Jan 23, 1988


GENEVA, JANUARY 22 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Uruguay Round negotiations resume next week at the GATT.

In the MTNS on goods, the negotiating groups on tropical products and on the functioning of the GATT system are due to hold meetings next week.

At the year-end meetings in December of the group of negotiations on goods (GNG), it was decided that the GNG should meet in mid-February to undertake a stock-taking of the work in the initial phase of the negotiations in 1987, after the capitals had had time to study the reports of the work in each of the 14 groups.

Nevertheless it was agreed in the GNG that they could move on to the next phases of the negotiations, even though in several of the individual negotiating groups the tasks set for the initial phase had not been completed.

On the basis of understandings reached in the individual negotiating groups, the GNG agreed that sufficient technical progress had been made to justify moving to the next phase, but that the unfinished part of the initial phase would be carried over into the new phase.

The tropical products group, chaired by Malaysia’s Paul Leong Kheee Seong, which meets on Monday, would have to agree on procedures and mechanisms to move into negotiations.

An unresolved issue in the initial phase has been the insistence of the industrialised countries for what is called "extended coverage".

This is a concept introduced by them to focus the tropical products negotiations, not in traditional terms in GATT of market access to these products in industrialised countries, but to focus attention on market access in third world countries, both to such products from other third world countries and from some of the industrial countries themselves.

In 1963, the GATT Contracting parties at Ministerial level agreed on a programme of action for liberalised market access in the market of industrialised countries for tropical product exports of the third world.

Among other things they agreed to bring about duty-free access to such products.

Among other actions called for then was duty-free access, elimination or reduction of domestic taxes inhibiting consumption.

While some of products where there is duty-free entry for the raw materials, the duties escalate on basis of stages of processing.

Unroasted coffee for example enters Japan without duty, and the five- percent in the EEC.

But roasted coffee carries a duty of 20 percent in Japan and 15 percent in the EEC (and 19 percent when decaffeinated).

Bulk black tea is duty-free in the EEC and faces five percent in Japan.

But in packages of less than three kilograms, the duty in Japan jumps to 20 percent, with a GSP tariff of 14 percent.

Tea extracts and concentrates face 12 percent in EEC and 13 percent in Japan.

Cocoa beans carries zero duty in Japan and three percent in the EEC. But cocoa paste, partly defatted, carries 15 percent in EEC and 20 in Japan, while cocoa powder containing added sugar or other sweetening faces 16 percent in the EEC and 21.5 in Japan.

Domestic consumption taxes on some of the tropical beverages are pretty high in some of the EEC member-states.

It is as high as 40 percent in unroasted coffee in Germany, 27 percent on roasted and over 55 percent on coffee extracts.

Similarly on tea, bulk tea in Germany carries nearly 50 to 70 percent, and in small packages nearly 35 percent.

The EEC has talked of possibility of some these issues also being tackled in the negotiations, but the EEC offer is hedged in with many conditions, including its view that both other industrialised countries and some of the third world countries should also reciprocate.

The Punta del Este declaration recognised the importance of trade in tropical products for a number of third world countries and agreed that negotiations in this area "shall receive special attention", including the timing of the negotiations and the advance implementation of early agreements (ahead of the conclusion of the MTNS in goods as a single undertaking).

The tropical products negotiating group at its next week would have to agree on a word schedule to start the process of negotiations, and enable achievement of early results in this area -–the only area where the Punta del Este declaration specifically recognised the possibilities of early agreement.