THIRD WORLD PRIORITIES FOR MONTREAL MID-TERM REVIEW.

Sep 26, 1988

THIRD WORLD PRIORITIES FOR MONTREAL MID-TERM REVIEW.

GENEVA, SEPTEMBER (IFDA/CHAKRAVARTHI RAGHAVAN) -- If any concrete measures are to be taken at the Montreal Ministerial meeting for mid-term review of the Uruguay round, "they must be balanced and duly take into account the interests of all participants", the Group of 77 has declared.

To this end, the G77 has called for sincere fulfilment of the standstill and rollback commitments and actions in the areas of tropical products, textiles, agriculture, and safeguards.

They have also called for reaffirmation of, and pledge not to deviate from the Punta del Este mandate in areas of Trade-Related Investment Measures (TRIMS) and Trade-Related Intellectual Property Rights (TRIPS).

This is the first time that the Group of 77 has been able to present a common position on the Uruguay round and its various issues in a comprehensive way.

In the period leading to the launching of the MTNS at Punta del Este in September 1986, third world countries became divided. As a result, not only were they unable to present a joint front inside GATT and UNCTAD, but found themselves ranges against each other at Punta del Este.

The South Commission at its Mexico meeting in august pointed out that the Uruguay round is not "yet another round of trade negotiations in GATT", but an attempt to restructure and refashion the rules of the international trading system, change the nature of GATT, and an attempt to tackle issues of strategic importance for the design and management of the global economy.

Only "a collective response" from the south can face this "well-organised strategy" of the industrial countries to put in place "the structure for a new system corresponding essentially to their vision of the world and their interest", the Commission said and called for "a special political effort" to agree on a common strategy for Montreal and the negotiating process beyond.

The recent Nicosia meeting of non-aligned Foreign Ministers commended the Commission’s views and called its members and other third world countries to continue efforts to harmonise their position in international forums, particularly on the Uruguay round.

The G77 position paper, circulated as an official document for next week’s meeting of the trade and development board, is not a direct outcome of these developments, but a response to the way in which the board agreed to devote one day to follow closely developments and issues in the Uruguay round of particular interest to the third world countries.

Under the compromise formula under which the group B countries agreed to this, the UNCTAD secretariat will have no analytical report on this (tough there is a factual review in the trade and development report). But the UNCTAD Secretary-General could deal with in his address to the board.

The G77 thereupon decided to present their own document.

The paper, whiles reviewing the developments and issues on the Uruguay round agenda, has also commented on some recent developments and moves in the U.S.

It has warned that the "many protectionist elements" in the recently enacted us omnibus trade and competitiveness act of 1988 would have "a major negative impact on the Uruguay round".

The group has also criticised sharply the increasing tendency in some industrialised countries to seek linkages between trade in goods and other matters such as policies of third world countries on direct foreign investment, protection of intellectual property, services and favour labour standards.

Despite the commitment in the UNCTAD-VII final act to eschew such linkages, some industrialised countries are continuing to see such linkages, the G77 have complained.

"Even more disconcerting", the G77 paper says in a reference to the United States, "such linkages have been institutionalised in the domestic legislation of a major developed country participant in disregard of the GATT obligations".

Referring to the announced U.S. intention to impose unilateral trade sanctions against Brazil, the G77 says that this is "not only a clear infringement of the standstill commitment but also seems to be aimed at coercing ... (Brazil) into changing its position in the negotiating group on TRIPS".

"This raises fundamental, legal and political questions having far-reaching implications for the conduct and outcome of the negotiations, and the Ministerial meeting of the Trade Negotiations Committee at Montreal cannot but deal with this problem in all its dimensions", the G77 says.

The G77 note that the Punta del Este declaration launching the MTNS is "a carefully negotiated balance of positions, interest and objectives". The negotiating plan adopted subsequently reflects not only the complexity of issues and diversity of interests but also unique institutional arrangements.

The progress of negotiations, which have been "clearly uneven" so far, have to be measures against the yardstick of specific aims and objectives and general principles and negotiating mandates of the declaration and negotiating plan and programme.

The standstill and rollback commitments were conceived as the foundation of the negotiations, but their implementation left "much to be desired".

GATT and UNCTAD studies had confirmed an increasing number of measures inconsistent with GATT and in violation of standstill commitments. As for rollback, there had been pro progress towards implementation and no notification by December 31, 1987 (as agreed to) of any undertakings.

A Brazilian proposal for setting target dates for requests, consultations and undertakings on rollback, though widely supported by third world countries, had not so far received any positive response from the industrial countries.

"The credibility of the entire exercise of MTNS as well as its positive outcome hinges on the implementation of the standstill and rollback commitments", the G77 warn.

In the substantive areas of negotiations of particular interest to the third world such as tropical products and textiles, little or unsatisfactory progress has been recorded, the G77 paper says.

And though considerable preparatory work has been accomplished in the negotiations in agriculture, and there is widespread support for overall liberalisation of that trade, progress "seems to hinge critically on the attitudes of the major participants".

"What is more disconcerting, is that in some negotiating groups developed countries have adopted an approach which is not consistent with the letter and spirit of the Punta del Este mandate".

"In new areas such as TRIPS and TRIMS, developed countries are attempting to rewrite and expand the negotiating mandate. In TRIPS there is also pressure to speed up the negotiations".

"There is clear evidence of foot-dragging in the important negotiations on safeguards".

"The existing provisions (in GATT) providing a legal basis to developing countries for maintaining quantitative restrictions for safeguarding their balance-of-payments position are being questioned".

The application of differential and more favourable treatment to third world countries is also being challenged in the name of integration of third world countries in the world trading system.

Some of the proposals of industrialised countries in the context of review of the functioning of the GATT system have given rise to "fundamental concerns", and seem aimed "at remodelling the GATT in a manner which would be contrary to the basic nature of the contract".

Deliberations in the Group of Negotiations on Services (GNS), have so far revealed "major gaps in the areas of definition, coverage, role of other relevant international organisations and modalities for attaining the objective of growth and development, which need to be addressed before elaborating the shape and connect of the multilateral framework".

The Uruguay round MTNS is an undertaking spanning four years, and the Montreal Ministerial meeting should be seen "as an important stage in the longer continuum of negotiations", the G77 document says in placing the Montreal meeting in its context.

"It is an occasion to revitalise the negotiating progress and provide the necessary impetus in areas of particular interest to developing countries and which are lagging behind ... it would provide a timely opportunity to the participants to take stock of the progress in the negotiations, to re-affirm the spirit and mandate of the Punta del Este declaration and to restore a healthy balance in the progress of the negotiations".

Outlining the concrete measures the G77 want out of the Montreal mid-term review; the G77 paper has called upon the participants "to fulfil the standstill and rollback commitments sincerely, in letter and in spirit".

The industrialised country participants should "translate their long-standing commitment and provide restriction-free entry for tropical products into their markets in recognition of the commonly agreed priority and special attention for this sector in the negotiations".

The return of the textiles trade to GATT rules, "must constitute an inescapable and indisputable priority for all those who are committed to preserving and strengthening the GATT system ... at the mid-term review, there must be a clear demonstration of the political will to achieve this end".

In the area of agriculture, an issue important of all participants and where considerable work has already been accomplished in the negotiations, "concrete progress should be achieved towards removal of distortions in and liberalisation of trade in agriculture".

Also, "recognising the systemic importance of a comprehensive understanding on safeguards, the participants should demonstrate the necessary political will to move these negotiations to a decisive phase".

"Equally important is the need for the participants to clearly reaffirm the mandate of Punta del Este, particularly in new areas such as TRIMS and TRIPS and pledge themselves not to deviate from it", the documents adds.

The principle of differential and more favourable treatment to third world countries should apply to the negotiations not only in terms of final results but also in the techniques and modalities used in the process, the G77 stress.

The Punta del Este declaration, the G77 point out, provides for an evaluation of the application of this principle before the formal completion of the negotiations. The Montreal Ministerial meeting should provide "a mid-term opportunity to review progress in this regard".

On the service issue, the G77 has called upon participants to address the major gaps in the areas of definition, coverage, and modalities for attaining the objective of growth and development before elaborating the rules and principles of any multilateral framework.

When the Uruguay round was launched, the fact of its being launched in a third world country and was expected to benefit all Contracting Parties was emphasised.

Part one of the Punta del Este declaration also made a pointed reference to the negative effect of prolonged monetary and financial instability in the world economy, the burgeoning indebtedness linkages a large number of third world countries and the substantive linkages between trade, money, finance and development, G77 recalled.

"The international economic environment for developing countries continues to be adverse", the G77 point out.

"It is characterised by stagnation and reduction of financial flows to developing countries, the continued crisis of indebtedness, the reverse flow of capital from developing top developed countries, the volatility of exchange rate fluctuations, the high level of real interest rates, the continuing low levels of prices of commodities exported by developing countries and the deterioration in their terms of trade".