Oct 8, 1990

GROUP 77 SPELLS OUT CONDITIONS FOR SUCCESS OF URUGUAY ROUND.

GENEVA, OCTOBER 4 (BY CHAKRAVARTHI RAGHAVAN)— With just eight weeks to go for the completion of the Uruguay Round, and a week before the start of the intense final pre-ministerial phase of negotiations, the Group of 77 has spelt out at the UNCTAD Trade and Development Board some of the criteria and conditions for a successful outcome.

The G77 spokesman, Amb. Inderjit Singh Chadha of India intervened in the Board discussion on interdependence to make a separate statement on Uruguay Round, setting out the "priorities and preoccupations" of the group.

Earlier, U.S. delegate, Amb. Morris Abram, in what has now become a standard theme for the U.S., irrespective of the agenda, complained that UNCTAD was yet to come to grips with the need to "restructure" its work programme to reflect the "new thinking" on what promoted trade and development.

Brushing all available literature and studies, including the Bruntland Report on Environment and Sustainable Development, Abram blandly asserted that "Sustainable development ... is the result of free enterprise, foreign investment, and good government".

In a variation of the "small is beautiful" theme, he called for "small, measured development" and asked the Third World to follow the "successful example" of Botswana.

"If success is to be achieved in the Round", Chadha told the Board: the capacity and opportunities for measurable increase in share of developing countries in international trade, and their accelerated and sustained economic growth and development, have to be significantly increased and there must be recognition of the sovereign right and need of developing countries for flexibility and autonomy to decide on their own economic policies.

A recurrent theme of the Third World countries in the past four years of negotiations, Chadha said, had been the need for "democratic, participative and broad based decision-making".

"Developing country participants comprise an overwhelming majority and their democratic exercise of the right to choose and express their choices in respect of the elements of an international trading and economic order which is going to affect them in a fundamental way must be respected by those who cherish democratic values and want to evolve a balanced and healthy international trading system", the G77 spokesman said.

Another aspect relevant to a timely and successful conclusion of the Round, he said, was "the need to respect established mandates in each area and work for agreed solutions to problems specifically identified in these mandates".

The Uruguay Round was unique not only for the wide array of tasks it had set itself but also for the "carefully negotiated equilibrium of rights and obligations, as well as safeguards for developing countries ... built into the Punta del Este declaration".

"If this balance is tilted or if the safeguards for developing countries are demolished, in spirit and practice", the Indian delegate said, "it would constitute a breach of faith of the solemn commitments undertaken .... but this has already happened".

On the view of the Chairman of the TNC (in his summing-up statement in July) about the "phenomenon of linkages, within and among subjects arising from the Uruguay Round being a single undertaking", the G77 said: "In our view it is important that balanced concessions should be sought within broad trading areas and subjects to be negotiated in order to avoid unwarranted cross-sectoral demands and that within this general guideline, specific priorities and mandates be followed".

Linkages between different areas and issues which did not take account of the stipulation about differential and more favourable treatment to Third World countries, about non-reciprocity of concessions made to them, and their not being asked to make contributions inconsistent with their individual development, financial and trade needs should be eschewed.

While individual Third World countries had been pursuing in the negotiations individual national interests, they nevertheless had some common goals and objectives.

These included more liberal and more secure conditions of access for their exports into the markets of ICs, with specific concessions on tariff and non-tariff measures and strengthening of multilateral rules and disciplines to reduce incidence of restrictions on or harassment of their trade.

They also sought the strengthening of the multilateral trading system through full respect for the MFN principle, effective and positive linkages between the international trading system and their development process, prohibition of all arrangements for restrictive market sharing or managed trade, prohibition of unilateral actions outside legal framework of the system and maintenance and strengthening of an effective system for dispute settlement.

But so far these objectives had remained unfulfilled, Chadha complained. The industrialised countries had attached low priority to market access and, in areas of interest to the Third World, had made concessions conditional on reciprocal market openings.

In the area of rule-making, the focus of the was on taking away existing rights of Third World countries while providing themselves with greater flexibility of action to restrict and discriminate against Third World trade through proposals for selective safeguards.

Their initiatives on the new issues posed the danger of limiting Third World access to and raising the cost of flows of technology and international investment and preventing development of their service sectors.

The July meeting of the TNC had been no exception to this trend and it was evident that there was no political will on the part of the industrialised countries to accommodate the specific proposals and interests of the Third world countries in different areas. There had been only lip service paid to, but little effort to translate the principle of differential and more favourable treatment into concrete operational obligations and commitments.

"This principle has to be incorporated in the outcome of each of the negotiating areas.... It would not do to merely replicate the ‘best endeavour’ type of provisions of Part IV of GATT and the Tokyo Round codes. Instead operationally effective commitments relating to the development dimension, structurally integrated in the 'negotiated outcome, would be necessary".

Dealing with some of the individual issues, the G77 among others made the following points:

Standstill and Rollback: The record of the ICs so far had been disappointing. At least in this last lap of negotiations, they should impart credibility to their determination to halt and reverse protectionism by notifying rollback measures by October 15.

Tariffs: The cumbersome offer-and-request procedure had insulated tariff protection on products of priority interest to the Third World and had increased the scope of demands for reciprocity. The commitment to give credit and recognition to the autonomous tariff liberalisation measures had not been respected.

Non-Tariff Measures: The fundamental issue of an agreed definition of GATT consistency or otherwise of NTMs was still pending and G77 hoped that ICs were not asking the Third World countries to "pay" for removal of measures which are of doubtful GATT consistency or which have to be phased out as part of rollback.

Textiles and Clothing: Uruguay Round trade liberalisation would have no meaning if trade in this sector were not fully integrated into GATT. Meaningful progress in this area was a "litmus test" for both trade liberalisation as well as accommodation of Third World interests in the outcome. Textile importing ICs should be prepared to make structural adjustments and demonstrate political will to dismantle their protectionist system.

Agriculture: There should be greater liberalisation of trade through increased market access, substantial reduction in internal support and elimination of all export subsidies and all derogations derived from waivers and protocols of accession of ICs. The development imension and special role of agriculture in the Third World should be recognised by enabling flexibility and autonomy in use of internal support programmes, export subsidies and border measures.

Rule-making: There should be strengthening of GATT rules and disciplines to clarify and resolve shortcomings in interpretations of the rules of the system. The review of the GATT Articles should not be used to alter the BOP provisions in Art XVIII: B "which were an integral part of the GATT contractual framework of rights and obligations". Discussions on Art XVIII: B should hence be closed.

Safeguards: There should be a non-discriminatory and comprehensive safeguards agreement which would reaffirm the MFN principle and outlaw all grey area measures.

MTN Agreements: Obstacles to effective participation of Third World countries in the Tokyo Round codes should be removed. The proposals (of the U.S. and EEC) for "anti-circumvention, measures in the anti-dumping code were of an "anti-development and anti-investment" nature. Revisions in the code should rather aim at reducing trade barriers and harassment in investigations and establish transparent and strict injury determination criteria.

Subsidies and countervailing measures: The proposals to expand the scope of prohibited subsidies and countervailable subsidies were attempts at constraining Third World capacities to meet legitimate development needs. Any satisfactory conclusion of negotiations in this area should be based on the recognition of need of Third World countries to maintain subsidies for development purposes and on clear cut rules for countervailing measures.

Dispute settlement: In a system heavily relying on trade retaliation and in view of their disproportionately lower capacity for retaliation, Third World countries should have strengthened access to compensation in dispute settlement.

TRIPs: Whether on principles, norms and standards or implementation of results, the outcome should be compatible with the special technology and development needs and objectives of Third World countries. The level of IPR protection required by a country had to be calibrated according to the stage of development of the country concerned. Any framework on IPR protection must address the question of access to technology of the Third World countries and nothing should be done which would detrimental to the trade, development and financial needs and interests of the Third World.

TRIMs: The only realistic possibility is an "effect oriented approach" and a case-by-case examination of adverse trade effects of Trims. Prohibition of investment measures per se should be rejected and Third World countries should continue to have the right to determine whether, to what extent and on what terms to permit foreign investment to ensure its maximum development impact and counter anti-competitive practices of TNCs.

Trade in Services: Any multilateral framework should recognise the basic asymmetry in the situation of services between the ICs and Third World countries. There should be specific obligations to in the framework to ensure increased participation of Third World countries in the international trade in services. The "positive list" approach should be followed in respect of commitments of national treatment and market access by Third World countries. For a successful outcome of negotiations, it was necessary to agree on universal coverage of sectors.

Institutional arrangements: Proposals (of the EEC) for a Multilateral Trade organisation (MTO) to implement the results of the Uruguay Round were not covered by the Uruguay Round mandate.

In the context of future institutional arrangements and strengthening of the international trading system, G77 members would carefully consider a universal trade organisation provided it was "meaningful, broad-based, comprehensive and responsive to developing country aspirations".

Such an Organisation should also deal with restrictive business practices, commodities and access to technology. Proposals for establishment of such an Organisation would need careful and detailed preparations and are best undertaken within the UN system including UNCTAD which had a comprehensive mandate, universal membership, experience and expertise to deal with such initiatives.