NO CONCRETE ACTIONS TO IMPLEMENT COMMITMENTS AND PROMISES.

Feb 15, 1986

NO CONCRETE ACTIONS TO IMPLEMENT COMMITMENTS AND PROMISES.

GENEVA, FEBRUARY 13 (IFDA/CHAKRAVARTHI RAGHAVAN)— Industrial countries have not carried out their commitment to standstill, nor have they taken any concrete actions to implement their promises to eliminate Quantitative Restrictions (QRS) and other equivalent measures on products of export interest to the third world.

In presenting this assessment in a report (TD/B/1081) the UNCTAD secretariat brings out that the Non-Tariff Measures (NTMS) applied against imports from the third world by and large are much higher and more frequent than for imports from other industrial countries, and even the tariffs against imports from the third "world are higher than those on imports from other OECD countries.

In 1983, at UNCTAD-VI in Belgrade, the industrial countries committed themselves to halt protectionism "by fully implementing and strictly adhering to standstill provisions they have accepted, particularly in respect of imports from developing countries".

They also agreed "to work systematically" towards reducing and eliminating QRS and measures having similar effect.

On an analysis of the information on non-tariff measures, available in UNCTAD’s own data base, the report says: "with a few exceptions, such as fuels, the analysis of the results ... gives no evidence that the commitments entered into by developed countries in 1983 have been transformed into concrete actions to eliminate QRS in sectors of export interest to developing countries, nor does it reveal a standstill of protectionism by developed counties".

The U.S. move in 1983 to eliminate licensing of fuel imports was however a step towards observance of the international was commitments, though the benefit to foreign suppliers mitigated by rise in domestic production associated with the deregulation.

If liberalisation of restrictions against fuel imports were excluded, UNCTAD says that there was an increase in the amount of trade affected by measures.

UNCTAD’s trade coverage ratios (the amount of imports affected by trade measures as a percentage of total imports of the same product group), increased from 16.9 percent in 1981 to 19.2 percent in 1984.

The greatest increase in the index, of 1.6 percentage points, was between 1981 and 1982, with a further increase of 0.6 percentage points between 1982 and 1983.

There was however a negligible change between 1983 and 1984, suggesting a resistance to protectionism.

The UNCTAD analysis covers Austria, Canada, the ten EEC member-countries, Finland, Japan, Norway, Switzerland, and the United States.

In these countries, in the product groups of interest to the third world countries, the trade coverage ratio remained at the high level of 37 percent in 1982 and 1983 for food items, increasing to 38 percent in 1984.

About 30 percent of all items were affected by the measures.

The UNCTAD analysis also brings out the differences in the treatment applied by the OECD countries on imports from their trading partners in other OECD countries, from "the third world countries, and from the socialist countries.

Between 1981 and 1984, the NTM, import coverage ratio for non-fuel imports from the third world rose from 2l percent to 23 percent, remaining much higher than that against imports from OECD countries (17.2 percent) or from all sources (19.4 percent).

In the case of third world countries, between 1981 and 1984, imports of food items and live animals faced increased intervention: the NTM trade coverage increased from 21.6 percent to 28.1 percent and from 22.4 percent to 29.6 percent respectively.

The level of intervention affecting imports of animal and vegetable oils, originating from the third world and socialist countries, has been much higher than those originating in other OECD countries.

Fifty-two percent of imports of these products from the third world, and 77 percent from the socialist countries, are subject to one or more NTMS, as against only 36 percent of imports from other OECD countries.

Even in tariffs, where the average applied tariff is a relatively low six percent, tariffs on imports from the third world are higher than those on imports from the OECD countries, even when the third world countries are benefiting from preferential tariffs (under GSP or similar schemes).

For oil seeds and nuts, for example, imports from the third world face a tariff of 0.4 percent, while that from other OECD countries face only 0.1 percent tariff.

Animal and vegetable oils from the third world face a five percent tariff against 2.4 percent by imports from other OECD countries.

Manufactures (other than chemicals) from the third world face a 7.7 percent tariff against a 5.2 percent from other OECD countries.

Within the manufacturing sector, clothing faces a 17.2 percent tariff on imports from the third world against a l4.8 percent on imports from the OECD countries, and footwear a 11.7 percent from third world against 9.7 percent from the OECD countries.

UNCTAD comments: "access of products of interest to the developing countries, especially in those sectors where they have a comparative advantage, has not been improved and they face discriminatory treatment, in particular in comparison with imports from developed market-economy countries themselves.

"This is in spite of the commitments frequently reaffirmed for a differential and more favourable treatment for imports from developing countries".

UNCTAD reports that the levels of protectionism has also increased in a majority of the third world countries, "but the fundamental reason for intensification in application of measures was balance-of-payments difficulties".

Faced with a severe shortage of foreign exchange, the third world countries have been forced to reduce imports, despite the high costs of this policy.

The situation has also become more acute because of l the need to service the increased debt burden and the higher rates of interest.

NTMS applied by the third world countries are most heavily concentrated on volume restraining measures (40.1 percent), and especially on non-automatic authorisations (24.4 percent).

These types of measures, UNCTAD notes, make it easier for the governments concerned to regulate scarce foreign exchange and to protect infant industries.

Para tariff measures and control of price level are much less frequently applied.

And while a majority of third world countries apply different kinds of NTMS, and particularly QRS, to attain diverse objectives, "it is important to note that these measures are normally applied without discrimination as to the countries supplying the imports", UNCTAD adds.