Apr 17, 1991

GATT CONCERNS OVER EC-1992, PREFERENCES, NON-TRANSPARENCY.

GENEVA, APRIL 16 (CHAKRAVARTHI RAGHAVAN) – Concerns over the complex layers of preferential trading arrangements that govern nearly 60 percent of its external trade, the prospects for trading partners after the 1992 integration, and the non-transparent ways of EC trade formulation and administration were voiced Monday in the GATT Council during its TPRM review of the EC and its member-states.

The EC Commission Director, Roderick Abbot, made a presentation of the EC position, with some comments on the GATT secretariat's report and summary observations, followed by statements and questions from several contracting parties.

The discussions will continue Tuesday, when the EC will respond to some of the comments and questions, to be followed by, a Chairman's summing up.

According to GATT sources, the comments and questions brought out the concerns of countries about the complex hierarchy of preferential trade arrangements of the EC - with EFTA, Lome, and Mediterranean countries and GSP schemes and arrangements being thought of and negotiated with the central and east Europeans.

Some participants said that while the particular preferential trading arrangements of EC with others are notified to GATT and examined in a working party, like the Rome treaty itself these arrangements are never formally approved, but the EC proceeds on the basis that what is not disapproved (and can't be disapproved because of the consensus requirements) is approved.

However, there has been no overall appraisal of the effect of all these layers of preferences in terms of the GATT's Most-Favoured-Nation principle and that in practice those not covered by the preferences end up by having the least-favourable terms.

Other concerns that came up in the discussions Monday related to the lack of transparency (for outsiders) in the unification of the internal market after 1992, and the way this is being done or future policies would be evolved, the EC's common agricultural policy and its impact on its own consumers and on the trading partners, the voluntary export restraint and other grey area measures of protection which by their nature are non-transparent, the use of anti-dumping investigation and measures as a protectionist and trade harassment device.

On the positive side, the comments brought out appreciation that on non-agricultural products the EC has one of the lowest tariffs, though there are many problems of tariff escalation and tariff peaks confronting exports of Third World countries.

The EC was also particularly commended by Brazil for its steadfast opposition to unilateralism - opposition to S. 301 of the U.S. trade law and U.S. use of unilateral trade sanctions to obtain concessions from others.

In a press briefing Monday, Abbot however tried to rebut this charge of non-transparency and non-accountability by noting that "Brussels (where the Commission is located and functions) is like a glass house" and nothing is secret.

Abbot defended the voluntary restraint agreements and other such grey area measures, arguing on the basis of the EC's difficulties in complying with GATT law - in taking non-discriminatory safeguard actions under GATT Art. XIX - thus forcing the EC to have recourse to such measures and that a Uruguay Round agreement should solve this problem, presumably by allowing selective measures.

In other comments to the press, Abbot said that the EC would need to make concessions to the East Europeans in allowing agricultural imports under the preferential trade agreements to be negotiated with them.

The EC was in the process of undertaking internal reforms in its CAP, but the Uruguay Negotiations can't wait for them but must be resumed in earnest after 1 June, when the U.S. administration gets its fast-track authority, and completed by end of the year.

While there could be some improvements on the EC offer at Brussels in terms of figures or starting point of the cuts, the structure of the EC offer could not be changed.

It was not clear from Abbot's comments whether or not the EC would be willing to enter into separate commitments in Agriculture on internal support, border protection and export subsidies.

Abbot would only say that the EC offer might not go as far as its partners wanted, but perhaps there could be a second rendezvous at a later date - by which time the interval reform process would have been completed as also the unification of the internal market.

In his presentation to the GATT Council, Abbot tried to rebut the criticism of the EC trade policy - its extensive use of QRs and other non-tariff measures as well as tariff peaks and tariff escalation by processing stages on resource-based manufactures - by pointing to the trade policies of others.

He cited in this regard Australia which had average tariffs of 18 percent and only 20 percent of them bound, to 37 percent tariffs in Brazil and 16 percent bound, and 43 percent tariffs in India with only three percent bound. He also mentioned the extensive use of QRs and import licensing in the Third World.

In the discussions, Brazil said that the situations of the developing countries like Brazil’s could not be compared to that of the EC, while Australia and India noted that their tariffs and non-tariff measures were being negotiated in the Uruguay Round and depending on the EC (and other ICs) liberalising trade in agriculture, textiles, etc., would be reduced and bound.