Jul 1, 1987


GENEVA, JUNE 29 (IFDA/CHAKRAVARTHI RAGHAVAN) – A general tariff reduction formula by which industrialised countries could reduce an bind at zero level their tariffs on all products in return for third world countries binding their own existing tariffs on a substantial number of products has been proposed by Brazil in the Uruguay round negotiating group on tariffs.

The proposal, presented Monday afternoon by Amb. Paulo Nogueira Batista, an later circulated as an official document to all participants in the round, would have its impact on negotiations in other groups (non- tariffs, natural resource –based products, textiles and safeguards), and in effect constitute an overall package.

The zero tariff level concession, to be implemented forthwith by industrialised contracting parties (CPS) on a preferential basis for the sole benefit of third world countries for a period of ten years, would be automatically extended to all industrialised countries after that period.

In return, apart form agreeing to bind their tariffs on a substantial number of products, third world countries, after the preferential ten year period, would consider gradual implementation of specific tariff reductions as bound concessions to industrialised countries. These concessions could be agreed upon during the Uruguay round itself.

The Brazilian proposals, before it was presented to the negotiating group on tariffs, was reportedly unveiled at the meeting of the informal group of third world CPS at GATT monday morning, and received support in principle of a large number of them.

In presenting his proposals to the tariff negotiating group, Batista reportedly noted that as a result of earlier GATT rounds, there has been a substantial reduction of tariffs on products traded among industrialised CPS.

And thanks to the application of the most-favoured-nation principle in article one of the general agreement, the third world CPS too have benefited from the low average level of tariffs.

However, third world CPS, left for historical reasons "in the shadow of this liberalisation effort", are confronted with high tariff barriers in industrialised country markets on exports of particular interest to them.

Also, goods processed from raw materials, exported by third world CPS at zero or very low rates, are denied access, and/or find it restricted, by a very high degree of tariff protection.

The grant by industrialised CPS of preferential access to exports of third world countries through "non-contractual schemes" have not been sufficient to provide the third world countries with a compensatory outlet.

"GSP (Generalised System of Preference) national schemes have increasingly excluded products of direct interest to the third world countries and/or subject to special escape clauses that considerably reduce the benefit of the preferential treatment", he pointed out.

The GSP schemes, the Brazilian delegate added; "are administered arbitrarily, in a manner incompatible with the fundamental principles of generality of coverage, non-reciprocity and non-discrimination, under which the granting of such schemes was authorities by the Contracting Parties".

In this situation, only a general formula of tariff reduction by industrialised CPS would put third world CPS in a position to overcome the variety of problems of market access they faced in industrial country markets.

Such a formula would also ensure the concrete application of the principle of differential and more favourable treatment, envisaged in the Punta del Este declaration, in a manner effectively beneficial to the third world countries.

The feasibility of the general formula outlined by him would be "greatly dependent on the successful early conclusion of an agreement on reinforced GATT disciplines on safeguards", Batista declared.

Third world CPS, he said, could only be "effectively attracted" to consider making a significant contribution to the liberalisation process of trade in goods, such as through binding of a substantial number of their tariff rates, "in the context of strengthened rules to govern recourse to safeguards for protection of domestic producers confronted with external fair competition".

Brazil’s general formula of tariff reductions should hence be examined in conjunction with its working paper on safeguards put forward in May at the Negotiating Group on Safeguards.

The general formula of tariff reduction would encompass elements of a "possible broad understanding" to deal with such questions as tariff peaks, tariff escalation and higher tariff rates on products of particular interest to third world CPS.

At the same time, the formula would provide for greater and quicker integration of third world countries in the GATT multilateral trading system, "through special techniques of preferential treatment and differed implementation of concessions".

Brazil had presented its preliminary thinking and, in the light of reactions would refine its ideas and submit at a later stage, on its own responsibility or in association with others, "a structured proposals" for the consideration of the group.

The general formula proposed would affect negotiations in other groups of the Uruguay round, particularly those negotiating groups dealing, primarily or simultaneously, with problems of access, including the one on safeguards.

Brazil would hence bring these proposals to the attention of each of the negotiating groups.

Brazil, Batista added, would also formulate at a later stage a similar approach on Quantitative Restrictions (QRS) before the group on non-tariff measures.