Jul 15, 1992


GENEVA, JULY 13 (TWN) – The question of extension of GSP preferences to the former East Europeans socialists and former constituents of the Soviet Union was discussed inclusively in the GATT Monday at the meeting of the Committee on Trade and Development. The issue remains on the agenda and will come up at its next meeting sometime in October.

Brazil which raised the issue said it had no intention of creating difficulties in the way of the economic restructuring being undertaken by the east Europeans and the former republics of the Soviet Union and their integration into the global economy. However, the issue was whether the trade preferences in the form of duty free entry under the general schemes of preferences being granted by individual donor countries could be done under the 1979 Enabling Clause or would need specific GATT waivers.

In terms of the GATT, only preferences granted to developing countries is covered by the enabling clause and needs no further action. En other cases, the Contracting Party granting preferences would have to seek and obtain a waiver from the CONTRACTING PARTIES - a process that would enable others that might be affected to seek some relief.

In the immediate aftermath of the changes in east Europe, the EC began giving GSP privileges to Poland, Hungary and Czechoslovakia. Though this was not challenged by others, the issue has been obliquely referred to in the GATT’s CTD.

But in recent periods the EC, EFTA, U.S., Canada and other ICs have been granting and extending GSP benefits to the past Europeans and to the constituents of the former Soviet Union, with Canada recently extending it to the Russian Federation.

In raising the issue, Brazil pointed out that while the Enabling Clause permitted tariff preferences to be granted in favour of the "developing countries", and there was no agreed definition of this term, it was at least necessary for a country to declare itself as a "developing country". None of the east European or former socialist republics had done so.

As a result, Brazil suggested, the GSP benefits being granted by the individual industrialised countries was not covered by or consistent with the Enabling Clause. None of the donor countries had sought a GATT waiver to enable them to extend these privileges.

The Brazilian view was supported by a number of developing countries including Argentina, India, Pakistan and Morocco.

Australia, Canada and the U.S. did not agree. They argued that the situation of the east Europeans and former constituent republics of the Soviet Union were similar to those of developing countries 20 years ago (when the GSP was first initiated and put in place). They also contended that the "Enabling Clause" itself had been in a different context and the entire economic situation had changed and the grant of the GSP to east Europeans and others were thus fully justified and a prerogative of the donor countries.

Brazil suggested that the GATT secretariat prepare on the effects of the grant of GSP. But the U.S., Canada and the EC did not agree, saying they had to consult their capitals.