Aug 30, 1985

GSTP NEGOTIATING COMMITTEE TO MEET IN SEPTEMBER.

BY CHAKRAVARTHI RAGHAVAN, GENEVA, AUGUST (IFDA) – The negotiating Committee on the Global System of Trade Preferences (GSTP) among Third World countries is expected to hold a meeting in Geneva in September to follow-up an the GSTP Ministerial meeting held in New Delhi on July 25-26.-

The New Delhi meeting has set a revised and tight time-schedule for the completion of the preparatory phase on the GSTP negotiations, and for the actual launch and conclusion of the first round of negotiations.-

The 1982 Ministerial declaration of the Group of 77 on GSTP set out the general principles, rules and time-table for the negotiations, with the first phase of negotiations to be concluded by 1985.-

Under this declaration, the GSTP is envisaged to be negotiated step-by-step, improved and extended in successive stages, and reviewed periodically.-

The declaration vested the authority for taking steps to establish the GSTP, including negotiations for it, in the GSTP negotiating Committee, open to all Group of 77 member-governments who have notified their desire to participate in the negotiations.-

Till now, because of disputes about financing the costs, the preparatory work and meetings of the GSTP negotiating Committee have taken place on an informal basis, and within the framework of informal meetings of the Group of 77 in Geneva.-

At New Delhi in July, the GSTP negotiating Committee met formally, and agreed an procedures for further work.-

With UNDP financing now assured under an inter-regional project, the first meeting of the GSTP negotiating Committee is now expected to be held in Geneva in September, when the Committee is expected to elect a chairman and a bureau, consisting of at least three vice-chairmen, and also constitute three working groups to organise and complete the on-going preparatory work, on a more formalised basis.-

The three working groups are to deal with the framework agreement, the techniques and modalities for negotiations, and draw up a negotiating plan.-

Under the time-table set at New Delhi, the framework agreement is to be elaborated by October 31, 1985, the techniques and modalities for negotiations by December 31, 1985, and the negotiating plan for the first round of negotiations drawn up by February 28, 1986.-

The New Delhi meeting has suggested on this basis the start of the first round of negotiations by May 1986 and its conclusion by May 1987.-

Brazil has offered to host the next Ministerial meeting on GSTP in April 1986, to launch the first round of negotiations.-

By that time the preparatory phase for GSTP should be concluded with the approval by governments of the framework agreement, as well as the techniques and modalities and the negotiating plan for the first round.-

The framework agreement, the overall legal framework within which the ground-rules for GSTP will be incorporated, will provide the necessary legal foundation for mutually beneficial trade expansion among Third World countries on a continuing basis.-

Considerable preparatory work has already been done on the components to be included in the framework agreement: rules of origin for GSTP, rules for safeguards, special provisions for Least Developed Countries (LDCs), rules for extension of negotiated concessions, procedures for negotiation of long-term contracts among interested GSTP participants, rules for modification or withdrawal of concessions, and rules for new entrants for GSTP.-

In respect of some of them, there are a few, but important, points yet to be settled, while for others the draft rules prepared and sent to governments have yet to be finalised in the light of suggestions received from them.-

In the case of rules of origin, among the issues to be settled are the actual percentage figures for value added to be used for determining eligibility criteria for GSTP.-

A connected issue is the question of partial or full cumulation on inputs from other GSTP participants used by another participant in making and exporting the finished product, and the percentage figures for these.-

In "full" cumulation, used within some regional and subregional arrangements, all value-added originating in individual participating states could be cumulated or added up to determine whether the resulting product satisfies the origin rule.-

In "partial" cumulation, only products that have acquired originating status in one participating state may be taken into account when used as inputs for a finished product eligible for preferential treatment in another participating state.-

It was agreed at New Delhi that for GSTP, there should be "partial cumulation".-

Though no decision could be reached at New Delhi on the percentage figures, at the senior officials' meeting that preceded the Ministerial meeting, there was considerable support for the recommendation that in order to attract GSTP, the value of materials, parts or produce from non-participating countries should not exceed 40 to 50 percent.-

Also for "partial" cumulation, the aggregate content originating in the participating country should not be less than 60 to 75 percent of the F.O.B. (Free On Board) value of the final product.-The actual percentages in respect of both have to be settled in the GSTP negotiating Committee.-

As agreed to at New Delhi, after the GSTP is set up, the rules of origin could be reviewed at the request of one-third of participants.-

Another suggestion for rules of origin, from the New Delhi meeting, is that in respect of the Least Developed Countries (LDCs) - for whom the 1982 declaration calls for non-reciprocal and special benefits - there could be an additional differential of ten percent in their favour.-

A second area to be finalised and incorporated in the framework agreement relates to the rules of safeguards for GSTP and balance of payment measures.-

Pending final agreement, the proposals drafted so far call for non-discriminatory application of safeguards, and only to the extent and for such time as might be necessary to prevent or remedy the serious injury or threat thereof to domestic producers as a direct consequence of imports enjoying GSTP preferences or to meet serious bop difficulties.-

Expect in critical circumstances, as a general rule all safeguard measures must be taken only after consultation between interested participants, and countries planning to take such actions "will be required to demonstrate to the satisfaction of concerned parties, and the 'permanent mechanism' to be set up for GSTP, about the serious injury or threat thereof justifying such measures".-Other rules to be incorporated in the GSTP framework agreement include rules for extension of negotiated concessions to other participants.-

The idea is that concessions exchanged during the negotiations among participants in bilateral/plurilateral negotiations, shall be extended on implementation to all participants in GSTP negotiations on a most-favoured-nation basis, but subject to some conditions.-

These would include the right to exclude tariff concessions linked to direct trade measures or sectoral arrangements, or concessions applicable exclusively to products originating from LDCs, as also an omnibus provision for any participant to be able to exclude any other participant from its concessions.-

The New Delhi meeting was told that some of the concepts like "para-tariff" concessions, "direct trade measures", "sectoral arrangements", and "participants" might need definition.-The ASEAN member-states who have been seeking definition of "participants", made clear at New Delhi that any such definition would have to be consistent with the 1982 Ministerial declaration that the GSTP will be open only to members of the Group of Seventy-seven.-Other rules to be incorporated in the framework agreement include rules for modification or withdrawal of concessions, procedures for negotiation of long-term contracts among interested participants in the GSTP, and rules for new entrants.-

While the Group of 30 within the Group of 77 in Geneva have prepared draft rules on these matters, they have yet to be finalised in the light of suggestions from participating governments.-

The GSTP negotiating Committee would now have to tackle these issues also, and put them into an overall framework.-

Side-by-side the GSTP negotiating Committee must formulate the techniques and modalities for the first round of negotiations.-