8:22 AM Mar 4, 1994


Geneva 4 Mar (Chakravarthi Raghavan) -- The secretariat of the General Agreement on Tariffs and Trade tried to play down Friday US President Bill Clinton's reinstatement, by Executive Order, of the Super 301 provisions of US trade law for unilateral determination of unfair trade practices by other countries and imposition of trade sanctions as well as the criticism of US attempts at management of trade by the GATT chief Thursday.

The action of the US President reinstating Super 301 and the statement from Clinton on this, and the remarks of Mickey Kantor, coincided with a strong denunciation of managed trade, bilateralism and unilateralism and trade sanctions, by GATT Director-General Peter Sutherland Thursday at New York at the Swedish-American Chamber of Commerce.

In his remarks Kantor, while promising actions by his office naming of a number of unspecific countries and demanding from them negotiations to comply with US market opening demands under threat of retaliation, had described Japan as a 'renegade nation' in trade and had made clear that Japan was one of the principal targets of the Super 301 actions.

The Sutherland speech had been prepared before hand and the meeting too had been set in advance and, technically, the speech and the Clinton action were a coincidence. But the references collectively could fit only the US.

The US bilateral and unilateral pressures and attempts to manage trade by setting numerical targets and import indicators, as well as the threat of retaliation against Japan, had been there for quite a few weeks and had been talked about US Trade Representative Mickey Kantor ever since the failure of the Clinton-Hosakawa talks to resolve these issues.

In a briefing over lunch to a small select 'GATT-friendly' newsmen, according to reports flowing out of that 'briefing', Sutherland had also reportedly linked the US-Japan bilateral dispute and the dispute over the US 'offers' and 'withdrawals' in the schedule.

However on Friday morning, at the UN's regular briefing, a GATT spokesman said that the speech in New York Thursday by GATT Director-General Peter Sutherland (at the Swedish-American Chamber of Commerce) and his criticism there of managed trade and unilateral trade sanctions and their threat to the just concluded Uruguay Round negotiations was addressed generally and not to any particular country, and that so far the US had not violated its GATT obligations nor was there any actual situation of 'trade war'.

This GATT attempt, through a statement attributable to a press spokesman,, to play down the US actions or relating it to the conclusion of the Uruguay Round accord and next month's Marrakesh ministerial meeting for the signature of the Final Act appeared to observers to indicate a retreat or atleast attempt to soften the criticism, perhaps under pressure from Washington.

The GATT spokesman's remarks said: "We need to be clear what the enactment of Super 301 may mean and keep a sense of proportion about yesterday's announcement. The use of any retaliatory weapon is only challengeable in the GATT if and when that use is in conflict with the obligations and GATT rules. At the present time, there is no evidence that the US intends to violate its obligations under GATT. Let us not suggest that what has occured is certain to lead to a trade war."

While this view about reinstatement of Super 301 and the threat of action in Kantor's remarks visavis GATT rules and US obligations under GATT was technically correct, it was seen as slightly disingenous.

The one major claim by all the participants in favour of the Uruguay Round agreements and the World Trade Organization has been that it will strengthen the multilateral trading system and make it more rule-based, and that all participants would be commited to bringing their laws, regulations and trade policy measures into conformity.

There could be little doubt that if the WTO were in place, and unilateral retaliatory actions are taken relative to trade in goods, services, it would be a violation of the obligations.

The whole basis of international law in the current state of international relations, order and world polity, is that agreements and treaties are negotiated and depend for implementation on good faith of the parties, in negotiations and subsequent ratification or acceptance of the treaty or agreement, that they would abide by it and implement all the obligations undertaken it in good faith.

If, just after the negotiations have been concluded, and preparations for putting the outcome in place are under way, the US could still use or threaten to use unilateral trade sanctions to gain its trade objectives, it does not arouse credibility about its good faith or that after the WTO comes into being it would suddenly become virtuous and abide by all the rules and obligations or that the new trade order of the WTO would ensure respect for the rights of the small and the big.

This situation, as several GATT delegations privately say, has little to do with the merits of US complaints against Japan -- its propensity to import less, export more, save more and run capital surpluses that are invested abroad.

There is quite a respectable volume of economic opinion that at a time when the world's savings and available capital for investment is low, the Japanese conduct should be commended rather than criticised.