Aug 9, 1988


MEXICO CITY, AUGUST 8 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The need for a collective response from third world countries to the organised efforts of the industrial countries through the Uruguay round to create a new world economic system to suit their interests has been advocated by the South Commission.

Referring to the mid-term Ministerial review meeting of the Uruguay round Trade Negotiations Committee, due to be held at Montreal in December, the South Commission has added: "there is an urgent need for third world countries to make a special political effort to agree on a common strategy for the Montreal meeting and for the negotiating process beyond".

The Commission’s analysis of the Uruguay round and the issues on its agenda, and its call for collective actions by the third world countries is in a 35-page statement that the Commission adopted and issued at the end of its four-day meeting here.

In its analysis of the Uruguay round and its implications, the Commission has pointed out that the outcome of the round, which is qualitatively different from earlier GATT MTNS, could vitally affect the development and future options of the third world countries and needs a collective response.

The chairman of the Commission, Tanzania’s Julius Nyerere is forwarding a copy of the statement, along with a personal letter. To the heads of states/governments of the countries of the South for their consideration and possible action.

This is the second statement that the 28-member Commission, established in August 1987, has issued on on-going processes and issues. The first, on third world external debt had been issued by the Commission at its second meeting in Kuala Lumpur in March.

The Commission which held its meetings at Cocoyoc, 90 kms. outside Mexico City, met with President Miguel de la Madrid, Monday morning and presented him with a copy of the statement.

In its statement, the Commission has underlined that the Uruguay round of Multilateral Trade Negotiations (MTNS) is qualitatively different from the traditional trade liberalisation efforts that have taken place in the past under the auspices of GATT.

The MTNS, the Commission points out, is not being carried out under the standard negotiating framework limited to trade issues only. "It is attempting to change the nature of the GATT in ways which gives rise to great concern", the Commission says.

The round is an attempt to restructure and refashion the rules of the international trading system in accordance with the interests and concerns of the major trading nations, the statement says.

The industrialised countries it notes, have succeeded in making the Uruguay round MTNS "a complex, multilevel undertaking, which entails defining and writing the rules for new and important spheres of international economic relations".

There is also an attempt to tackle issues of strategic importance for the design and management of the global economy, including the linkages between money, trades and finance.

In a number of respects, the Commission warns, the outcome of the Uruguay round may vitally affect the domestic development and future options of the third world countries, and represents a very special challenge for them.

Unlike the GATT round of the past in which the third world countries were essentially marginal observers of the contest between the developed countries, the participation of third world countries is critical to the achievement of a balanced set of results in the Uruguay round.

"The Uruguay round, therefore, is too important to be approached by the developing countries as yet another periodic round of trade negotiations in GATT", the Commission says.

"It needs very high policy priority and attention from them. Only a collective response from the south can hope to face the well organised strategy of the developed countries, which are attempting to put in place, piece by piece, a structure for a new system corresponding essentially to their vision of the world and their interest", the Commission warns.

The politics of the Uruguay round suggests "an emerging and significant clash of interests between developed and developing countries – about the meaning and scope of trade liberalisation, on the opening up of the domestic markets of developing countries to service industries of developed countries, about a multilateral investment regime that will affect ability of developing countries to regulate private foreign capital flows in accordance with national development priorities, and about pressures to force developing countries to change their intellectual property laws to suit the interests of exporters of technology".

Third world countries despite their diversified interests on specific issues, share fundamental common interests and positions on the broad framework of the Uruguay round, the Commission says.

"The existence of a diversified set of negotiating interests in the south should not affect the G77 coalition any more than in the case of developed countries, where a diversified set of negotiating interests has not prevented them from presenting a common front in almost all significant instances".

The common strategy of the countries of the south, the Commission says, could be bases on a number of principles:

--The close linkages between trade, money and finance already recognised should be fully respected, with particular attention to the impact of trade policies and other macro-economic policies of the industrialised countries which impact on the development prospects of third world countries. Determined efforts should be made to improve the functioning of the international monetary system and the flow of financial and real investment resources to third world countries. "Normality cannot be restored to the international trading system until the world overall economic environment improves. The link between the restrictive measures developed countries are applying to imports from developing countries and the ability of the latter to meet their debt obligations and their development needs are a key component of this interdependence".

--The multilateral trading system should be reformed, incorporating as a central objective the promotion of sustained development in the third world. The special problems of the least developed countries already recognised should receive particular attention. "Trade policy can be a powerful instrument of economic development, and this aspect must not be lost sight of by narrowly focusing on import liberalisation".

--Confidence in a rule-based international trade system should be restored through a return to transparent multilateral non-discriminatory disciplines, improved adherence by the major industrialised countries to the spirit and the letter of the agreed rules and disciplines, and the introduction of collective mechanisms for enforcement of the rights of the weak as well as of the strong.

--Renewed attention should be paid to the problems of stable and remunerative returns from commodity exports. The work already undertaken in various international institutions should be strengthened, and further attention should be given to new mechanisms, including expanded schemes of compensatory financing.

--Priority in the negotiations should be given to completing the unfinished work of previous rounds, notably on tropical products, safeguards, textiles, agriculture, tariffs, non-tariff measures and dispute settlement, before moving to new issues.

--The commitment to the principle of differential and more favourable treatment of developing countries as reaffirmed in the Punta del Este declaration should be fully honoured together with effective operational arrangements for its implementation. While recognising that, as the economic development of these countries progresses and their trade situation improves, they should take on an increasing degree of participation in the rights and obligations of the trading system, this should not be unilaterally imposed by the industrial countries.

--As already agreed at Punta del Este, the concept of automatic reciprocity in trade agreements, whether bilateral or multilateral, should be rejected. Third world countries should not be expected to "pay" for liberalisation by industrialised countries where the restrictions involved are not in conformity with GATT. Moreover, third world countries should be given credit in the Uruguay round for their unilateral trade liberalisation measures taken under IMF and World Bank programmes.

--The need for a multilateral set of rules relating to trade in services is far from established. In any case, any such regime should explicitly provide for measures designed to promote the development of service industries in the third world as well as exports of services thereof. As agreed at Punta del Este, it should fully respect policy objectives of national laws and regulations.

--As regards negotiations concerning trade-related investment measures and trade-related intellectual property rights, the formal recognition, in connection with services, of the objective of promoting the development of third world countries and respect for policy objectives of national laws and regulations should guide the negotiations in these areas a well. Any multilateral regime must provide positive encouragement to technical progress in developing counties, paying special attention to the removal of barriers to access to technical knowledge, including its importation.

Analysing the implications of various issues on the agenda of the Uruguay round and their effects on the third world countries, the Commission notes that the negotiations are scheduled to continue for the next two years.

The third world countries, the Commission says, need on-going opportunities to consider carefully and at the highest level the overall implications of the exercise and to put forward a collective approach to the issues of common concern and the management of global interdependence, which are raised in the round.

"However", the Commission notes, "negotiations are in progress and the ministerial meeting to be held in Montreal in December 1988 will evaluate that progress and seek early results in certain areas. It is essential that third world countries approach that meeting on the basis of a common stance. There is an urgent need for them to make a special political effort to agree on a common strategy for the Montreal meeting and for the negotiating process beyond", the Commission says.