Jun 16, 1988

NO LET UP ON PROTECTION, TRADE HARASSMENT AND BILATERALISM.

GENEVA, JUNE 14 (IFDA/CHAKRAVARTHI RAGHAVAN) -- There has been little or no decline in use of production and export subsidies, the trend to enlarge scope of anti-dumping actions as a trade correction tool or in maintenance and extension of bilateral restraint agreements, according to the GATT Secretariat.

This is brought in the GATT Secretariatís report on the developments in the trading system for the six-monthly special session of the GATT Council on Wednesday.

The twice a year special session of the GATT Council reviews developments in the trading system and a range of issues both directly relating to trade policies as well as others impacting on trade.

In its overview, the Secretariat notes that the environment for trade policies has continues to be dominated by concerns over payments imbalances, exchange rate uncertainties, problems of unemployment, slow growth in many industrialised countries and continuing debt servicing difficulties of many third world countries.

Competitive export subsidisation, particularly between the EEC and the U.S., has continued in the agricultural sector.

The decrease in world prices, exacerbated by this competitive export subsidisation, has forced other governments to increase compensatory payments; the Secretariat notes and cites in this connection Australian payments to producers and Canadian financial support to grain farmers.

Voluntary export measures to restrict international trade in steel, motor vehicles, footwear and textiles have remained in place. New restraints on Korean shoes have been put in place in Italy.

In the textiles sector, the report notes that by and large the EEC has fewer restrictions under MFA-IV than MFA-III, while the U.S. has maintained or intensified its range of restrictions.

The bilateral accords under MFA-IV have confirmed the preliminary view of the Textile Surveillance Body (TSB) that in some major importing countries there has been both an expansion of product coverage to include other vegetable fibres and silk blends and a more extensive use of specific group and aggregate limits.

Such expanded restriction was despite "the degree of economic recovery" enjoyed last year by the domestic textiles industries of the major importing countries.

In addition most of the new agreements contained consultation provisions making it possible to place under restraint products that were previously uncontrolled.

The GATT Secretariat has also drawn attention to the comments of the TSB on the "price clauses" incorporated in the EECís agreements with Czechoslovakia, Poland and Romania.

The TSB, the Secretariat pointed out, had reiterated its view that such price clauses fell outside the provisions of the MFA.

As to the restrictions on textiles of new vegetable fibres not previously controlled, the TSB had noted that specific restraints had been introduced on products made from such fibres (as per the MFA-4) when there had been no imports nor an imminent increase of such imports of products made of these new vegetable fibres.

In the TSBís view, specific restraints on products made of new fibre specified in the MFA-IV should be introduced only if it was demonstrated that imports of such products were directly competitive with products made of fibres (already covered by the MFA), and that such imports were causing or aggravating market disruption or real risk of such disruption in the importing country.

The use of subsidies, the report notes, continues to be a source of contention.

Evidence on industrial aids and subsidies, it says, is "patchy" but a number of conflicts remain current particularly between the U.S. and EEC, specially on government assistance and subsidies for construction of civilian aircraft, notably the airbus.

The report points out that for some time now it has been apparent that the threat of anti-dumping investigations or actions are followed by exporting parties entering into price undertakings and or limitation of shipments.

It refers in this connection tot he EEC action against so-called "screw-driver" operations by Japanese enterprises, and EEC investigations into "unfair practices" in shipping which could result in application of port levy on Korean shipments to bridge the gap between Korean shipping rates and rates judged to be normal.

A number of voluntary trade restrictive measures have been either rolled-over or renewed. In all some 127 export restraint pacts of one form or another are in operation, the report notes.

These are in addition to 71 textile arrangements taken outside the MFA and 54 arrangements in food and farm products holding trade to acceptable traditional levels or unilaterally imposed quotas.

Use of price undertakings, the report says, remains a feature in anti-dumping proceedings involving imports from third world countries and centrally planned economies.

In a number of instances, anti-dumping investigations had been suspended or terminated and replaced by a form of voluntary export restraints or orderly marketing arrangements by the exporter in question.

There have been relatively few cases where price undertakings have been allowed to lapse by the importing country.

"In short", the report says, "in a number of countries anti-dumping legislation is being used as a principal trade correction tool".

On the issue of counter-trade, the Secretariat says that the tendency of governments to be involved in such agreements showed no signs of slowing down.

Reflecting the scarcity of hard currencies and depressed demand for commodities, the infrastructures of counter-trade had expanded rapidly in the third world countries, and the continuance of the economic environment had ensured the attractiveness of counter-trade to both exporters and importers.