7:03 AM May 24, 1993


Geneva 23 May (Chakravarthi Raghavan) -- GATT Director-General Arthur Dunkel has warned against the dangers to the multilateral trading system in the idea of 'managed trade' and attempts to achieve environmental or social objectives through unilateral standards or use of trade policy.

The warning from Dunkel came in a speech prepared for delivery on Monday in Seoul while speaking at the Pacific Basin Economic Council. The text was made available in Geneva by the GATT press office.

While welcoming as 'encouraging' the US request for extension of fast-track authority to 15 December and noting that this new deadline (for concluding the Round) was widely supported, Dunkel hoped the July Western Economic Summit in Tokyo will bring credibility to the new deadline.

Dunkel who had set so many unfulfilled deadlines on the Round over the last three years, was cautious in predicting that the new deadline would be met. He merely said: "There is now a chance to put the Round at the top of the international economic agenda. If the world misses this chance we cannot be sure of another."

On the issue of multilateral system and regional arrangements, Dunkel underscored the need for regional arrangements now being concluded to remain 'open' -- defining the open trading system, not as one involving unrestricted circulation of goods, services and capital, but one carried out according to principles of non-discrimination, protection only through tariffs and within a multilaterally agreed framework of rules, including safeguards for hard-core situations and dispute settlement procedures.

The very success of the open trading system, Dunkel said, had brought to the forefront of the trade policy debate a number of competition-distorting policies which were previously hidden behind border protection.

Reduction of barriers to trade at the border -- with the exception of persistent problem areas like textiles and agriculture -- has shifted political focus to domestic policies, such as, internal and export subsidies, technical standards, sanitary and phytosanitary measures, intellectual properties and services. Hence the high level of ambition and tremendous challenge in the agenda of the Uruguay Round.

However, even before the Round was concluded, the trade significance of policies in other areas such as environment, labour standards and social policies was being considered.

"Here," Dunkel warned, "the danger is that legitimate and widely-shared concerns in these areas are being misapplied to trade policy, where they all too often translate into a belief that trade is somehow 'environmentally hostile' or 'anti-people'. And all of the old protectionist interests are still out there as well, waiting for their chance at a comeback and all too happy to borrow some respectable new clothes.

In remarks directed against the United States (but without naming it) and pronouncements of high officials of the Clinton administration, Dunkel added: "Furthermore, some of the politicians and officials who should be fighting for the open trading system that has made their societies more prosperous and more secure do not, because of the seductiveness of ideas of 'level playing fields', 'fair trade' or 'managed trade'. We see attempts to impose domestic environmental or labour standards on other countries through trade measures, and attempts to open markets through bilateral pressure rather than in multilateral negotiations."

"This bilateralism," Dunkel added, "is a threat to open regional arrangements as much as it is to the open multilateral system...Everyone who has an interest in an open economy...should join in resisting the closing-in of minds and of trade...The idea of 'managed trade' is fundamentally anti-multilateral, since it is inherently discriminatory."

Political leaders needed encouragement to pursue environmental, social goals through specific, targeted domestic policies and through negotiations in appropriate existing international fora such as ILO and UN agencies, and not through unilateral imposition of standards or use of trade policy as a weapon.

They need encouragement to act more in consistency with multilateral rules and principles -- e.g. implement panel rulings -- and renounce bilateralism.