May 15, 1991


GENEVA, MAY 13 (CHAKRAVARTHI RAGHAVAN) - The preferential tariff treatment under the schemes for Generalised System of Preferences (GSP) should be extended to cover all aspects of barriers to ensure preferential access for Third World exports of goods and services in Industrialised Country markets, the Group of 77 has suggested.

Putting forward this idea Monday at the UNCTAD Special Committee on Preferences by Mrs Lakshmi Puri of India, speaking for the G77, said that the GSP could be "honed into a prime instrument" in terms of the UNCTAD-VIII agenda of "multilateral cooperation and international action for a sound, stable and equitable world economy" and "promotion of accelerated development, economic growth and technological capabilities of developing countries".

UNCTAD-VIII, she added, should not only result in substantial improvements of the GSP schemes maintained by the OECD countries and the Central and East Europeans, but also evolve new and creative mechanisms for preferential treatment in terms of Third World access to markets in Industrialised Countries and to the key factors that enabled achieving and sustaining global trade competitiveness as well as accelerated development in a rapidly changing and increasingly interdependent world economy.Tariffs, the G77 coordinator on Trade pointed out, were now less important as a determinant of market access in OECD countries while increasing problems to access were posed by non-tariff measures (NTMs) and restrictive business practices (RBPs).

There were also problems of access to means of achieving competitiveness - technology, international distribution, marketing and information channels and networks as well as trade financing.

"What we must begin to think about in terms of the objectives and principles of the GSP", Mrs. Puri said, "is how to extend this preferential treatment in the area of tariff to cover all aspects of barriers to developing country exports so as to assure preferential access for developing country goods and services into developed country markets".

"Also, measures would have to be devised to enable developing countries to access other determinants of trade competitiveness through GSP type affirmative actions. This is one key area where UNCTAD-VIII can help in moving forward".

The GSP, she underlined, had continued utility and contemporary relevance. Third World countries had benefited considerably in terms of increased market penetration and sustained exports and the preferences were starting to make an impact through the build-up of export supply capabilities, particularly in the manufacturing sector.

But the full potential had barely been tapped - only 48.8 percent of MFN dutiable imports into the OECD countries were covered by GSP and of that only 41 percent or 19.2% of total imports from the Third World countries actually received preferential treatment.

But the dynamic factors created by stimulation of export-oriented investment of GSP had been responsible for an increase of one to six billion dollars per year in export earnings of the Third World, and would continue to play such a role by influencing the vocational policies of TNCs and providing a fillip for TNC investments and industrialisation of the beneficiary countries.

The continuance of the GSP was justified by the critical need for trade and export support to the Third World in an international trading system, which was structurally weighted against them.

The Uruguay Round, she said, would no doubt have an impact on extent of market access that Third World countries would get but unless the differential and more favourable treatment to the Third World was operationally incorporated into all aspects of the outcome, these countries would not necessarily gain market access.

The Indian delegate praised Japan for leading the way by its decision to extend its GSP schemes for another ten years and with considerable liberalisation and improvements in the scheme.

She also welcomed the EC commission's proposals to the Council of Ministers for incorporating in the guidelines for EC's GSP in the 1990ís many constructive proposals for simplification, stabilisation and liberalisation.

The G77 spokesperson appealed to all other preference giving countries also to extend their schemes into the 21st century and incorporate substantial improvements.

She also welcomed preferences being extended to Namibia and to Mongolia under the EC and Swiss schemes, as well as the re-designation of some countries as beneficiaries under the U.S. scheme.Nevertheless, she added, the G77 remained concerned at ab initio or ad hoc discretionary exclusions, and often done on a unilateral basis without objective or fixed criteria and without prior consultations with the excluded country. The threat or denial of GSP status was also being used to extract reciprocal concessions from the Third World country - contrary to the whole concept of non-reciprocity and non-discrimination of GSP.

Beneficiary status under one scheme was being held hostage to the preference-giving country's views oh policies the receiving country should follow on intellectual property rights, workers' rights, investment and political issues.

The Indian delegate also called for harmonisation and improvement of the rules of origin under various schemes and for adoption of the process criteria in all schemes to determine the "substantial transformation" of the product to merit preferences.