN economic survey painted out, the number of "success stories" in the third world was steadily dwindling, and "successful developing countries are quickly becoming a sort of species in danger of extinction".

While world trade was expanding, third world share in it had been steadily declining since 1980.

The inequality and unevenness was reflected in the Uruguay round negotiations too, where there was "an inglorious attempt' to nullify and reverse the special and differential treatment for the third world – "one of the scarce conquests of developing countries", even if in practice very little of substance had come out of it.

Even the few tangible expressions of this principle we re being jeopardised by "a politically insensitive offensive", as for example the efforts to undo the special provisions on balance of payments in article XVIII: B.

It was disheartening, Ricupero said, to note that at a time when the Soviet Union was beginning to tone down ideology as basis of diplomatic discourse and no longer claiming class struggle as a guiding principle of its foreign policy, same people in the "presumed more pragmatic west" should be trying "to revive an even more obsolete and dated ideology than Marx’s, the laissze faire ideology of the early nineteenth century".

If the negotiations had so far failed to meet even minimum standards from the viewpoint of development, the outlook was hardly more encouraging in its contribution to the strengthening of the multilateral trading system.

The upbeat predictions about trade expansion in the near future, in contrast to the mood during the Tokyo round, should have provided an "exceptionally favourable environment" for rollback of protectionism.

On the contrary, there was "an irrational escalation of unilateral measures and growing threats of punishing so-called recalcitrant partners ... (by) resorting to bilateral or regional schemes, in utter negation of the multilateral approach".

Ricupero referred in this connection to the "unilateral and illegal actions" against Brazil by the U.S. under its S. 301 of the trade law, and said these were not only a clear violation of GATT rules and disciplines, but also "an undeniable breach" of the standstill commitment.

Brazil, he said, had sought formal consultations with the U.S. on this issue, and was "firmly determined to pursue the matter and redress and restore our rights nullified and impaired by the unilateral U.S. action."

R. A. Akhund of Pakistan, said the Montreal meeting should be an occasion to demonstrate some tangible evidence of progress to renew faith in the negotiating process.

It was necessary, he said, to take account of the reality of the persistent dissatisfaction with the manner in which rules for free trade were observed under the present system, where observance or violation of rules and negotiations were based on the effective bargaining power of the parties.

While the Uruguay round negotiations were making some progresses, the overall climate remained clouded by growing protectionism and trade frictions among major industrialised nations.

At the recent Islamabad informal meeting of Trade Ministers, some principles had emerged which could help further the negotiating process, Akhund said.

First and foremost among them, he said, was the feeling that formal linkages between issues did not help advance the issues.

"Attempts to force inexorable linkages are a sure recipe for choking any progress: whether it be a linking of tropical products with agriculture, or of textiles to safeguards. Similarly, we cannot appreciate the logic of agreement on frameworks of principles only for a selected number of areas."

Secondly, there should be pragmatic compromises acceptable to all, and "not all or nothing solutions".

Thirdly, while there should be quicker progress on some items, specific negotiating frameworks of principles should be developed and agreed on most areas, and in some "a sizeable down payment as evidence of good faith".

Finally, on some of the new areas, a lot of further work would need to be done, particularly toallay fears and anxieties emanating from the implications of multilateralism in these areas.

Akhund also complained about the relative neglect of subjects of greatest interest to the third world, including safeguards, textiles, standstill and rollback, and tropical products.

If a balanced package was to be evolved at Montreal, it was of utmost importance to show some tangible progress in these areas, he said.

A number of countries, including Peru, Mexico and South Korea underlined the linkages between debt and trade and the need to take account of these links in the Uruguay round.

Several of them also stressed the need to give credit in the round to unilateral trade liberalisation measures undertaken by third world countries in pursuance of their adjustment programmes.

Korea criticised the tendency towards bilateral and regional trading blocs.

Japan contrasted the stress on multilateral system in public speeches and talks of the world leaders, and contrasted it with "the reality (which) sometimes betrays these fine words".

"Sometimes one even has an impression that some people are sceptical of the benefits ... of the multilateral trading system. The dangers of unilateralism, bilateralism and regionalism is a reality against which all contracting parties have to fight most urgently", the Japanese delegate, Amb. Hatano declared.