Jun 25, 1986

MTNS IN GOODS, AFTER COMMITMENTS ON STANDSTILL AND ROLLBACK.

GENEVA, JUNE 23 (IFDA/CHAKRAVARTHI RAGHAVAN) A group of ten third world countries have tabled in GATT a draft declaration envisaging the start of Multilateral Trade Negotiations (MTNS) in specified areas of trade in goods, but conditional on standstill and rollback commitments becoming effective.

The draft for a Ministerial Declaration to be adopted by the GATT Ministerial Meeting (scheduled for September 15, at Punta del Este, Uruguay), has been officially trebled before the Preparatory Committee for a new round, which resumed its meetings here Monday afternoon.

The areas of trade in goods, where the draft envisages the Ministerial Meeting to approve the programme of negotiations and the start of MTNS (subject to standstill and rollback commitments becoming effective), are: safeguards, agriculture, Tropical Products (TPS), Quantitative Restrictions (QRS) and other Non-Tariff Barriers (NTBS), commodities, natural resource products, and Restrictive Business Practices (RBPS).

The programme of negotiations in each of these areas are elaborated in separate annexes to the declaration.

Other areas of trade in goods, listed in a separate annex, are seen as those where further preparatory work has to be completed before a programme of negotiations could begin.

The draft has been tabled on behalf of Argentina, Brazil, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania, and Yugoslavia.

The wording of the draft suggests that these countries envisage the Punta del Este meeting to be a meeting of GATT Contracting Parties at Ministerial level, which implies that the meeting would be subject to the provisions of the general agreement and the agreed procedures for the meetings of CPS.

The specific reference to "strict observance of GATT jurisdiction" in the draft, and repeated references to "trade in goods", even in areas where further preparatory work is seen as required, makes clear that the sponsors rule out any decision at Punta del Este in respect of new themes services, investment, and intellectual property rights which the U.S. and its supporters want to bring into GATT, and put on the agenda of a new round.

The Preparatory Committee has before it a draft Ministerial Declaration on behalf of nine industrialised states, but put forward as a "non-paper" (meaning a paper for discussion that would not commit anyone, not even signatories).

The non-paper (known to have been drawn up in consultation with the U.S., EEC and Japan, and having their support) envisages the launching of the new round of MTNS at Punta del Este, and inclusion on the agenda of the new round, for formulating multilateral frameworks, the issues of services, investment and intellectual property rights.

The third world draft takes, as its point of departure, "the need to preserve the GATT system", through stipulated actions, and from this proceeds to the strengthening of the system through a programme of liberalisation of trade in goods.

It would have Ministers reaffirm, their "conviction in the lasting validity of the basic principles and objectives of the GATT", and recognise the preservation of the GATT "as the first objective in world trade relations, and a prerequisite for subsequent actions for strengthening of the multilateral trading system".

In this context, it would call upon all Contracting Parties (CPS) to "abstain from taking restrictive trade measures for reasons of a non-economic character".

Referring to the "prolonged financial instability" in the world economy and the linkage between trade, money, finance and development, the draft would have Ministers express their concern over the decline in flow of financial resources to third world countries, the net transfer of financial resources from the third world to industrial countries, the debt situation, the high level of interest rates, the misalignment and volatility of exchange rates and stringency of liquidity.

All these demand parallel efforts and measures aimed at promoting "a substantial reform of the international financial and monetary system".

In this context, the draft also calls particular attention to "the negative impact of protectionism on the ability of indebted countries to foster their economic development and to fulfil their financial commitments".

The preservation of the GATT system immediately requires "a firm and credible commitment" not to introduce any new restrictive import measures of a tariff and non-tariff nature in all sectors of trade in goods, and all CPS should undertake to respect the commitment.

The standstill, spelt out in an annexe, would have each CP enter into a commitment not to introduce any new restrictive import measures, or agree to any such if proposed by the legislature, unless the new measures are in strict conformity with the GATT, and particularly its articles VI (anti-dumping and counter-vailing duties), article XIX (emergency protective action on imports of particular products), and article XVIII (governmental assistance to economic development).

The standstill is to apply to all sectors of trade in goods, including textiles and clothing, and any restrictions must fully conform with the GATT provisions.

Actions consistent with GATT, but that have a "limiting or distorting effect", are to be avoided.

And any measures taken in exercise of GATT rights should not go beyond those strictly necessary to remedy the specific situations provided in the relevant GATT provisions.

The preservation of the GATT, according to the draft, would not be attained unless determined measures are taken to eliminate measures inconsistent with the GATT.

The Ministerial Declaration would hence call upon industrial CPS to undertake a rollback commitment in all areas of trade "in order to phase-out within a specific timeframe barriers inconsistent with GATT which impinge upon the exports of the developing CPS".

Such a commitment would be a concrete expression of the willingness of industrial CPS to further the objectives and commitments in part IV of GATT.

These rollback commitments would in turn "need to be complemented by elimination of all measures inconsistent with GATT through negotiations among developed CPS in the context of a new round".

The rollback commitment, spelt out in an annexe, is to apply to all sectors of trade in goods, including textiles and clothing, and would constitute a commitment to "phase-out" in accordance with a time-bound scheme not exceeding three years, all existing restrictive import measures applied on imports from third world CPS, "inconsistent with GATT or not based on specific provisions of GATT".

Both the standstill and rollback commitments are to be taken at the highest levels of executive branch of a government, backed where needed by legislative sanction, and notified to GATT before the launch of a new round of MTNS.

The GATT Council is to establish proper machinery for monitoring and surveillance of individual commitments notified to GATT.

The determination to restore credibility of GATT through standstill and rollback also require revision of GATT disciplines on restriction of trade through safeguards, according to the draft.

The Ministers are called upon to give prompt effect to their 1982 Declaration to reach a comprehensive understanding on safeguards, based on GATT principles and particularly the Most-Favoured-Nation (MFN) clause.

The safeguards issue, the annex to the draft declaration spells out, should be dealt with independently of the launch of a new round of MTNS, or at the very least, as a first stage of a round of MTNS, and put into effect, independently of results in other areas, as soon as agreement is reached.

Based on the MFN principle, the safeguards agreement should be comprehensive and should clarity and reinforce the disciplines of article XIX and become an integral part of GATT.

The strengthening of the GATT, by further efforts at liberalisation of trade through reduction of existing barriers and elimination of distortions in all areas of trade in goods, should be addressed "as a subsequent major objective in world trade and in strict observance of GATT jurisdiction", the draft would have Ministers declare.

The aim of liberalisation and eliminating of distortions should be addressed through a round of MTNS in the area of trade in goods.

The draft would also have Ministers reaffirm that in any new round there should be effective application of the principle of differential and more favourable treatment to third world countries, embodied in part IV of GATT and in the enabling clause, incorporating Tokyo round MTNS into GATT.

The draft calls for specific modalities to be devised (including criteria for trade coverage, type of concessions, extent of reduction of trade barriers and timing of implementation of concessions exchanged), for the effective application of the principle in the new round, and with special attention paid to the particular situation and problems of the least developed countries (LDCS).

The declaration would have the Ministers approve the programme of negotiations in specified areas of trade in goods safeguards, agriculture, tropical products, QRS and NTBS, commodities, natural resource products and RBPS with the specific negotiations in each of these spelt out in separate annexes.

On agriculture, the annexe says that all elements, restricting access for or distorting international markets of agricultural products, should be treated in full from the start of the proposed round of MTNS, and "be effectively included in the strengthened disciplines of GATT".

The priority objective of negotiations on agriculture should be to "substantially improve" conditions of access through liberalisation and expansion of trade in all its forms, so that trade in agricultural goods may develop "on a secure and stable basis, unhindered by distortions in trade and the displacement of efficient producers from their traditional markets or by excessively low prices".

Apart form the general standstill and rollback commitments, participants in negotiations on agriculture should "avoid new measures and dismantle existing ones, taken in the exercise of GATT rights or in the absence of GATT obligations, that limit or distort trade in agriculture".

CPS should also undertake to "gradually phase-out" export subsidies, according to an agreed programme and time-table, and enter into a commitment for greater liberalisation of tariff and non-tariff measures.

As a starting point, they should commit themselves to "minimum levels of access" to markets for all products falling within the agricultural sector.

CPS should also commit their governments to adjust progressively national policies "so as to eliminate all obstacles to full integration of this sector within GATT rules".

The special needs of third world countries should also be taken into account in the negotiations on agriculture, in the light of GATT provisions for special and differential treatment.