Mar 25, 1986


GENEVE, MARCH 12 (IFDA/CHAKRAVARTHI RAGHAVAN) – The forthcoming new round of Multilateral Trade Negotiations in GATT, because of the universal and global implications of its outcome, should be open and permit participation of all interested countries, the Soviet Union suggested Friday.

In putting forward this view Friday, Mikhail Pankine, head of the Department of International Economic Organisations of the Soviet Foreign Trade Ministry, indicated to newsmen here a Soviet interest in participation in the new trade round.

Pankine also expressed Soviet desire to establish "closer contacts" with the general agreement on tariffs and trade, to which it was not a Contracting Party.

"We closely follow the course of events in connection with the preparatory process to the new round of MTNS within the framework of GATT. Everything seems to indicate that the outcome of this round could have universal and global implications. Accordingly it is essential to ensure that the forthcoming round should be of open character, permitting all interested countries to participate in it", Pankine added.

Tough the Soviet Union has expressed itself on this in more general terms in the recent past, including in December at the UN Economic Commission for Europe, this is the first time they have set out their views in such direct terms.

Pankine said that the Soviet Union had not formally applied to be given the status of "observers" in GATT, where any decision would require a consensus, but had undertaken informal consultations with a number of GATT CPS.

While the Soviet Union had been "very much encouraged" by the positive attitude of many CPS to the informal soundings, "some important trading nations participating in GATT up-to now have not shown the necessary political will to positively react to our intentions", Pankine said.

Pankine did not want to name the opponents of the Soviet request. But GATT sources said that the U.S. and EEC are opposed to grant of observer status to the Soviet Union or to facilitate in any way an eventual Soviet adherence to the GATT, and have hence been raising procedural roadblocks.

According to these sources, ever since the Soviets began their unofficial soundings two years ago, the U.S. and EEC have sought to establish some general guidelines in deciding grant of observer status.

This has so far been decided on individual case-by-case basis.

The U.S. and EEC now want to lay down guidelines, including a judgement as to whether the grant of such observer status would lead to joining the GATT, and how sincere the applicant might be in evincing such a request.

At the last meeting of the GATT Council, where the Gulf Co-operation Council was given "observer status", the U.S. and EEC reportedly declared that they would not agree to consideration of any more requests for observer status, unless the general issue was first decided.

Pankine said Friday that the Soviet unofficial soundings had been made in Geneva since 1983. But this was also being pursued with individual country delegations coming to Moscow for trade talks.

The Soviet representatives in Geneva, Pankine added, had also established "contacts" with the GATT Director-General and its Secretariat, and this was before the general objections about observer status had been raised in the GATT.

Pankine added: "we are not discouraged, and we are going to continue our efforts. We deem it important for the future MTNS to be open to everyone".

"Nobody knows what will be the final scope of the MTNS. But many things show that it will have global and universal impact. Because of that the Soviet Union might be interested in participating in the new round of negotiations".

Earlier, Pankine had underscored the high importance attached by the Soviet Union to the activities of UNCTAD, and the Soviet view that UNCTAD-VII should reach action-oriented decisions on the "burning questions", and that work at UNCTAD-VII should involve a continuity with the past and should not be " a start from the scratch".

On the common fund, Pankine noted that the Soviet Union had fully participated in the negotiations leading to the elaboration of the agreement, but had not so far signed or joined.

The various concerned authorities in the Soviet Union, Pankine said, were giving serious consideration to this issue of ratification or accession, which posed some difficulties.

The major Soviet interest in the common fund was related to the so-called first window, to finance the buffer stock operations of International Commodity Agreements (ICAS) to be associated with the fund.

In this area the situation had become "very deplorable", and the number of ICAS were diminishing, with renegotiations of even existing agreements facing difficulties, Pankine pointed out.

The prospects for activities of the first window of the common fund were thus not very clear.

As regards the second window to finance the activities to develop the commodity economy of third world countries, the Soviet Union faced some problems in regard to this multilateral activity.

This related to the fact that about 50 percent of the commodity economy of third world countries were controlled by TNCS in one way or another.

The Soviet Union had reservations about use of international pool of resources to be used to finance development projects in the commodity sectors of the third world countries, when there would not be a guarantee that the funds would be used to finance projects for the benefit of these TNCS.

"Politically and ideologically we cannot be expected to participate in activities to facilitate the operations of TNCS. Because of this we are still to take a decision on the common fund".

On the third world debt problem, Pankine said in the Soviet view the third world countries could no longer repay their debts under existing conditions.

At the same time, the Soviets recognised that in the interests of international economic security, there was a need for joint search for a just settlement of the debt problem.

An essential pre-condition for a solution of this and other economic problems lay in making real progress in disarmament and the use of resources saved for development.

Other conditions included reducing all interest payments on loans and credits, stabilisation and reduction of interest rate, renunciation of protectionism in trade, restructuring of the international monetary and financial system, and ending efforts to use financial and monetary difficulties of individual countries to exercise political pressures on them.

In a reference to the Baker Plan, Pankine said that notwithstanding the various proposals made recently by some of the creditor countries, the latter were still trying to reserve the existing mechanisms, which enabled them to obtain an outflow of funds from the third world countries by way of repayment of interest and principal.

Citing the Soviet experience with Peru, Pankine said that sometime ago when Peru found itself in difficulties over its debt, the Soviet Union agreed to help repayments by "opening up its markets" to new or traditional exports of Peru to enable export earnings to repay the debt.

This had proved to be satisfactory. Even when Peru found itself force to limit repayments to ten percent of its export earnings, Peru’s arrangements with the Soviet Union were not affected.