6:54 AM Jul 11, 1994
DETAILED ANALYSIS OF URUGUAY ROUND RESULTS SOUGHTGeneva 8 July (Chakravarthi Raghavan) -- The UNCTAD Ad Hoc Working Group of Trading Opportunities for Developing Countries has recommended that the secretariat undertake detailed analysis of the effects of the Uruguay Round on developing countries, both in quantitative and qualitative terms, and then focus on sectors and products of export interest to them. The Working Group also recommended that the studies should be undertaken in the areas of textiles and clothing, agriculture and services, covering inter alia trends in structure of demand and supply, potential gains to developing countries arising from the Uruguay Round results in these areas, and identification of policy measures, at national and international levels, to realise these gains. The Working Group, Chaired by Mrs. Magda Shahin of Egypt, had been set up for a two-year term but was extended because of the timing of the conclusion of the Uruguay Round, completed its work with a report to the Trade and Development Board outlining principles and strategies for policy action at the national and international levels to enhance development prospects of member States, particularly those of developing countries, through an expansion of trading opportunities as well as on requirements for building export capabilities in developing countries and for expansion and fuller utilization of market opportunities in the contemporary world economy. It was the first UNCTAD body to examine the results of the Uruguay Round, and this was done on the basis of a preliminary analysis by the secretariat. This study had brought out that imports into the four major industrialized country markets (Canada, EU, Japan and the United States) are likely to rise by about $28.5 billion (1988 dollars) or 4.6 percent of the dutiable imports from the world in 1988 and that, of this, imports from developing world would be about $7.1 billion or 3.1% of dutiable imports of 1988. This is in sharp contrast with estimations of the GATT secretariat, in its analysis and forecasts just before Marrakesh, of a $755 billion world trade gains and a $255 world income gains at the end of the implementation period. In December before the market access picture was known, on the basis of an average 35% tariff cuts, the GATT had projected a $750 billion annual trade gain and the World Bank/OECD Development Centre had projected of a $250 billion world income gains. Since then, both the GATT Director-General Peter Sutherland and the OECD have been talking of much higher gains if services were taken into account. But these projections lack details of the assumptions, qualitative and quantitative, underlying them and thus difficult of assessment. The UNCTAD report had also brought out that the post-Uruguay Round overall trade-weighted averages facing imports from developing countries in the markets of the four would be higher than those facing imports from all sources. Even when GSP rates were taken into account, post-Uruguay Round trade-weighted tariffs on imports by Canada and the USA from developing countries would be higher than imports from all sources. In Agriculture, where quantitative estimates based on econometric simulation are still to be carried out, the UNCTAD report suggests that aside from a few cases, the reductions carried by the four countries are unlikely to entail any big increases in market access opportunities for agricultural products of developing countries in the immediate future. The Textiles and Clothing agreement would enable importing countries to "avoid integrating actually restricted product areas at the earlier stages" and many developing countries would hence not benefit from meaningful trade liberalization in this sector in the near future. The discussions in the Working Group were carried out at informal meetings and hence views of individual countries and groups are not available in the report, only the agreed conclusions and recommendations. But participants said that in the informal exchanges, the industrialized countries, in particular the European Union sought to head off any UNCTAD assessments, arguing UNCTAD should confine itself to identify trading opportunities opened up and how developing countries should take advantage of them and not on other elements. In summing up the outcome at the final plenary session Friday, Mrs. Magda Shahin, noted the Group had the "most ambitious work programme" of the five Ad Hoc groups set up under the Cartagena mandate, and that the work initiated by it on the analysis of the outcome of the Uruguay Round would be a valuable input into continuing inter-governmental analysis and assessment of the results. It would also contribute, she added, to the Trade and Development Board's broad consideration in September of the results of the Round and to the work of the new Ad Hoc Working Group on Trading Opportunities in the New International Trading Context. In its conclusions and recommendations, the Working Group said that the analysis of the results of the Uruguay Round on trading prospects of developing countries should adopt both a quantitative and qualitative approach. A quantitative approach could, inter alia, identify and analyze market access opportunities resulting from reductions in tariffs and non-tariff measures, export subsidies etc. Also useful would be the research efforts under way to identify and analyze in qualitative, and where possible quantitative terms, new trading opportunities for developing countries in services. The Working Group agreed that the Uruguay Round results contained elements which, though not easily quantifiable, had "great relevance" (a term presumably used to cover both positive and negative consequences) for the trading prospects of the developing countries. These elements included in particular the strengthening of the rule-based multilateral trading system, the improved dispute settlement mechanism, TRIPs, TRIMs and the special and differential treatment provisions for developing countries in the various agreements. "An analysis of such elements," the Working Group said, "would assist developing countries in adopting appropriate policies under the new rules and disciplines to improve their trading prospects". The secretariat report had noted that the post-Uruguay Round rules would foreclose several of the policy options used in recent periods by some of the Far Eastern economies to achieve rapid expansion of exports, as well as in earlier periods by the developed countries. These options included a combination of macro-economic policies including exchange rate policies and micro-economic policies including trade and investment policies as also use of selective interventionist policies and measures to influence the direction and level of investment, to increase profitability of exports and provide incentives for accumulating technological capability. These countries had also used a variety of policy instruments including production subsidy, export subsidy, investment-related measures such as export requirement and domestic-content requirement measures, technology transfer clauses etc. In agriculture, many of the policies employed in developing countries such as minium guaranteed prices, procurement prices and price stabilization schemes, excepting for some schemes for food security purposes, would be restricted. In terms of industrial expansion and exports the new rules on subsidies and countervailing measures and on anti-dumping would restrict scope for use of subsidies by developing countries and could be a major constraint on a wide menu of policy choices used by other countries in the past. The Ad Hoc Working Group spoke of the "view expressed" that for developing countries to derive maximum benefits from the new trading opportunities, new non-tariff measures which might offset the benefits should be avoided. The Working Group called for detailed studies in the area of textiles and clothing, agriculture and services covering, inter alia, trends in structure of demand and supply, potential gains for developing countries arising from the Uruguay Round results in these areas, and identification of policy measures at national and international levels to realize these gains. Such studies should also identify trading opportunities in the longer run, taking into account the additional growth prospects of the world economy including possible changes in demand and supply structures. The Working Group said that the LDCs needed increased technical assistance in the development, strengthening and diversification of their production and export bases including those of services, as well as in trade promotion, to enable them to maximize the benefits from liberalized access to markets. Given that some developing countries, in particular the LDCs and net food importing countries could experience difficulties to take advantage of expanded trading opportunities as well as to overcome the challenges resulting from the Uruguay Round, studies should be undertaken to identify policy measures at national and international levels to overcome these difficulties. These should take into account the mechanisms for assisting such countries envisaged in the ministerial decisions and declarations in the Final Act of the Uruguay Round, it added. In terms of regional policies, the Working Group felt that regional integration arrangements centred around major trading nations "should contribute" to the expansion of world trade and that elimination of intra-regional barriers should be accompanied by the reduction or removal of barriers to trade with third countries. Hence, the Group said, regional and multilateral approaches should be complementary. To enhance the effectiveness of policies at national level, complementary policies would be needed at international level to promote more open markets, free movement of capital, growth oriented adjustments, more business cooperation including dissemination of technology and further increase of external financial resource flows. The working group also called for better use of UNCTAD's computerized information systems to facilitate identification of market access opportunities arising from Uruguay Round trade measures. Developed and developing countries, it was further recommended, should cooperate at the international level to bridge the information gap of developing countries with respect to the environmental rules and regulations in major markets, to ensure greater coordination among governments on development of mutually recognized environmental regulations and standards (including eco-labelling), and reduce the cost of compliance by developing countries, particularly the LDCs, with environmental standards higher than those that have existed so far in the world economy. In this connection, the Working Group said, given the growing international concern about the environment and ecologically sustainable development, increased international cooperation in the transfer of technology would be essential to expand the trading opportunities for developing countries based on environmentally friendly production processes and products. The Working Group said that as tariff and non-tariff barriers come down, there is need to examine the interface between competition and international trade with particular emphasis on trading opportunities of developing countries and continue to develop international guidelines on competition policy. There was a need for further intergovernmental deliberation and global consensus-building on the new and emerging issues of the international trade agenda, such as trade and environment and competition policy, thus contributing to a better understanding of such issues, including their development implications for developing countries.