Oct 2, 1987


GENEVA OCTOBER 1 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Negotiating Committee for the Global System of Trade Preferences (GSTP) at its meeting here next week is expected to take stock of progress in the first round of negotiations, and set a date for the next Ministerial Meeting of the Committee to be held in Yugoslavia.

The Committee is also expected to set the stage for the next stage in the negotiations for exchange of concessions in the first round, namely tabling of "offers" by countries to whom requests have been made, and for negotiations on basis of request and offer lists.

The GSTP is envisaged as a preferential trading system among third world countries and as "a major instrument for promotion of trade among developing countries members of the group of 77, and the increase of production and employment in these countries".

Conceived and conceptualised at the 1976 Mexico City Conference of non-aligned and other developing countries on ECDC, and the 1979 Arusha Fourth Ministerial Meeting of the G77, the scheme has taken quite some time to move from concept to negotiations.

In October 1982, the foreign Ministers of the G77 issued a declaration for the establishment of the GSTP to be open to members of the group of 77, and formulated broad guidelines and principles to govern the scheme, and set up a GSTP Negotiating Committee open to all G77 members wishing to participate.

The Committee has now a membership of 81 countries.

After the first Ministerial meeting of the GSTP negotiating committee at New Delhi in 1985, the GSTP negotiating process received a political impetus.

As a result, at the Second Ministerial Meeting in Brasilia in May 1986, the first round of negotiations was launched. The GSTP agreement adopted at Brasilia, it was agreed, should provide the legal framework for the conduct of negotiations, pending its legal framework for the conduct of negotiations, pending its signature and ratification at the conclusion of the first round.

The GSTP is the first multilateral legal instrument of a contractual nature that the third world countries have negotiated and adopted for themselves, and is the first major proposal for inter-regional economic co-operation among third world countries that has matured to the stage of actual and concrete negotiations.

The Brasilia meeting set the guidelines for techniques and modalities for the first round, covering a number of approaches to be followed for exchange of concessions, and recommended a commitment for standstill for the duration of negotiations on trade control measures on products offered for exchange of concessions.

Of the 81 countries that are on the GSTP negotiating Committee, 69 notified their intention to participate in the first round.

Of the countries that have not so far notified, Saudi Arabia is perhaps economically significant. It exported in 1984, a little over 15 billion dollars (mostly petroleum) to other third world countries and imported from them a little over five billion dollars.

The other three important countries are also from the Gulf – Iran (exports 5.6 billion and imports 3.8 billion), Iraq (exports 5.6 billion and imports 3.7 billion) and United Arab Emirates (exports 3.4 billion and imports 1.8 billion).

As provided in the GSTP agreement, countries participating in the first round would have to exchange concessions among themselves, and when 15 of those who have thus exchanged concessions (and drawn form the three regions of Asia, Africa and Latin America), sign and ratify the agreement, it would come into force.

Those G77 countries, who have not participated in the first round and exchanged concessions, could become members, after the agreement enters into force, by making an application and negotiating with interested participants on the basis of its own offer list and any request lists that could be submitted.

Of the 69 countries participating in the firs round of negotiations, 39 have put in "request" lists, covering in all over 1.200 products, and addressed to 63 countries.

The sixty-nine in 1984 accounted for 91.57 billion dollars of exports to other third world countries and 97.27 billion dollars of imports from other third world countries.

The 39, who have put in the request lists account for 76 billion dollars of exports and 85 billion dollars of imports from other third world countries, and also represent a significant potential in terms of domestic markets and future trade and other economic expansion and exchanges.

The 30 others participating in the first round, but have not so far tabled requests, include such economically or politically significant countries like Nigeria, Kuwait, Libya, Tanzania, and Zimbabwe (currently chair of the non-aligned movement).

So far, three rounds of informal bilateral consultations have been held amongst the countries that have tabled "request" lists and their partners, to whom requests have been made, to exchange preliminary views, including on their existing trade regimes and the nature and details of the concessions sought.

At its next week’s meeting, the GSTP negotiating committee is expected to take stock of the progress in these consultations and set a date for the countries to whom requests have been addressed to table their own "offer" lists.

Thereafter, on the basis of these request and offer lists, bilateral and/or plurilateral negotiations could be held among the interested parties for exchange of concessions.

At the end of this process, there would be a multilateral review and finalisation of concessions, which would be annexed to the GSTP agreement, and the concessions exchanged thus multilateralised.

While the bigger economies among the first round participants have addressed request lists covering scores of products to their trading partners, the smaller countries’ list cover four of five products.

The guidelines for the first round of negotiations envisaged several broad approaches to exchange of concessions.

These include: an across-the-board tariff cut through a preference margin of ten percent; product-by-product negotiations on the basis of request and offer lists for tariff, para-tariff and non-tariff concessions; a sectoral negotiations; and negotiations on direct trade measures.

There is a growing view among the participants now that they should go ahead, on the basis of request and offer lists, and finalise the product-by-product negotiations and exchange of concessions, and for finalising them at the next Ministerial meeting at Belgrade, to enable the agreement to be signed, ratified and brought into force.

This would mean that not all the 1.200 products covered in one or other of the lists would figure in the list of those on which concessions have been exchanged. The smaller countries who have put forward four or five products would, in the negotiations, would naturally try to ensure some "equivalence" by agreeing to extend concessions to a limited number of products to be imported by them.

But when all the concessions have been exchanged, and multilateralised, a significant part of mutual trade is expected to be covered, and provide a kind of demonstration effect of both the seriousness and benefits of the GSTP.

The intention would appear to be that thereafter further negotiations on full range of products not covered in the first round, as well as other approaches for GSTP could be taken up and pursued.

The finalisation of the first round, and quick measures to bring the GSTP agreement into force, it is felt would be essential to establish the credibility of third world talk of enhanced south-south economic co-operation, and particularly in the area of trade.

Meanwhile, the G77 in Geneva have been holding consultations on the issue of the People’s Republic of China’s request to be a participant in the first round and join the GSTP.

The Foreign Minister of the G77, at their September 1986 Meeting, decided that China could be invited to participate as an observer in the GSTP negotiations. The GSTP Negotiating Committee itself was asked to consider the Chinese request and submit its views to the Sixth Ministerial Meeting of the G77 Preparatory to UNCTAD-VII.

The Havana Ministerial Meeting was unable to reach a decision, given the differing views among the GSTP participants, and the original stipulation, incorporated into the framework agreement, that participation in the GSTP is to be open only to G77 members.

The Havana Ministerial Meeting asked the G77 in Geneva to hold further consultations and pursue the matter.

Both the discussions amongst the G77 in Havana, and subsequent consultations here, showed that there were two broad views:

One views that China should be enabled to participate, and that if necessary the GSTP agreement and rules should be amended.

The other view was that this would create a precedent, and may open a "Pandora’s box" in terms of others wanting to join (Bulgaria, Israel and Turkey), and the best solution would be to invite China to join the group of 77, on the same basis as for Romania and Malta in past.

At its meeting here this week, the G77 adopted and forwarded to the New York Meeting of G77 Foreign Ministers, a report on the outcome of the consultations.

In the consultations, the report said, "the People’s Republic of China while stressing its character as a developing country and reiterating its support to the aspirations and activities of the Group of 77, expressed the intention to maintain its present status as an independent entity".

"The Group of 77 consider that the participation of China, as a large developing country, in the GSTP would be welcome. However, Such participation presupposes that it should be compatible with the relevant provisions of the agreement on GSTP, which defines "participants" in the GSTP as members of the Group of 77".

"The Group of 77 also felt", the report added, "that any decision on China’s participation in GSTP should be such as not to constitute a precedent of the accession of any other country non-member of the Group of 77".

While forwarding this report to New York, the G77 in Geneva have also decided that the process of consultations should be continued in Geneva "to provide a solution acceptable to all concerned, well in advance of the forthcoming meeting of the Negotiating Committee at Ministerial level scheduled to be held at Belgrade".