Oct 25, 1991
NO FINAL PACKAGE WITHOUT CLEAR GATT RULES, SAY NORDICS.
GENEVA, 23 OCTOBER (CHAKRAVARTHI RAGHAVAN) – The Nordic countries have served notice that their acceptance of a final package on the Uruguay Round should not be taken for granted unless the package contained "equitable, unambiguous and predictable GATT system of rules". The Norwegian statement Wednesday, on behalf of the Nordic countries, set out in the negotiating group on Rules, was echoed among others by Japan, Korea and India. It came against the background of behind-the-scene moves by the four majors in the Quad (Canada, EC, Japan and the U.S.) to wrap y agreements in various areas among themselves, give it privately to GATT Director-General Arthur Dunkel and other chairmen to be put forward as "take-it-or-leave" texts for others. The EC which appears to have made some forward moves on agriculture, such as by agreeing to changes in its oil-seeds regime to comply with a GATT ruling, is known to be currently holding high-level discussions with the U.S. in Washington. This is expected to be followed by a meeting of the Quad in London next week. The U.S.-EC summit in November is also expected to have Uruguay Round and Agriculture high on the agenda. If the four, particularly the two (U.S. and EC) agree among themselves, it is expected to generate considerable pressures on others to fall in line and accept the compromises and conclude the Round, politically, by year-end, leaving only market access negotiations and initial service commitments, and signatures of the package as a whole to be done early in the New Year. In line with this strategy, Dunkel has been applying pressures on various negotiating groups to complete their negotiations and produce clean texts by mid-November. There are reports that the secretariat is already trying to prepare clean texts in various areas, reflecting Quad agreements wherever they have reached it. In this context, there have been reports that in the rule-making areas where there are some considerable differences within the Quad itself on issues like anti-dumping and subsidies, and between the U.S. and EC on one hand and other trading nations, the package would have nothing on these "intractable" issues, to be tackled in future negotiations. The two majors U.S. and EC, have been using the anti-dumping investigations and levies, as a protective device to hit imports, and have shown little flexibility in agreeing to clearer rules that would discipline their activities in this area. After some informal consultations last week, it was reported that the two majors are suggesting that in the absence of an agreement, the existing Tokyo Round codes (which they have so interpreted as to provide themselves leeway to do what they want) should prevail and be part of the overall package. GATT officials have also been pushing this view, with Dunkel reported Wednesday (after the Rules group meeting) as telling in an interview for an Indian newspaper that while the present rules were not satisfactory and countries were trying to improve them, "improve" would have different meanings. "But this Round has to be conclude" and governments had to recognise they can't make it and go on with the present system or modernise the rules, Dunkel is reported as having said. The implication appeared to be that if no agreements on rules in these areas could be reached, the Round may have to be concluded on basis of existing system of rules. Adding to the anger and frustrations of the smaller trading nations, the informal consultations on these issues is limited to a few countries, with neither the smaller exporting nations nor Third World nations represented in the group. The consultations on antidumping and other such rules issues are confined to the Quad (Canada, EEC, Japan and the U.S.), Hong Kong, Mexico, New Zealand and Singapore. The Nordics (who are currently facing or being threatened with at least four anti-dumping investigations and actions - on Norwegian Salmon and Swedish steel exports - in the U.S. and EC markets), South Korea and India were among those who complained about the lack of transparency - complaints that were sought to be assuaged, but not successfully, by promises of more frequent meetings of the group where the progress in consultations would be fully reported. In the statement at the negotiating group Wednesday, Norway underscored the Nordic view on the need for more emphasis on rules negotiations, pointing out that in their view the fundamental importance of a reform of the GATT system of rules could not be over stressed. GATT was a body of rules, the Nordics said, and the strength and effective enforcement of the rules were essential if GATT was to fulfil its role. Alarmingly, reduced respect of rules presently led many to question the functioning and credibility of the GATT and even GATT’s raison d’être and "this is why the Uruguay Round must not end without a strengthening of GATT rules". In areas where the Round was attempting to expand the present multilateral trading system (Agriculture, Textiles, Services, TRIPs, etc.) there was a clear recognition of the importance of strict rules and "the same attention should be placed on rules in "traditional" GATT, represented by the General Agreement and the Codes". At the core of the rules negotiations, the Nordics said, were two fundamentally different but equally important problems: * Present inability to prevent misuse of existing trade rules and disregard of existing rules; * The present inability to effectively address new trading problems and remedy anti-competitive trading practices. The first would have to be solved by strengthening and more effective enforcement of existing rules and their clarification to avoid unilateral interpretations while the second had to be solved through new trade rules and modernisation of existing rules so as to provide countries with appropriate safeguards against anti-competitive behaviour. A balanced Uruguay Round outcome would have to address both and provide for legitimate escape clauses and trade remedies without leading to protectionist misuse of GATT rules. "To ensure an equitable, unambiguous and predictable multilateral trading system for the future", the Nordics said, "the Uruguay Round has to lead to substantial and balanced reforms in the fields of anti-dumping, subsidies, safeguards, balance of payments restrictions, TRIMs and dispute settlement". On Anti-dumping, the Nordics drew attention to the substantial increase in use of ad instruments during the last decade, with about 1.500 cases initiated in the 1980’s and an increasing number of countries using it. In some cases AD actions were being used as an alternative non-MFN based safeguard measure to hamper normal commercial activities. The unfair use of anti-dumping, the Nordics said, was illustrated by the inflated margins in calculating the dumping margins, disregard of other injurious factors than dumped imports, lengthy duration of measures with AD assuming a permanent character. These problems had to be addressed in the Uruguay Round through strict and unambiguous AD rules as also rules to prevent any possible circumvention. Similarly, the Nordics said, the subsidies rules should also be clarified and made unambiguous. They should prohibit all export subsidies and subsidies contingent on export performance, but must allow for subsidies to promote regional development or other important policy objectives. An operational safeguards mechanism was an essential part of the reform of GATT rules. While enabling operational safeguard provisions against unforeseen import surges, the threshold for their invoking should be high enough to deter misuse. Non-discrimination and global application must be the guiding principles of use of safeguard measures, and such actions should also be clearly limited in time and retaliation should not be so circumscribed as to invite misuse. It should also lead to end to grey measures on a permanent basis. The Nordics also called for strengthened trade rules to be applied to BOP restrictions. The fundamental principles underlying Article XVIII (BOP rights of Third World countries) was not at issue, but only its all too loose invocation. A reasonable measure, the Nordics said, would be to review the functioning of the BOP Committee in order to strengthen its role in overseeing application of Art XVIII. Only a Uruguay Round that includes a substantive reform of rules would make GATT an effective and credible instrument of an international trading system. "A reform of rules and disciplines will weigh heavily in the Nordic countries' evaluation of the final package emerging from the Round. The Nordic Countries' acceptance cannot be taken for granted without the final result ensuring an equitable, unambiguous and predictable GATT system of rules".