GSTP: WAY CLEARED FOR SIGNATURE OF AGREEMENT

Apr 12, 1988

GSTP: WAY CLEARED FOR SIGNATURE OF AGREEMENT

BELGRADE APRIL 10 (IFDA/CHAKRAVARTHI RAGHAVAN)— The meeting of Senior Officials for the Ministerial Session of the Negotiating Committee on the Global System of Trade Preferences (GSTP) concluded its work Saturday night, after completing the unfinished work on the agreement and recommending a draft Belgrade declaration for adoption by the Ministers.

When the Ministers adopt the declaration and sign the agreement Wednesday, they would open the way for establishment of the (GSTP) - the first inter-regional, and legally binding operational agreement for mutual cooperation among the countries of the south, and one that would prove to be a major contribution to a multilateral trading system based on equity.

The concessions exchanged here are quite modest, in terms of trade or economic impact. But the agreement, when effective creates a legal and institutional framework for widening and deepening mutual cooperation among the countries of the south. The Belgrade declaration sets in motion the preparatory processes for a second round to begin this process.

The Senior Officials completed the work on the agreement by adopting the two remaining articles 23 and 24, and annexes one and four.

Article 23 designates the government of Yugoslavia as the depository. And article 24 provides that the agreement will be open for signature at Belgrade from April 13 until the date of entry into force. Annex one lists the 45 participants of the GSTP, and annex four is the schedules of concessions of each of the 45 participants (14 from Africa, 16 from Asia, and 15 from Latin America).

Of the economically or politically significant G77 members, Saudi Arabia and Kuwait (among the gulf countries), and Kenya and Zimbabwe, which chairs the nam are absent from this list.

When the 45 append their signature on the GSTP agreement, and subsequently ratify it, they would be multilateralising the preferences they have negotiated bilaterally.

The final Plenary of the Senior Officials was preceded by an informal meeting of the 45 countries. At this meeting, both the list of participants in annex one and the schedules of concessions in annex four were scrutinised, prior to their formal approval by the plenary of senior officials.

The schedule of concessions, a mimeograph document of 194 pages, lists under each country, the products for which it is extending concessions, the indicative current basic MFN duty, and the preferential GSTP duty or margin.

A cursory glance suggests that a wide range of products, agricultural and industrial, raw materials and processed and semi-processed, figure in the lists. But participants said that a clear assessment is possible only after detailed examination of trade flows and trade weights of items on which concessions have been given.

Some of the bigger economies have concessions on a large number of products, with Yugoslavia having the largest. While others have a smaller range of products but having some modest weight in their imports. In the case of a few, particularly those that have negotiated since March 4, the number of countries with whom they negotiated appear to be only one or two, the products few, and the concessions inconsequential or trade-neutral.

Four countries - Ghana, Indonesia, Malaysia, and Tanzania - have listed only one product.

Some of the participants later said that while Tanzania’s was a different case, being on LDC entitled to benefits without reciprocity and expected to make only some 'taken' contribution of its own, the situation of the others was different. And would need careful assessments in their capitals.

Most of the schedules show the GSTP concession in terms of the preferential margin on the MFN, while three (Colombia, Iran and South Korea), have shown the GSTP rate as a fixed rate below their indicative MFN.

In the discussions in the informal meeting of the 45, this issue was reportedly raised, and an understanding reached that in such cases, if the basic duty was reduced; GSTP rate too would be reduced to maintain the preferential margin.

According to participants in the informal meeting, Colombia which negotiated bilateral accords here at the very last stage and filed a schedule on the basis of the fixed rate, gave an undertaking to this effect, and also that if its MFN rate went up, the GSTP rate would be maintained at the rate specified.

South Korea too reportedly agreed to this. According to some participants, this had been a sticking point that blocked several of the major GSTP trading nations from concluding bilateral accords with South Korea.