"WAY FORWARD HAS TO BE FOUND", SAYS SURVEILLANCE BODY

Nov 24, 1988

"WAY FORWARD HAS TO BE FOUND", SAYS SURVEILLANCE BODY

GENEVA, NOVEMBER 23 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Uruguay round's Trade Negotiations Committee will be asked to carry out, at its meeting in july 1989, "a substantive evaluation" of the implementation of the standstill and rollback commitments, and take "such procedural or other action as may be appropriate."

This is one of the recommendations to the Montreal Ministerial meeting of the Trade Negotiations Committee.

The recommendation is in the report of the Surveillance Body.

The report, covering the period up to October 31, 1988, underlines that the standstill and rollback commitments "are a key element" in the Punta del Este declaration.

Reports of a number of international organisations, including UNCTAD and GATT, have all said that since Punta del Este there have been proliferation of protectionist measures, and virtually no rollback.

The report brings out that since Punta del Este, there have been 23 notifications by eleven participants against seven others about violations of standstill - 17 by industrialised countries (mostly against each other), and six by third world countries.

They cover Quantitative Restrictions (QRS), tariffs, import controls and prohibitions, export restrictions, internal taxes, production and export subsidies, and government procurement.

More than two-thirds of notifications are over violations of the commitment "not to take any trade restrictive or distorting measure" inconsistent with provisions of GATT or instruments negotiated within GATT or under its auspices.

The other notifications relate to the commitment not to take any trade measures in such a way as to improve negotiating positions.

Two of the measures - U.S. tax on imported petroleum and U.S. custom user fees - have been ruled to be against GATT, and the panel have been adopted.

While the report does not mention it, the U.S. administration in one case has asked Congress to change the law, and in the other (petroleum tax) is discussing payment of compensation to principal trading partners rather than changing the law.

In the area of rollback, there have been 19 requests by seven participants for rollback of measures or their being brought into conformity with GATT.

Two of these requests are from industrialised countries, and nine from third world countries. Most of them relate to QRS considered to be inconsistent with GATT articles XI and XIII.

Japan has notified rollback action by way of market opening measures through termination of import allocation systems on certain categories of agricultural products.

Japan has said that its action has been "in partial response" to the rollback requests, and the measures would be implemented unilaterally, without conditions and on MFN basis.

Excepting this, "no other rollback actions had been notified in response to requests", the Surveillance Body says.

The EEC has put forward what it describes as "unsolicited" offer on rollback, and has sought "contributions" by other participants as a condition for implementing that offer.

Participants in the Surveillance Body have expressed concern that the EEC would maintain or create discrimination against trade of some participants, contrary to the GATT and the standstill and rollback commitments.

The report also notes that Brazil had put forward a proposal suggesting target dates for requests, offers and undertakings on rollback.

Though supported by "a substantial number" of delegations and with "widespread expression of support for spirit underlying it", the Surveillance Body could not agree on the proposal.

Though the report does not mention it, the opposition came from the industrial nations.

The report notes that Brazil has subsequently put forward an updated version, calling on ministers at Montreal to agree on a specific time frame, but that "the positions have not changed (and) some participants had difficulty with the specific elements."

"There was however widespread support for the spirit behind the proposal and for the need for guidance by Ministers that would lead to more effective and progressive implementation of the rollback commitment."

The report also notes the view of "some participants" (third world countries) that lack of action on rollback by the time of Montreal could create "a situation of imbalance and have negative implications for progress in other areas of the Uruguay round".

They also note that except for action by Japan, there has been no rollback undertaking in response to requests, despite the "understanding" in the trade negotiations committee that some commitments would be made by end of 1987.

The report also notes the view of other participants (industrial) that the only deadline for rollback is end of the Uruguay round, and lack of results on rollback "should not impede progress in other areas of negotiations."

Some participants, the report notes, have suggested that the implementation of the commitments should be stressed in the positive context of world trade which has been expanding over last two years, and in light of autonomous trade-liberalising measures during the period, even though there have been no measures taken or notified under rollback.

Other participants (third world countries), the report adds, "are not convinced" that such liberalising measures outweigh restrictions, or that "expansion of world trade and healthy development of world trading system are necessarily the same things".

These participants do not consider the "general context as relevant to specific evaluation of the implementation of the commitments."

Noting the lapse of two years since the commitments were undertaken, and which some participants describe as "political" and not "legally-binding", the report says: "a way forward has to be found. Two years now remain for the phasing out, or bring into GATT conformity, of measures subject to the rollback commitment. If the commitment is to be implemented progressively during the negotiations as foreseen ... progress must be made."

The Surveillance Body has expressed the hope that further positive actions on rollback be announced by the time of the Montreal meeting.

The Surveillance Body has recommended that the Ministers, at their Montreal meeting, should affirm their determination to ensure that the standstill and rollback commitments are met, and emphasise the need to take "appropriate action" to ensure withdrawal of all measures contrary to the standstill commitment, taking into account that a number of measures have been ruled as GATT inconsistent.

The Ministers are also asked to emphasise the need for "timely action" on rollback, and "prompt response" to rollback requests and urge participants to indicate to the Surveillance Body how and when they intend to proceed to rollback measures covered by the commitment.

Participants are also to be invited to examine carefully the measures that they maintain, whether or not these have been notified, to determine what actions they should take to implement their rollback commitments, and communicate the conclusions of their consideration to the surveillance body promptly.

Finally, the Ministers are asked to agree that the trade negotiations committee, at its meeting in July 1989, should carry out "a substantive evaluation" of the implementation of the standstill and rollback commitments, including evaluation of avoidance of disruptive effects on the trade of third world countries.

The Trade Negotiations Committee is also to evaluate the impact (of the implementation) on the process of the MTNS and in relation to the interests of individual participants, "with a view to taking such procedural or other action as may be appropriate."