Feb 2, 1990


GENEVA, FEBRUARY 1 (BY CHAKRAVARTHI RAGHAVAN) – Mexican president Carlos Salinas de Gortari called on GATT Contracting Parties Thursday to "re-establish compliance with the basic principles of the General Agreement" and establish a "structural equilibrium" within the system to enable countries that made major efforts to open up their economies to obtain "reciprocal benefits".

The Mexican President who is on a tour of Europe was addressing GATT Contracting Parties.

It was not clear from the text of the speech whether Salinas was in effect advocating a change in the current GATT system of multilateralism where bilateral concessions exchanged on basis of reciprocity are automatically multilateralised on a MFN basis.

In his address, Salinas noted that the world was undergoing profound changes and, despite the uncertainty regarding the direction of change, events were taking the countries towards greater interdependence.

The basis for orderly international economic structure for the next century would require consolidation of the political culture at the world level whose essential premise would be preservation of cultural identity and individual forms of organisation.

In a rapidly evolving world situation conditioned by political factors of an uncertain nature, the strength of economic agreements joined by a number of countries would depend on the responsibility with which everyone complied with their commitments.

Mexico, Salinas said, had successfully completed the renegotiations of its foreign debt and would soon be signing agreements with over 500 banks of whom ten percent had opted to provide fresh money and the rest, divided equally, had opted for a 35 percent reduction in principal or a fixed interest rate of 6.25 percent – freeing public resources for investments.

In order to achieve economic efficiency Mexico had also under-taken a number of measures for liberalisation of trade, promotion of foreign investment and deregulation of economic activity.

All these changes demanded an unprecedented export effort, since foreign trade would be the chief engine of growth.

But to take advantage of the virtues of foreign trade required a system "with clear sound rules" to promote trade flows.

The current system, however faced well-known challenges, with protectionist pressures on the rise in major international markets where individual interests had been put above the general benefits of an open system with freer trade.

Tariffs as a recognised and negotiated means of protection had given way to proliferating non-tariff measures, which concealed the nature and scope of protection.

"Objective concepts such as ‘free trade’ have been replaced by subjective ones like ‘fair trade’, facilitating trade harassment and application of arbitrary and selective measures against efficient exporters", the Mexican President complained.

The lack of clarity and precision in standards for applying safeguards had led to proliferation of "half measures" which eroded the principle of non-discrimination, split up the global nature of the system and delayed structural adjustments.

There was also the added risk of formation of blocks undermining the most-favoured-nation principle, with countries not part of blocs running the risk of having to deal with distortions of trade that inhibited the development of their exports.

In this situation, the Uruguay Round offered clear opportunities for shoring up multilateralism and this must be based on five principles:

* Firstly, compliance with the basic principles of the General Agreement should be re-established.

This would necessarily entail integration into GATT of sectors like Textiles and Agriculture. Agriculture sector should be reformed with the long-term objective of establishing an equitable system oriented to trade, while the Textiles and Clothing sector should be integrated in an "orderly and predictable manner" into the GATT.

* Secondly, the quality and content of GATT rules should be improved in order to prevent unilateral interpretations.

Anti-dumping and counter-vailing duty provisions, originally conceived the counter unfair practices, were being distorted and used as mechanisms for harassment of exporters.

* Thirdly, a "structural equilibrium" should be established within the system that would enable countries, which had made major efforts to open their economies "to obtain reciprocal treatment for their exports". It was "paradoxical" that at present countries that delayed opening their economies had the greatest negotiating power.

* Fourthly, constructive and innovative mechanisms should be designed to ensure that the rules of the system contributed to the process of economic development of countries. The principle of special and differential treatment as an exception to the GATT rules had not achieved its objective, and "the degree of development should be incorporated as an integral part of the norms of the system".

* Finally, the trends towards regionalism should be channelled in such a way as to strengthen world exchanges, and trade blocs instead of becoming impenetrable fortresses should become poles of trade development.