7:52 AM Apr 25, 1997

EC, US WEIGH-IN ON KOREAN 'FRUGALITY' CAMPAIGN

Geneva, 24 April (Chakravarthi Raghavan) -- The European Union and the United States joined forces again at the WTO Thursday to complain about the 'frugality campaign' in South Korea.

Speaking under any other business, both the EC and US complained of the campaign targeting imports (of luxury goods) and its effects on trade. The EC wanted the Korean government to publicly disassociate itself from the campaign, in particular the anti-import campaign.

The US supported the EC objections and sought to draw a distinction between macro-economic policy efforts to increase savings and investment and the efforts to target consumption of imports.

Korea expressed surprise that this was still being made an issue, and referred to the public statements made by the Korean government during the recent visit of the WTO head, Mr. Renato Ruggiero, to the effect that the government was not involved in the campaign nor was there anti-import bias.

Neither the EC nor the US (both of whom had raised the issue at a goods council meeting earlier) repeated their threats of bringing up the issue before the WTO's dispute settlement body.

Earlier, in taking note of the reports of the balance-of-payments committee on the consultations with India, the United States, Australia and New Zealand, asked India (which is to consult again in June) to provide, at least three weeks ahead of the consultations, a report on its programme to phase out quantitative restrictions.

Japan said that the IMF's report showed that Indian BOP restrictions were inconsistent with Art. XVIII:B (which enables developing countries with a BOP problem to put restrictions). The EC appeared to take this further by in effect arguing that the GATT "understanding" of 1979 (which calls for price-based measures, rather than quantitative restrictions) over-rode Art. XVIII:B.

India took note of the comments (of the US, Australia and New Zealand), and said it would live up to its commitments (to the BOP Committee on the last consultations) about phased elimination of QRs and presenting a plan of action. India however challenged the Japanese and EC interpretations of the GATT article and the BOP Committee Report, and said while the IMF could make a statement on the BOP position of India, it could not say anything on the consistence of trade measures. Any event, the IMF had only said that India had comfortable reserves to phase out QRs.

On other issues, Canada suggested that the next Ministerial meeting of the WTO (due in 1998) to be held in Geneva, be either on May 18-20 or February 2-4, with one day devoted to the 'celebration' of the 50 years of the GATT trading system and two days for the normal business of ministerial conferences.

No decision was taken.

Cuba (where the original Havana Charter negotiations were concluded and signed, but was blocked from entry into force by the United States refusal to ratify it) said that it was hosting a conference on 50 years of the multilateral trading system and this would be at the end of 1996.

In other actions, Congo was admitted as the 131st WTO member, with the Council agreeing to accept the Congolese formal instruments with retrospective effect. That country had not been able to complete in time its processes to convert its membership of the old GATT into the new WTO.

A number of developing countries were also granted extensions to bring their customs schedules in line with the harmonized system of customs nomenclature.

Egypt referred to the Singapore Ministerial Declaration which called for measures to reduce the burden of workload (of innumerable meetings) on developing countries and wanted the consultations on this being conducted by the deputy Director-General, Mr. Anwar Hoda, to be continued.

Peru notified that it was changing its tariff structures from a 15-25 percent external tariff to a range of 12-20 percent. The trade weighted average of its tariffs would go down from an 18 to 13 percent.

On the Vatican's request for observer status, so far conducted through informal consultations, the Council agreed to a formal proposal being put forward which the Council could formally consider.

The spokesman could throw no light whether this would imply a revision of the general understanding in the WTO about observership or whether the Vatican plans to become a member, and if so the range of its trade interests and relationships with the rest of the world.

The WTO General Council has so far proceeded on the understanding that the request for observer from a country had to relate to its intention to seek full membership.