LOSERS SHOULD BE COMPENSATED, SAYS CPS CHAIRMAN

6:52 AM Jan 26, 1994

LOSERS SHOULD BE COMPENSATED, SAYS CPS CHAIRMAN
Geneva 25 Jan (Chakravarthi Raghavan) -- A monitoring mechanism to gauge the impact of the Uruguay Round on individual countries and ways to redress the situation of any "losers" in the Round by "positive action which may include compensation" was suggested Thursday by the Chairman of the GATT CONTRACTING PARTIES, Amb. Balkrishan Zutshi of India.

In his opening address to the 49th session of the CPs, Zutshi commended this suggestion to the GATT CPs and its successor organization for further thought and action.

Zutshi also cautioned against some of the calls from the industrial world and its NGOs on trade and environment and said for many CPs, especially for developing countries, there was a great deal of trust riding on the TNC decision to develop a work programme on trade and environment -- trust that the programme would address in a balanced and equitable way the trade, environment and sustainable development needs and priorities of every country.

Poverty was the most important obstacle to environment protection in many developing countries and any attempt to focus the trade and environment debate on polemics about 'greening the GATT' would not only be irrelevant for the great majority of developing countries but would be viewed as a serious protectionist threat to their trade interests, the CPs Chairman warned.

While Zutshi gave a positive assessment of the Round and its future benefits, he was clearly taking note of the assessments emerging after the conclusion of the negotiations on 15 December to the effect that the main, if not most, to gain are the US and EC and their TNCs while most of Africa, and many others in other regions, would be losing out or see some small gains after 10-15 years.

The conclusion of the Uruguay Round agreement, Zutshi said, was the result of the collective will of participants to shape the future of international economic relations and pave the way for more stable and equitable economic growth.

But the Uruguay Round agreements had only laid the ground work for economic and trade relations between nations into the 21st century and it was for the cps to build upon the blueprint agreed upon in December.

Zutshi cited latest GATT figures of a deceleration of growth in trade in 1993 -- below three percent in volume terms and down from the four percent of 1992 -- while world output had grown by just above two percent, double that of 1992. Both trade and output figures were below the averages for the previous decade, confirming that the period of slow growth for the world economy, which began in 1989 continued in 1993.

Zutshi however suggested that there were grounds for optimism in 1994. The slowdown in 1993 was largely due to the pronounced weakness in major West European economies where signs of recovery had become apparent in the final quarter of 1994.

The successful conclusion of the Uruguay Round, he added, was also expected to restore consumer and investor confidence, thereby reinforcing the positive trends in evidence in developing regions and in the economies in transition.

But the expectations of the successful conclusion of the Round bringing benefits to all CPs should be actually borne out, and atleast no participant should be worse off or emerge as a net loser, Zutshi said.

"In order to ensure this," Zutshi added, "it may be useful to envisage a monitoring mechanism to gauge the impact of the Uruguay Round results on individual countries. Should there be any losers from the Round, ways should be found to redress the situation by positive action which may include compensation."

While the "euphoria" at the conclusion of the Round was justified and understandable, and it would be tempting to believe that Uruguay Round conclusion would ensure for ever a strong, open, non-discriminatory and rule-based multilateral trading system, that unfortunately could not be taken for granted and demanded eternal vigilance. "We have to be on guard against machinations of protectionist forces and narrow sectional interests," he said.

The decision to draw up a work programme on Trade and Environment for adoption by Ministers in Marrakesh, Zutshi saw as a "further step towards maturity of this important issue in GATT".

But there should be no doubt in anybody's mind, the CPs Chairman stressed, that there was "a great deal of trust riding on the TNC decision" for many CPs, especially developing countries: "trust that the work programme will address each country's trade, environment and sustainable development needs and priorities in a balanced and equitable way; and trust that this will be a work programme on the trade and trade-related aspects of the subject that remains firmly within the competence of the multilateral trading system."

One clear message that came out of the Earth Summit was the need to maintain "an open, equitable, secure, non-discriminatory and predictable multilateral trading system," Zutshi noted.

"Trade liberalization coupled with financial and technological transfers, is essential for promoting sustainable development, particularly in the developing countries where poverty is the number one preoccupation for all policy-making and the most important obstacle to better environmental protection.

"To overlook that fact, and instead focus the trade and environment debate on polemics about 'greening the GATT' would reduce the debate to an irrelevance for the great majority of contracting parties. Worse than that, it would be viewed as a serious protectionist threat to their trade interests."

The TNC decision had embraced the objectives of protecting the environment and promoting sustainable development and both objectives must be kept clearly in view in drawing up a balanced work programme.

"We are committed to a work programme which will produce, at the end of the day, appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required.

"There is no short-cut to arrive at that point. Until we have done a thorough job of identifying the relationship between trade measures and environmental measures in order to promote sustainable development, any attempt to take a prescriptive approach would be premature and, in all probability, counterproductive," Zutshi warned.

"If there are problems of coordinating trade and environment policies, they must be resolved in a way that does not undermine the multilateral trading system which we have spent the past seven years reinforcing through the Uruguay Round negotiations".

While he made no reference to any particular view or country, the remarks of the CPs Chairman appeared to be a response to the demands from various environment groups, as well as recently by US President Bill Clinton, for bringing environment protection on the trade agenda, and set environment standards (for products and production processes) to justify trade restrictions.

On the WTO, to succeed the current GATT, Zutshi said this was more than a symbolic move and represented "an assertion of collective will to put in place a strong and rule-based multilateral trading system that would safeguard the interests of the rich and poor, the strong and the weak".

The future of the WTO, he added, would be ultimately evaluated and assessed "on the basis of the welfare that it brings to the global community" and to do this the WTO "must serve as a vehicle for strong global economic growth".

The Uruguay Round negotiations, Zutshi said, had been characterized by active participation of a significant number of developing countries and, in his view, this was a pointer for the future.

The developing countries would be playing a larger and dominant role in the WTO and the traditional trading powers must welcome this rather than view it as some kind of threat.

The prosperity of the developing countries was extremely vital for the sustenance of global prosperity and the multilateral trading system. And in this the least developed countries, "the poorest of the poor" should not be forgotten and all efforts should be made to integrate them as quickly as possible into the global trading system.