Nov 21, 1987


GENEVA NOVEMBER 19 (IFDA), BY CHAKRAVARTHI RAGHAVAN – Officials of the World Bank conceded Thursday that their latest publication, "the Uruguay Round: a handbook on the Multilateral Trade Negotiations" was not a handbook or manual in the normal meaning addressing specific issues in the negotiations, but a collection of essays by authors whom the Bank had selected and commissioned.

The Bank’s Director of International Economics, John Bennet made this comment Thursday at a briefing for diplomats, representatives of international organisations and officials.

In a foreword, the Bank President, Barber Conable, has said the "handbook" is part of the Bank’s ongoing programme to encourage "informed developing country participation" in the new round.

The handbook, Conable said, was a wide-ranging collection of informative essays and reflected "the bank’s experience in the economic of international trade without taking up matters of political strategy or negotiating technique-subject areas beyond the immediate scope of the bank’s expertise".

Apart from the essays, the annexes has some date, the text of the Punta del Este declaration, and a list of participants in the Uruguay round (which puts Malta among the EEC countries).

The essays on various items figuring on the agenda of the Uruguay round is by some 200 odd individual authors, whose current affiliations or positions are not identified.

Bank officials at the briefing were unable to point to any one of the authors who could be called a third world economist, living and working in the third world.

But the handbook is not intended to take a pro-third worldview but presented an objective view, the bank’s Geneva representative William Siebeck said.

But U.K. Delegate, Amb. John Sankey however agreed that at least a line or two of the work or affiliation of the authors would help to put their views in perspective.

Though the bank itself disclaimed any responsibility for the views, in several of the individual chapters the views expressed and suggestions and conclusions put forward seemed to show a remarkable coincidence to the views being advanced in the negotiating groups by the United States, the bank’s largest single stockholder.

Some of the other essays slur over the continued use by the U.S. (40 years after GATT came into being) of the grandfather clause in the protocol of provisional application saving pre-existing laws, to ignore GATT rules on "injury test" before application of countervailing duties against subsidies.

Similarly the U.S. refusal to apply to third world countries the subsidies code, until the countries concerned negotiated bilaterally to phase out subsidies (permitted to third world countries under the code) is simply described as "a contentious issue".

Michael Finger in his introduction underscores the importance to the international community of strengthening the GATT system and the benefits of the multilateral approach to trade liberalisation (where concessions exchanged bilaterally are multilateralized through the application of the most-favoured-nation clause of GATT).

Some of the essays raise the problem of the erosion of the MFN principle.

However authors Gardner and Eliza Patterson, in an essay on the objectives of the Uruguay Round, appear to be advocating the conditional MFN approach, on the view that unless the unconditional MFN rule were modified either nothing would happen in the negotiations or like-minded countries would strike a deal outside the GATT framework and thus circumvent the MFN rule.

Since simple abandonment would arouse many bitter political disputes, the answer would lie in "a participatory MFN rule under which benefits of all new undertakings except tariff cuts would be accorded only to those who adhere to the agreement", the two Patterson's argue.

Michael Sakbani of the UNCTAD Secretariat wondered how trade policy issues, including problems of protection, could be addressed without dealing with macro-economic policies of the industrialised countries that created the pressures for protection because of the exchange rate variations and the like.

Also, how could third world countries liberalise when they were faced with collapsed commodity prices and earnings or the debt-servicing crisis, all impinging on their balance of payments?

Bennet said the Bank would not like to comment on the processes of GATT. However, he said, some of these non-trade issues were addressed by the bank in the world development reports, and the unpublished confidential reports to governments.

But at least a couple of essays advocated an end to the use of BOP provisions in article XVIII, and one of them argued that every case where there was not an across-the-board restriction, the country concerned was acting not for BOP reasons but for protection.

This is the U.S. argument in the BOP Committee, as well as in the negotiating group on GATT articles, namely, that the third world countries should not have the autonomy (provided in para ten of section B of article XVIII authorising the country concerned to give priority "to imports essential in the light of its policy of economic development).

Sakbani also noted that under the GATT system the only remedy when a country did not abide by the rules and obligations was for the affected country to retaliate. This was a remedy that was not available to smaller trading partners.

A multilateral trading system based on rules and disciplines could survive only if all Contracting Parties joined together to take retaliatory actions and imposed sanctions against the Contracting Party disregarding the rules.

Unless these issues were on the table in the new round, GATT would remain a simple power game.

Indian delegate P.S. Randhawa said that while the bank was seeking a more active role in the Uruguay Round, it was not at all clear what its perspective was.

A handbook to be useful to third world countries should analyse the negotiating issues and objectives.

The essays, Randhawa complained, not only did not deal with the negotiating objectives in each of the areas addressed, but were already drawing conclusions.

He cited the essay on investments, which dealt with investment, issued per se and totally ignored the mandate of Punta del Este which only dealt with the adverse effects of trade-related investment measures.

Randhawa said strengthened rules and disciplines in GATT as a result of the Uruguay Round would benefit third world countries by assuring security and stability of their external-trading environment.

But from the handbook and the bank’s presentation, it was not clear whether the bank was talking of how the Uruguay Round and the GATT system could contribute to the development of the third world or about the third world’s contribution to the Uruguay Round (by agreeing to some of the demands made upon these countries).

Bennet said the bank had no ideological views. But its long involvement in development had shown that trade restrictions were a major obstacle to development. Also, the bank believed that unless the trade liberalisation process continued and protectionism reversed, there would be major obstacles to world economic growth.

The Uruguay Round offered the best opportunity to continue the liberalisation process, and the bank felt it should encourage third world countries to actively participate, he added.

Jonathan Scheele of the EEC wondered what was the audience the handbook was addressing, and if it was the negotiators in the Uruguay Round, how was it going to be of use to them when it did not address the issues being negotiated.

Bennet said that the essays tried to bring some "academic light" to bear on the broad issues and approaches, and was not intended to deal with specific negotiating points.

"If developing countries do participate in the GATT talks and negotiate reciprocal reductions and bindings of tariffs, the multilateral development banks might consider further direct financial support for these countries (that is, in addition to existing structural adjustment loans"), one of the essayists, Henry Nav has said in an essay on "bargaining in the Uruguay Round".

The Nicaraguan delegate referred to this and asked what kind of participation the bank expected from the third world in order to qualify for lending?

Bennet could not explain this new conditionally, but said that participation by itself was not a condition for bank lending, though it was "the deep conviction" of the bank that it was in the best interests of the third world to actively participate in the round.

Murray Gibbs, chief of UNCTAD’s Technical Assistance Division for the Uruguay Round negotiations, said the problem was not one of third world interest or participation but making industrial countries appreciate the legitimacy of third world concerns and objectives.

In the Tokyo round, he recalled, a number of third world countries did try to participate actively, and at the very early stage a number of them had formulated their request on industrial countries for tropical products, but got no response.

"The problem then, as now", Gibbs said, "is not to convince third world countries to participate, but whether they would be permitted to participate effectively".

In the Tokyo round, he noted, when negotiations moved to informal discussions, large number of third world delegations were simply not given and opportunity to participate", he recalled.

The bank, Gibbs said, was better placed than others in convincing the industrialised countries of some of the issue in the negotiations of importance to the third world, as well as the legitimacy of the aspirations of third world countries.

And perhaps instead of organising a seminar in Central America or elsewhere (as the bank is planning), the bank could organise a seminar in Washington and invite Congressmen and Administration Representatives, and enable third world countries to put forth their views there.