Mar 9, 1982




Geneva Mar 5 (IPS/Chakravarthi Raghavan) -- The November General Agreement on Tariffs and Trade Ministerial meeting must confront squarely measures being taken by countries in the 'grey areas' to limit access to domestic markets or gain unfair advantage in the export markets, the GATT Director-General, Arthur Dunkel has warned.


Dunkel was speaking at Hamburg at the 'ostasiatisches liebesmahl', and the text of his speech was made available here by the GATT secretariat.


The grey areas, according to Dunkel, are the growing bilateral and sectoral arrangements for so-called self-restraint and orderly marketing arrangements, involving mainly the industrialised countries but into which some of the Asian Third World countries were being drawn.


In many Third World Asian countries he had been visiting, Dunkel said, the Mutlifibre Arrangement (MFA) was better known than GATT.


Businessmen and politicians, he said, viewed GATT activities primarily from the viewpoint of textiles and clothing, which accounted for ten per cent of their total exports and 20 per cent of their exports of manufactures.


Eighty per cent of the industrialised countries' overall trade deficit in textiles and clothing was offset by their exports of dyes, synthetic fibres and textile machinery to the Third World, Dunkel reminded textile manufacturers in the North.


For those Third World countries, critically dependent an textiles, the MFA was 'bound to call in question the sincerity of those in the west who so often, and so eloquently, proclaim their dedication to the principles of liberal trade'.


While the MFA was a negotiated derogation from the basic GATT laws of international trade, the special arrangements with protectionist effects, essentially bilateral and wholly outside the rule of lawy now involved one sector after another -- steely shipbuilding, synthetic fib.resq automobiles, and agriculture where intervention was institutionalised.


GATT itself contained 'escape clauses' and had a record of waivers and exceptions, both negotiated and otherwise.


'But what is disturbing in the present situation is the growing dimension of the "grey area" in which restrictions are imposed without any legal sanction', dunkel added.


Another dangerous distortion of competitive conditions was the rapidly spreading use of subsidies, both domestically and in export markets.


The growth of competition through export subsidies posed a special problem for the Third World 'which cannot afford to join that game, but cannot afford either to allow the terms of competition to be thus turned against them'.


Deploring the gradual erosion from respect for rules, Dunkel,

without mentioning by name, took a critical view of the recent remarks of the EEC Ccommission vice-President, Viscount Davignon, who had spoken about protectionism is not only a possibility but a probability.


Dunkel, again without specifying the country, was even more critical of the talk in the United States, both in Congress and from the administration, about trade being conducted on the basis of 'strict reciprocity -


'In my view this implies repudiation of existing international obligations, and all the lessons of the past (between the two world wars, which have demonstrated that strict reciprocity is technically infeasible'.


The recognition of this makes countries arrive at the GATT system, which was nothing revolutionary, but what prevailed in practice before World War One, he said.


Parties negotiated in GATT an the basis of both reciprocity and non-discrimination, dunkel said, and this was due to their understanding that reciprocity was a subjective notion that could not be looked at in bilateral terms, could not be determined exactly, but could only be agreed upon.


'One side alone cannot decide what reciprocity is', he added.


The habit of international cooperation, based on general rules of economic behaviour, which had underpinned the enormous material progress of the post-war era, was now seen by an increasing number of governments to be threatened by the trend of events.


The GATT November ministerial meeting, Dunkel said, is now the focus of hopes that order can be restored.


But mere verbal reaffirmations will not be enough. Positive action is needed to restore confidence in the trading system and GATT, to reach a common understanding of the state of GATT law and to secure effective and universal application of rules, he argued.


Mere words would not do, they would only confirm that governments have exhausted their capacity for constructive cooperative action and are reduced to collective incantation.