Nov 9, 1988

MONTREAL SHOULD REMEDY SHORTCOMINGS, RESPECT PRIORITIES.

GENEVA, NOVEMBER 7 (IFDA/CHAKRAVARTHI RAGHAVAN)The Montreal Ministerial mid-term review meeting of the Uruguay round Trade Negotiations Committee (TNC) should remedy the shortcomings of the last two years of negotiations and respect the priorities established at Punta del Este, the countries of Latin America and the Caribbean have said in a declaration issued here.

The declaration added: "any process which tends to neglect our fundamental interests and increase imbalances will not be acceptable ... consequently, our Ministers will decide upon their participation in a possible consensus in the light of the concrete possibility of correcting present imbalances."

Adopted november 4 at a Latin American consultation and coordination meeting convened here by the permanent secretariat of-SELA (the Latin American Economic System), the declaration was made public this morning.

The countries of Latin America and Caribbean, it said, attached great importance to the Montreal meeting (5-8 December), as it provided "an opportunity to give new political momentum to the negotiations to strengthen the multilateral trading system, adjust the orientation and asymmetries that have emerged ... and incorporate in the negotiations elements and proposals that reflect the region's legitimate interests".

The multilateral trading system, the declaration said, was facing "a very serious and dangerous crisis" as a result of proliferation of protectionist measures, increasing recourse to bilateralism and application of coercive measures, all of which called into question "the very credibility" of the Uruguay round.

The two years of negotiations had brought to light "profound asymmetries in the different negotiating groups."

There had been "no adequate response" in areas and subjects of greatest interest and priority to the countries of the region, whereas in the so-called new areas, the main industrialised powers had exerted pressure and even made proposals which went beyond some of the terms of reference agreed upon at Punta del Este.

To preserve the comprehensive nature of the negotiations, it was imperative that the TNC, while respecting the Punta del Este declaration in its entirety, "should remedy the shortcomings and respect the priorities established, in order to redress the balance of interests and expectations originally agreed upon."

Complaining about the failure of the Uruguay round's surveillance mechanism "to contain and reverse protectionism", the declaration pointed out that the standstill and rollback commitments "are a precondition" of the Punta del Este declaration, and were "designed to be a sound basis for furthering the negotiations by eliminating measures violating the commitments and harming the essential interests of third world countries."

"It is imperative and urgent that the failure to observe these commitments be remedied in Montreal ... and specific procedures and timeframes established to enable substantial progress in this area in the near future."

Rejecting what it called "the intention" of industrialised countries to ignore the fundamental principle of special and more favourable treatment for third world countries, the declaration warned that if this attitude persisted "there will be no progress in the Uruguay round".

Debt servicing, the declaration noted, had become "the major obstacle to the development of the region".

"By transferring a large proportion of their domestic savings to the industrialised nations, the Latin American countries have had to reduce their import, investment and, consequently, growth capacity, which has meant a serious deterioration in the living conditions of their peoples."

This debt/finance/money/trade link recognised in the Punta del Este declaration, but ignored in the first phase of negotiations, "must necessarily and effectively be incorporated in the results of the Uruguay round."

Access to markets of industrialised countries and a favourable trading environment were essential for the countries of the region to meet their financial commitments.

The debt problem called for "concerted action reflecting joint responsibility, and parallel negotiating efforts should be undertaken in other areas of international economic relations such as money and finance."

Fulfilment of objectives of the Uruguay round would be seriously limited unless the multilateral trading system was reformed and its legal basis strengthened.

Towards this end, "we shall continue to work towards ensuring that the fundamental principles and rules of the general agreement are observed, that its provisions are definitively accepted and that the provisions of the other instruments subscribed to under the auspices of the contracting parties are strengthened."

Participants at the meeting said this was a reference to the United States position.

Forty years after it came into being, GATT remains a provisional treaty. The United States is strongly opposed to making GATT a definitive treaty or agreeing to incorporate in its domestic law observance of international obligations undertaken in the general agreement.

The U.S. has taken this position in the negotiating group on dispute settlement and other negotiating groups, even though it has not been averse to definitive treaties in respect of the codes evolved under GATT, like those on subsidies, anti-dumping etc concluded during the Tokyo round.

In a reference to efforts of the U.S. and others to expand the Punta del Este mandate at Montreal, and impose new obligations on GATT contracting parties, the SELA declaration pointed out that the TNC meeting "can only adopt decisions within the framework of the Punta del Este declaration and we therefore reiterate that the competence of the Contracting Parties and the relevant articles of the general agreement must be respected."

Tropical products, the SELA declaration pointed out, was "a priority sector", fully recognised as such in the Punta del Este declaration, and "we reiterate that substantive results must be obtained before the end of this year and applied immediately."

The Montreal Ministerial meeting was not "a routine exercise but an opportunity to embark on practical steps needed to strengthen the multilateral trading system".

"Any process which tends to neglect our fundamental interests and increase imbalances will not be acceptable."

"Although so far we have had no reason to be optimistic, our Ministers will judge whether these aims and efforts are shared by the other contracting parties. Consequently, our Ministers will decide upon their participation in a possible consensus in the light of the concrete possibility of correcting present imbalances."