Apr 27, 1984

WILL GRADUATION ALSO MEAN NO DISCRIMINATION AGAINST THIRD WORLD EXPORTS?

GENEVA, APRIL 25 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Some developing countries might be fully prepared to accept the same obligations as developed Contracting Parties in GATT, if in return they would receive same treatment as other developed CPs, the Director-General of GATT, Arthur Dunkel has suggested.-

Dunkel was speaking Tuesday in Chicago, at the non-official World Trade Conference there. A copy of his speech has made available here by the GATT secretariat.-

Dunkel said that many people in the U.S.A. and elsewhere, saw relations with developing countries as one of the "structural problems" of the general agreement, in the sense that the status of developing countries was undefined and the special rules applying to them made no distinction between the different levels of development within the group.-

"It is sometimes suggested that there should be graduation - let U.S. not be afraid of the word - by countries attaining the higher levels of development through the acceptance of more of the obligations of GATT membership".-

"The concept is not popular, but I am not sure that all developing countries would reject it out of hand", Dunkel said.-

"Some of them might be fully prepared to accept the same obligations as developed Contracting Parties if that meant that in return they would receive the same treatment - for example, no quantitative restrictions on their exports of textiles, clothing and agricultural products, and no pressure for 'voluntary export restraints' in other sectors where they have attained competitive efficiency", Dunkel added.-

On the U.S.-Japanese proposals for a new round of negotiations in GATT, Dunkel said that a new major round would be feasible only if "a sufficiently large number of countries are persuaded that overall its results will benefit them".-

While the U.S.A. wanted such negotiations to cover new areas of services, investment and high technology, "many other Contracting Parties have relatively little interest in these areas and need to be satisfied that progress is to be expected on the question of most concern to them".-

Achieving a consensus on the agenda and objectives of any negotiations was therefore a first priority, and "a premature or ill-prepared initiative" would do more harm that good, Dunkel warned.-

If he was a member of a national administration, Dunkel went on, he would judge whether the concept should be supported, on the basis of answers to five questions.-

Would such a round help find a rational way to take account of the special needs of the developing countries, while integrating them more fully in the GATT system, "as partners, rather than recipients of differential treatment and simultaneously as objects of discriminatory restrictions?".-

Was it likely to put an end to the proliferation of protective measures taken outside GATT rules and subject to no multilateral disciplines?.-

Would it help to bring agricultural policies, including domestic policies where they affected international trade, more nearly into line with the principles of competition and comparative advantage?.-

Would it help to reverse the "dangerous escalation of competition from subsidies?.-

Would it, in overall terms, strengthen the GATT system as a basis for "secure and predictable trade relations" for the rest of this century?.-

Answers to all these questions could be positive, only "if there were a real sense of common commitment - an understanding that international trade is not a zero-sum game, in which one country's advantage can only be secured at the expense of another".-

The great problem in world trade at the moment, Dunkel said, was not that national objectives conflict, but that they were ill-defined, and "we have got into a dangerous habit of adopting adversary positions almost automatically".-

North-south relations had been "bedevilled by a false picture of two great blocs whose interests are necessarily in conflict".-

"Could the reality of the interdependence between them have been demonstrated more convincingly than it has been by the debt crisis? The recession we have just lived through would be nothing as compared with the consequences of collapse of the financial system", Dunkel added.-

It was clear that the contraction of imports into the heavily-indebted countries, and into the traditional oil exporters, had severely affected the export performance of the Industrial countries in 1983 - though less that of Japan than of north American and European countries.-

From every point of view, and particularly of the indebted countries themselves, it would be preferable if their payments adjustment could take place through export expansion.-

But for this, they depended on economic growth and open trade policies in the developed world.-

But while there was growth, what of trade policies? What signals had been given to potential investors in Latin America by developments in U.S. textiles policy? What scope would be left by the world-wide cartelisation of the steel industry for the expansion of steel exports of Brazil, even if the problem of subsidies had not arisen?.-

At Williamsburg, the industrialised countries had recognised the need for "roll-back" of protectionism and pledged themselves to start the process.-

"So far the pledge has not borne fruit. Nobody now disputes however, that there are fundamental problems which have to be settled before they destroy the trading system, and that there is not very much time left".-

No doubt this was why some governments, like Japan and the U.S.A., were advocating a new round of negotiations, so that problems could be tackled as a package.-

But, while a new round could resolve many difficulties, if it failed, it could also defer their resolution indefinitely. Nor should the prospect of a new round be allowed to delay progress on those issues where it was possible to move forward in the short term.-

On the issue of agricultural protectionism, Dunkel said agricultural trade seemed to exemplify all the faults of the trading system: access to markets was highly restricted, conditions of competition had degenerated in third markets, and governments everywhere were concerned by the explosion of direct and indirect costs of support and protection for domestic production.-

All this, he noted, had happened despite GATT rules, and the wide evasion of such rules.-

One reason was that the U.S. itself had felt unable to live with those rules, and in 1955 had sought and obtained a permanent waiver from GATT obligations on agriculture.-

This was before the formulation of the EEC’s common agricultural policy.-

The U.S. waiver had set a precedent for differential treatment for the EEC, Japan and others - including Switzerland which secured special protection for agriculture in its protocol of accession to GATT.-

But for the first time in GATT history, there was now some chance to make GATT rules fully operational in agriculture, Dunkel noted.-

The Agricultural Committee in GATT had made some progress. There was now general agreement that the rules relating to agriculture had not been applied with sufficient rigour and that the rules could be improved.-

But if this was to be done, leadership from the major participants, based on the recognition of their common interest in finding a rational solution, would be essential.-