Nov 26, 1986

LAUNCH OF MTNS "NO REASON FOR COMPLACENCY", SAYS GATT CHAIRMAN.

GENEVA, NOVEMBER 24 (IFDA/CHAKRAVARTHI RAGHAVAN) Contrast to their meetings over the last few years, the 42nd annual session of the GATT Contracting Parties began Monday on a relatively low-key note.

But a remainder that this did not mean that GATT has solved all trade policy disputes or that the course of world trade is smooth and robust came in the opening speech of the chairman of the Contracting Parties, Amb. Kazuo Chiba of Japan.

"The launching of the Uruguay round, though crucial and welcome, is neither a reason to be complacent nor to forget that the regular and important work of GATT must go on" Chiba told the opening session.

Participants at the session said that they did not expect any serious controversies, though issues like the U.S. trade embargo against Nicaragua, as well as the trade disputes of U.S. and EEC with Japan are expected to figure during the three-day session.

In the U.S.-Nicaragua case, a three-member GATT panel has found itself unable to provide any relief to Nicaragua, because of GATT practices and rules, and the terms of reference of the panel that precluded it from going into to the validity of the U.S. claims that it was acting to safeguard its national security.

In the U.S. and EEC disputes with Japan, only last week in the GATT council Japan blocked reference to panels for adjudication (a normal GATT practice) the two separate complaints against Japan raised by the U.S. and EEC.

The U.S. complaint was over Japanese restrictions on imports of some fish products from the U.S. while the EEC complaint was over Japanese tariff and non-tariff barriers to imports of alcoholic beverages, including European wines and scotch whisky.

Japan argued in the council that these disputes should be settled in bilateral consultations and/or in the new round a view that both the U.S. and EEC rejected though they themselves have been using the argument of the new round to resist long pending third world demands for immediate trade liberalisation and market access, and/or rollback of illegal protectionist measures in place.

In his opening address, Chiba reminded the delegates that neither 1785 statistics nor those projected for 1986 showed any great buoyancy in world trade.

Production and trade in 1985, he said, rose barely by three percent in volume, and latest available figures suggested that perhaps there might be a four- percent increase in volume in 1986.

In 1985, third world countries saw a large fall in the value of their exports, partly due to the situation in the oil market, but partly also due to weaknesses in the commodity markets.

The average dollar export prices of primary commodities other than crude petroleum, Chiba noted, had fallen by 9-1/2 percent in 1985, to a level some 26 percent below the peak 1980 levels.

In contrast to the poor results on the fuel and commodity markets, third world countries had a "remarkable performance" in their manufactured exports, with the third world as a whole likely 1986, for the first time in post-war period, to earn more foreign exchange from exports of manufactures than from exports of fuels.

While there was continuing reason for confidence in ability of the third world to move into more sophisticated market areas, "too often developing countries have been turned away from the markets of their industrial partners at the very point when they have found the capacity to compete effectively", Chiba underlined.

The Uruguay round launched at Punta del Este, Chiba noted, had raised world-wide expectations, and the "spirit of Punta del Este" had been seen as "one of the few recent examples of authentic cooperation within the international community".

"Back here in Geneva, we are faced with the task of preparing to respond to these expectations", and in the work of putting place the necessary structures and negotiation plans "we have found that we cannot negotiate through the mere inspiration of the spirit of Punta del Este but must rely on our own negotiating skills".

But the difficulties of the current exercise should not be lamented as "a frustrating encumbrance", since it was vital to have in place from the start the necessary conditions for success.

The four years set for the Uruguay round were not at all "a comfortably lengthy period" for the kind of tasks represented in the Ministerial declaration.

But in one sense, the business community did not have to wait for four years (and the conclusion of the new round), "because, of course, the standstill and rollback commitment is already operative", Chiba said.

However, he reminded the delegates, for this it would be necessary to settle before December 19 (the date set for approval of the negotiating plans), "on a sensible and solid mechanism for overseeing this most serious and far-reaching undertaking".

This would be the clearest possible indication to the outside world that the Punta del Este declaration was not an example of the mountain in labour producing a little mouse.

The world economy was also facing a number of problems - pattern and size of trade imbalances, exchange rate movements, and the debt-service problems of many third world countries.

Progress in finding meaningful and lasting solutions to these problems also would make a positive contribution to the success of the Uruguay round, he added.