May 16, 1987


GENEVA, MAY 14 (IFDA/CHAKRAVARTHI RAGHAVAN)-- Brazil formally complained in GATT Thursday about U.S. actions in modifying its generalised scheme of preferences (GSP), excluding some countries and some products from benefits and using "criteria not related to GATT".

The Brazilian complaint was raised in the GATT council and supported by a large number of third world countries.

The U.S., in response, claimed that it was fully entitled to do what it had done under its "autonomous" GSP scheme.

At Brazil's request the issue is to remain on the GATT council agenda, and the chairman of the Council is to consult on how the discussion on this issue should continue.

At the previous meeting of the Council, Brazil had announced its intention to raise the issue.

Speaking thursday in the Council, the Brazilian delegate, Amb. Paulo Nogueira Batista, said that "developed countries acting individually" had been authorised to grant preferential treatment to products originating in third world countries "provided the corresponding schemes or arrangements are of a generalised non-discriminatory and non-reciprocal nature".

This meant, Batista said, that the schemes had to be "as broad as possible" in terms of product coverage that concessions given on products in the scheme "cannot discriminate among developing countries and have to be granted without any expectation of reverse concessions from developing countries".

In the implementation of the Brazilian delegate complained, the preference giving industrialised countries "clearly moving away from the observance of these basic principles", which had been established in decisions of the GATT contracting parties of June 25, 1971 and November 1979.

The 1971 decision granted industrial contracting parties’ waiver till 1981 from their most-favoured-nation in providing GSP preferences for third world countries. The 1979 decision, incorporating the "enabling clause" into the GATT framework granted industrial CPS a wider waiver from their MFN obligations thus enabling them to provide the special and differential treatment to third world countries, and including GSP schemes in this.

Batista said Thursday that the fact that such GSP schemes were of a voluntary character and did not constitute a binding obligation for the preference giving countries "does not give them the right to ignore the legal GATT framework under which they have been authorised to put in force such schemes".

"In other words", Batista said, "developed countries are not obliged to grant GSP schemes to developing countries and may at any time decide to revoke a decision to do so. However, while implementing a GSP scheme, they are bound to fully comply, as parties to the general agreement, with the relevant decisions of the contracting parties".

The Brazilian delegate illustrated the "major deviations" taking place by citing the general review of the U.S. GSP and its announcement of January 2 to exclude from its benefits some third world countries as well as a substantial number of products originating in other third world contracting parties.

The total exclusion of all products originating in some third world CPS was justified "on the basis of criteria which are not foreseen in the general agreement such as the observance of workers' rights requirements unilaterally defined by the U.S.", Batista said.

Moreover, as criteria for exclusion or maintenance of products in its GSP schemes, the U.S. government reviewed the practices in beneficiary third world countries "in areas not related with the GATT, as for instance intellectual property rights, access for services and investments, establishing therefore links which clearly affect the principle of non-reciprocity in a manner which also might imply discrimination".

Batista said the preference giving countries should notify in advance to GATT any modifications they wished to introduce in their respective GSP schemes in a manner which would enable the determination of the conformity of such modifications with the decisions of the contracting parties on the GSP schemes".

The issue should also be kept on the agenda of the GATT council to enable contracting parties to make appropriate recommendations, the Brazilian delegate suggested.

The Brazilian complaint and requests received the support of a large number of third world countries.

Several of them also made the point that the constant changes in GSP schemes by the preference giving countries was a source of insecurity and instability in the trade of the beneficiary countries, several of whom are highly dependent on these trade preferences.

India and a number of others also raised the point that this issue had been brought up by them for the last few years in the GATT Committee on Trade and Development, put without any redress or actions so far.

The U.S. delegate, Amb. Samuel, explaining the U.S. schemes and procedures adopted in inviting the views of beneficiary countries before the preference schemes were revised, contended that the GSP scheme was an autonomous one.

The U.S. actions, he contended, was consistent with the various decisions in GATT. The recent review, he said, was made to ensure that the scheme was responsive to the changing needs and interests of beneficiaries, and in particular the least developed among them who were provided with duty-free access on all eligible imports.

On the issue of non-discrimination and the 1979 decision about special and differential treatment to all third world countries, Samuel insisted that the U.S. actions were in conformity with the enabling clause.

The U.S., he noted, had always argued that the enabling clause required the application of special and differential treatment "in a dynamic manner i.e. a manner taking account of changing development levels in individual countries".