Friday 12 February 1993




Geneva 10 Feb (Chakravarthi Raghavan) -- The United States raised in the GATT Council Wednesday the recently concluded the ASEAN Free Trade Agreement and asked the ASEAN contracting parties (Indonesia, Malaysia, the Philippines, Singapore and Thailand; Brunei is not a GATT member) notify their agreement under Article XXIV of the General Agreement so that a working party could be set up to examine it and its compatibility with GATT.

The US has made a similar demand in respect of MERCOSUR, linking Argentina, Brazil, Paraguay and Uruguay in an integration agreement.

Like MERCOSUR members, the ASEAN representatives too wanted their integration and preferential trade arrangements to be considered in terms of the 1979 'Enabling clause' which enables developing countries to extend tariff preferences among themselves without having to extend it to all other CPs.

In the MERCOSUR case, the US refused to accept a compromise (put forward by the EC at that time) for the working party to be set up by the GATT Committee on Trade and Development (CTD). Such a working party, it was explained, would still have been able to go into all the issues, including the effect of the agreement on other CPs. However the US did not accept it, and the issue is still pending.

In the ASEAN case too, the US has taken a similar stand to that on MERCOSUR. But the EC has joined the US on this question while, as on MERCOSUR, the ASEAN case for the issue to be dealt with under the Enabling clause got the support of other developing countries.

While the US objections stem from its effort to whittle away the 1979 'Enabling Clause' and its special and differential/preferential treatment for developing countries, the EC objections to deal with the ASEAN agreement within the terms of the Enabling Clause and the CTD stem from the fact that it holds Singapore not to be a developing country and thus no eligible to use the 'Enabling Clause' options.

Ironically though, both the US and EC, Canada and other OECD countries, in extending GSP preferences to the former Socialist countries (all the east Europeans as well as several of the constituent republics of the former Soviet Union, with some giving preferences also to Russia), have been trying to take recourse to the 'Enabling clause', under which ICs could grant tariff preferences to developing countries without having to extend it to all GATT CPs under the most-favoured-nation clause, rather than seek a waiver from the CONTRACTING PARTIES.

GATT sources noted that either way, a working party would be able to deal with all issues. Also, in the entire history of GATT no working party has ever come up with agreed report and recommendations, since this requires consensus and the opposing stands were more 'ideological' than 'substantive'.

However both sides stand firm.