GATT CPS FOR EFFECTIVE SURVEILLANCE OF COMMITMENTS.

Nov 28, 1986

GATT CPS FOR EFFECTIVE SURVEILLANCE OF COMMITMENTS.

GENEVA, NOVEMBER 26 (IFDA/CHAKRAVARTHI RAGHAVAN)— The need for effective and adequate surveillance mechanism to oversee the standstill and rollback (SS/RB) commitments of the Uruguay round was underscored by most of the speakers at the 42nd session of the GATT Contracting Parties, which concluded Wednesday.

As the chairman of the session, Amb. Kazuo Chiba, put it at the end of the general debate in which some 40 countries spoke: "almost all speakers viewed the implementation of the standstill and rollback commitments as an essential element for the entire Uruguay round and emphasised the urgent need for the establishment of an appropriate mechanism allowing efficient and effective surveillance of such commitments".

But the U.S. was an odd-man out on this, and tried to play down the nature of the commitment while opposing a wide-spread view among the others on the elements of such a mechanism for effective surveillance.

The U.S. Deputy Trade Representative, Michael Smith, went so far as to claim that the standstill and rollback commitment in the Punta del Este declaration was a political undertaken of Ministers, comprising the Trade Negotiations Committee (TNC) and "independent of the liberalisation negotiations of the Uruguay round".

The EEC’s Deputy Director-General of External Relations, Paul Luyten disagreed with this view at a press conference, and agreed that the commitment was a decision of the GATT Contracting Parties in launching the negotiations on trade in goods, and adopted separately as part one of the Punta del Este declaration.

Smith also returned to the pre-Punta del Este position of linking negotiations in goods and services and seeking trade-off between the two, and said any attempt to speed up the work of the GNG (Group of Negotiations on Goods) at the expense of work in the GNS (Group of Negotiations on Services) would result in reduced participation in and commitment to the GNG by the United States.

Later, Indonesia (speaking for the Asian), and India replied to the U.S. on this and rejected this view.

A GATT spokesman said the two had underscored the view that the negotiations on goods and negotiations on services were two separate legal process and negotiations envisaged in the Punta del Este Ministerial declaration.

The two, the GATT spokesman said, were not prepared to accept the U.S. view that the two processes were necessarily to proceed at exactly the same pace, and insisted that "certainly there could be no trade off between concessions in the area of goods and those in services".

Brazil, without specifically replying to the U.S., in its own intervention took a similar stand, and said the two were legally distinct negotiating processes, one in goods within the GATT framework and another in services outside the GATT.

The Brazilian delegate, Paulo Nogueira Batista said "Brazil supports entirely the view that the two juridically independent processes should be seen as a single political undertaking ... our representatives are instructed and prepared to strictly honour the engagements solemnly assumed in Punta del Este, as long as and to the extent that others are equally empowered and prepared to fully honour theirs".

Batista also stressed that the successful outcome at Punta del Este was because in the end the notion prevailed those meaningful decisions would only be possible through consensus.

"The success of the 'Uruguay round' itself will depend to a very great degree on our ability to extract the right conclusions from the positive experience of Punta del Este and on our determination to pursue, at all stages of the negotiations, the search for consensus solutions, acceptable to all", Batista added in what was seen by many as a response to the U.S. efforts to dictate its own viewpoint.

In taking the position that the SS/RB is not connected with negotiations for liberalisation of trade, Smith also said that the U.S. would not accept placing the surveillance mechanism under the control of the group on negotiations (GNG), the subordinate body of the TNC charged with overseeing the negotiations in goods, but only an arrangement "overseen by, supervised by, and reporting to the TNC".

Several of the speakers, though they did not mention the U.S. by name, left little doubt that they were concerned that the U.S. was not observing the standstill, as example by the levy of a discriminatory fee on imported petroleum for the "super-fund", and a customs "user-fee" on all imports.

Luyten noted that they were just at the beginning of a long and complex negotiating process, and "our immediate horizon is to make sure that the standstill and rollback commitments ... are observed by all participants. Regrettably, there is evidence that standstill is being taken too lightly by some ... it is incumbent on U.S. to ensure that an adequate surveillance mechanism is in place".

Luyten made clear at his press conference that the EEC had the U.S. in mind over its discriminatory levy for a "super-fund" on imported petroleum and the "user-fee" on all imports for customs processing.

India’s Anwar Hoda said that the SS/RB commitments were of foremost importance "and, indeed, an essential requisite for negotiations". An adequate and effective surveillance mechanism should be immediately established to ensure that there was no dilution of these important commitments entered into by Ministers on behalf of CPS.

Batista said the credibility gap in the negotiations could be overcome only by steadfastness in complying with the SS/RB commitments in goods "in a manner consistent with our obligations under the general agreement".

This, along with new and strengthened safeguard rules could alone contribute to the preservation of substantial liberalisation of past GATT rounds. Hence the surveillance and negotiations on safeguards deserved very high precedence in time and in order.

Thailand's Nissai Vejjajiva said that all Contracting Parties should adhere to the political will and commitment at Punta del Este, and take as their point of departure the commitment to standstill and rollback.

The so-called customs user fee (introduced by the U.S.), he said, should be seriously examined and eliminated. The surveillance mechanism should have sufficient powers to enable its effective functioning.

South Korea’s Sang Ock Lee underscored the need for early establishment of an effective surveillance mechanisms and elaboration of detailed plans for implementation of rollback commitments.

Sweden' s Lars Aneil, speaking for the Nordic countries, said recent developments in the trade policy field gave rise to concerns, and pointed to the need to ensure strict adherence to the SS/RB undertakings, "including the rapid establishment of an effective surveillance mechanism.

The Nordic countries, Aneil said, favoured an independent surveillance body reporting directly to the TNC but also keeping the GNG informed.

Successful negotiations would depend on the general trade policy climate, and hence all countries should refrain from taking trade restrictions, including grey area measures, that would undermine the letter and of the Ministerial declaration.

While this was a joint responsibility, for obvious reasons the major trading nations had particular responsibility.

Malaysia’s Amb. Datuk Khor Eng Hee referred to the recent breaches in the SS/RB commitments, and said if these were not to be "a token wish to do something about protectionism", it was imperative to establish an efficient and deterrent surveillance mechanism.

Austria’s Georg Reisch stressed that implementation of the SS/RB commitments was an essential element in confidence and climate.

"An appropriate mechanism allowing efficient and effective surveillance ... is therefore urgently needed. A delay would be in no nobody's interest, and major trading countries as well as smaller have the responsibility to demonstrate the seriousness of the political commitment".

Switzerland’s Pierre-Louis Gerard said the surveillance mechanism should reflect the political commitment and is direct link to the negotiating process. But it would be counter productive to bureaucratise it or duplicate the juridical processes already available in GATT.

In their interventions, third world Contracting Parties also laid stress on need for early actions in areas like agriculture, tropical products, textiles and safeguards, to secure liberalised access to their exports and enhance export earnings, to enable renewal of development and boost faltering world trade.

Kazimir Vidas of Yugoslavia called for the elaboration in all areas of the negotiations of criteria and techniques for the application of the principle of differential and more favourable treatment of third world countries, embodied in part IV and other provisions of GATT and the enabling clause.

Stressing the need for parallel measures in the areas of international monetary and financial system, Vidas suggested the organisation, within the Uruguay round, of a joint meeting of Ministers of Trade and Finance of the Contracting Parties.

Indonesia's Amb. Poedji Koentarso, speaking for the Asian countries, also raised the issue of special and differential treatment for the third world countries, and complained that to date these provisions of the GATT had remained unimplemented.

There was a need for the industrial countries to eliminate protectionism, and consider the main interest of the third world – agriculture, tropical products, textiles and clothing, and the "grey area" measures - as the cornerstone of the negotiations within the framework of the Uruguay round.

The South Korean delegate noted that a considerable number of third world countries were still sceptic of the real need for the trade negotiations, and were concerned about its adverse impact on their economies, industrialised countries had to make more positive efforts to dissipate these concerns.

Among other things, the grey area measures, which deviated from the GATT principles of non-discrimination, should receive high priority. And so should the efforts to reach a comprehensive agreement on safeguards.

India' s Anwar Hoda said that though the Punta del Este declaration did not lay down any priorities, it was clear from the developments in the trading system that priority would have to be given to a comprehensive safeguards agreement, and with liberalisation of trade in agriculture and returning textiles and clothing to normal GATT framework, should remain high on the agenda.

Australia’s P. Field said world trade, whether in wheat or computer chips, was increasingly affected by import barriers and other major market distortions due to subsidies and market management arrangements.

While all countries shared responsibility, the actions of the major nations had the most impact, he noted.

The budget costs of all subsidies provided by the U.S., EEC and Japan to their farmers, the Australian delegate noted, amounted to 76 billion dollars in 1986. And if other forms of support were added to these, the total cost of subsidies by the three majors was of the order of 200 billion.

The distortions in production and trade in agriculture was now being extended to textiles, steel and even high technology goods, and in each case the major trading nations must accept responsibility.

The logical extension of this recognition would be that only their efforts towards liberalisation and removal of distortions would have the most impact on world trade.

Vejjajiva focussed to the adverse impact on Thailand' s economy and rice trade of the U.S. farm legislation for subsidising rice exports, and called liberalisation of trade in tropical and natural resource-based products, and bringing agriculture trade under improved GATT disciplines.

EEC' s Luyten however argued that the origins of the crisis in agriculture could not be found within the precise areas of export and import policies in one or another region of the world.

There was no country in the world, which did not intervene to support to protect their agriculture.

Balanced solutions should be sought in the negotiations on agriculture through a concerted and coordinated approach involving all participants in the world market, importers and exporters alike, and bearing in mind the specific characteristics of these sectors.