Oct 16, 1987


GENEVA OCTOBER 14 (IFDA/CHAKRAVARTHI RAGHAVAN) – The European Community put forward Wednesday in GATT its proposals for liberalisation of the trade in tropical products.

About seven percent of EEC’s imports are tropical products, and in 1985 they amounted to about 46 billion dollars.

The issue of liberalisation of trade in tropical products has been on the Agenda of GATT in one form or another, and in successive MTNS, for nearly three decades, but with few tangible results.

There have been several specific commitments and undertakings by the industrialised states to liberalise this trade, and thus enhance the export earnings of the third world exporting countries, but with minor exceptions most of these have remained unimplemented.

The issue was supposed to have been dealt with as a matter of priority in the Tokyo Round. But nothing came of it.

It also figured in the 1982 GATT Work Programme mandated by the Ministers, but again without progress.

It has now got subsumed in the Uruguay Round.

In the Punta del Este Declaration, the Contracting Parties recognised the importance of this trade to a large number of third world CPS and agreed that "negotiations in this area shall receive special attention, including the timing of the negotiations and implementation of the results".

In this regard, the declaration while recognising the Uruguay Round GATT MTNS in Goods as a single undertaking said agreements reached at an early stage might be implemented on a provisional or a definitive basis by agreement prior to the conclusion of the round.

The initial phase of negotiations, to be concluded by end of 1987, is to cover submission of initial proposals and other inputs by participants aimed at achieving agreed objectives and agreement on techniques and modalities as a common basis for negotiations, including the tabling of initial requests/offers.

But discussions in the negotiating group, chaired by Malaysia’s Paul Leong Khee Seong, have got bogged down over the issue of so-called "extended coverage".

This is a term used by the U.S. and supported by the EEC, Japan and other industrial countries to mean that negotiations should not merely cover products of particular export interest to third world countries, but other tropical products exported by the industrialised countries.

In this view, the U.S. and other industrialised countries say the liberalisation should cover not only the markets of industrial countries (the subject of three decades of unsuccessful efforts) but of third world countries too.

The Asian countries have lent indirect support to the extended coverage concept.

But in private talks some of them are finding it difficulty to reconcile this stand of theirs with the high-visibility support of countries like Malaysia in the south commission and south-south co-operation, and the on-going negotiations for global system of trade preferences (GSTP) among third world countries.

The issue of "extended coverage" remains unresolved so far, and an informal meeting of the group Wednesday failed to resolve it, third world participants said.

The EEC proposals tabled in the negotiating group covers tariff and non-tariff measures on tropical products in their raw, semi-processed and processed forms.

Products "closely linked" to the EEC’s common agricultural policy and "a small number" of products where the EEC was having "insuperable difficulties" have been excluded, according to the EEC delegate, Jacques Dugimont, who presented the proposals.

Dugimont’s statement and EEC proposals did not identify the products. But EEC officials gave the examples of tapioca products, which are considered direct wheat substitutes, and vegetable oils.

The products posing "insuperable difficulties", EEC officials explained, are some of those being imported now duty-free from the lome countries and which would face sharp competition from imports from Latin America if the liberalisation proposals were applied. These, they said, included African bananas.

In presenting the proposals, Dugimont told the negotiating group that the EEC proposals were "wide-ranging" and with "far-reaching" consequences. The EEC could not undertake such a programme of liberalisation in isolation, and would be unable to implement them if they were not matched.

The conditions put forward by the EEC delegate were three –fold:

Firstly, there should be a "fair degree of burden sharing", including an assessment related to balance of benefits, involving all industrialised countries, centrally planned economies and the "more advanced" third world countries.

Secondly, there should be a "satisfactory level of reciprocity" by the main beneficiary countries, including third world countries whose level of development, financial and trade needs allowed them to participate more fully in the overall balance of rights and obligations under GATT.

Thirdly, where third world countries enjoy a "dominant supply position" for raw materials on the world market, there should be "an appropriate reduction of measures restricting the export of such products, matching the extent to which tariff escalation is reduced in importing countries".

Dugimont said that the EEC also had a particular responsibility for a number of associated countries (ACP countries and some others with special agreements like the Mediterranean countries), which is reflected in the EEC policy.

The expressed interests of the least developed countries on the specific trade advantage that they derived from existing preference margins would also have to be taken into consideration in the present negotiations, the EEC delegate said.

In its proposals on tropical beverages and what is described as "tropical industrial products", the EEC proposed as "orientations" for negotiations:

--Elimination of duties for industrial tropical raw materials,

--Elimination or significant reduction of duties for industrial tropical semi-processed products, and

--Reduction up to 50 percent of existing duties for finished industrial tropical products.

The products covered under this proposal are cocoa, tea and coffee, manufactured tobacco, tropical woods and natural rubber, and jute and hard fibres.

In respect of "tropical agricultural products", the EEC proposed:

--Elimination or significant reduction of duties for fresh or semi-processed agricultural tropical products, and

--Significant reduction of existing duties for processed agricultural tropical products.

The term "agricultural tropical products" covers spices and essential oils: plants, vegetable materials, etc.; tropical fruits (including) shelled fruits) and nuts and processed products.

The tropical fruits are tamarinds, cashew apples, mangoes, mangosteens, papayas, lychees, jackfruit, guavas, pawpaws, sapodilla plums and similar tropical fruits.

The tropical nuts are coconuts, cashew nuts, Brazil nuts, areca and cola nuts, macadamia nuts and similar tropical nuts.

In the area of non-tariff measures, the EEC proposed the progressive elimination of remaining national quantitative restrictions (QRS) (with the exception of fresh bananas), and progressive elimination or reduction of consumption taxes on coffee, tea or cocoa affecting trade in these products.

At a press briefing Wednesday, community officials said that such consumption taxes were maintained by several individual members of the EEC (Denmark, The FRG, Italy, Belgium, Greece, and Portugal, and on cocoa in France).

No overall figures of the taxes collected are available, but in the case of the FRG alone this is estimated to be about six billion Deutsche marks or about 3.2 billion U.S. dollars.

In informal talk with third world delegates Tuesday evening, the EEC delegate, Amb. Tran Van-Thinh made the point that the EEC had undertaken a major exercise and put forward its proposals taking account of the long history and frustration of third world countries within GATT on this issue.

The proposals by the Community was intended to give practical effect for the "the political commitment to give ‘special attention’ to tropical products", Dugimont told the negotiating group Wednesday.

Third world sources said that most of the participants at Tran’s meeting did not react immediately, preferring first to see the proposals in detail.

Some participants said that the proposal for "reciprocity by the main beneficiary countries" in return for "progressive elimination" of QRS would even be contrary to the rollback commitments.

The participants noted that QRS were in any event illegal in GATT, but were being maintained by the industrialised countries against third world exports in one form or another.

Under the rollback commitments, measures contrary to GATT have to be eliminated within an agreed timeframe, not later than the completion of the round.

The commitment provides that "there shall be no GATT concessions requested for elimination of these measures".

At a press briefing Wednesday, Tran said that the EEC did not look to sector-by-sector reciprocity in respect of its liberalisation proposals for tropical products.

The issue of elimination of measures contrary to GATT or illegal in GATT would involve the issue of who was to decide it? In GATT these things could be decided only by consensus, and 20 years of discussions on this and on liberalisation of tropical products had led nowhere, Tran said.

Tran also suggested that the EEC expected not only the U.S. and Japan to take measures to match the EEC’s on tropical products, but also countries like South Korea.

Dugimont said that the EEC proposals for reduction of measures restricting exports of raw materials would cover both export duties as well as other measures.

Asked whether the EEC proposals did not in effect amount to assurances of supplies in return for liberalisation, and an issue that went beyond the general agreement, Dugimont argued that the EEC processing industries depended on raw materials from the third world countries, and the EEC proposals would assure "conditions of fair competition".

Third world participants privately noted that the issue of access to raw material supply sources was an issue that was beyond GATT provisions, and such assurances about raw material inputs could not be isolated from assurances about other inputs like finance, technology or even other raw materials where the industrial countries have a monopoly.