6:56 AM Sep 28, 1994
HIGHLY UNBALANCED OUTCOME, FEW GAINS FOR SOUTHGeneva 27 Sep (Chakravarthi Raghavan) -- The outcome of the Uruguay Round, in terms of the rights and obligations of the developing countries before and after the Round, is highly unbalanced, their gains much less than the concessions they have made and there will be economic costs for them. And while some of the rules and disciplines -- such as on anti-dumping, subsidies or safeguards -- are clearer and more precise, overall they give much discretion and some of them are principally aimed at the developing countries and their exports. These were some of the views and assessments of experts who are here to participate in a seminar on Trade Prospects for Developing Countries up to the Year 2000 and beyond. The seminar, jointly organised by the UN Conference and Trade and Development and the Geneva Centre for Applied Studies in International Negotiations, is on the occasion of the 30th anniversary of UNCTAD. The conclusions of the two-day seminar are expected to be presented at the UNCTAD Trade and Development Board's session on Thursday to observe the 30th anniversary. One of the major claims of the GATT, as well as many of the developing countries who participated, is that the outcome is positive, will expand and benefit the trading opportunities of the developing world and that the WTO-based new trade order would be a strengthened multilateral trading system. Several of the participants though seemed to have an "yes, but..." view of the outcome. In talking to SUNS, Bhagirath Lal Das, former representative of India to GATT and later Director of UNCTAD's Trade Division (during the Uruguay Round) said of the many claims of billions of dollars of trade and welfare gains: "these quantitative projections are very uncertain, as all these models are." Das, who after his UNCTAD assignment went back to India as permanent secretary of the steel ministry before retiring, said that a better way of judging the Uruguay Round outcome would be to look at the rights and obligations of the developing countries before the conclusion of the Uruguay Round and after its conclusion. When the Round was launched at Punta del Este, once the sophisticated language of the Declaration was left out, it was clear that the whole purpose of the Round was to bring the developing countries within the fold of the disciplines of the GATT and to extract concessions from them and make them take more obligations. This was the prime consideration behind the launching of the Round. A second consideration was to instil some disciplines in the field of agriculture, particularly in the European Community, and mainly targeted at its variable levy. A third objective was to bring 'services' within the ambit of the multilateral system and its discipline in order to have expanded access for the services of the Industrialized countries into other industrialized countries and also the fast-moving developing countries. After the Tokyo Round, the industrial countries had already reduced their tariffs on products of interest in their mutual trades, and there was also a level of discipline. "Most of us felt at Punta del Este," Das added, "that this was the main objective and basis of the Round and from this view, the Round has succeeded: they have got concessions from the developing countries and have brought some disciplines in agriculture on the EC and in services." "It is not rational, even for a weak negotiating partner, to have such an imbalance as has occurred, in any rational multilateral negotiations. But the developing countries had only two options: either to accept the outcome or remain outside the system. The latter is not practical for any country. So the imbalance had to be accepted." But would the more elaborate and precise multilateral rules -- in Safeguards, Subsidies and Countervailing duties, Anti-Dumping and Dispute Settlement -- provide greater security of access to markets for developing countries? Mr. Patrick Messerlin, of the Institut d'Etudes Politiques in Paris, said the anti-dumping rules and other remedies were contingency protection instruments. The Uruguay Round rules were more sophisticated and even more expensive (where to use or defend against) and not too much should be made of them. For the developing countries, in Messerlin's view, it was just a minor gain. But it would mainly benefit the big enterprises in the ICs in their efforts to protect their home territory. If the domestic complainants were less than 25 percent of the producers of the like product, they cannot initiate a complaint. But if they were more than 50% it is an automatic right. This meant that it would not be invoked by a number of small firms, but would be by big firms. It was a US move which within the country had seen one or two small firms being able to invoke it (as in the flat video panels used in lap top computers). However, the contingent protection problems had not been resolved. There was substitutability between instruments. If grey area measures can't be put in, and safeguards are difficult, then antidumping could be used. The number of instruments that could be used had increased. The safeguards agreement, whose provisions for elimination of 'grey area' measures would largely benefit some of the Asian countries. But while generally eschewing selectivity, it is still there so that the importing countries could target imports which had increased from any particular source disproportionately. "This is a clear invitation to selectivity and could be very damaging for new entrants into a market. If your exports succeed in penetrating a market, it is by a 'disproportionate' increase visavis the rest of the exporters". The Uruguay Round, Messerlin explained, had also enabled simultaneous use of several instruments -- as the European Union's actions on India and Pakistan over textiles restricted under the MFA being hit also by antidumping investigations. A number of developing countries and transition economies were also close to putting in place their own anti-dumping laws. As for the dispute settlement system and the rules, the real question was whether they could be enforced against the US and EU. He doubted it. Mr. Jean-Francois Beltis, Etude Van Bael et Bellis, Brussels, the Uruguay Round Anti-Dumping code would not be beneficial to the developing world, and would be a powerful contingent instrument of protection in the hands of many major developed countries. But if more and more developing countries also begin to use it -- though it would be difficult for them since it would require "the mastery of the art of sophistry" -- may be in the next Round everyone would join in eliminating antidumping. As it was, the AD agreement was no more than the EU's own code, minus the aspects of it which Japan did not like, plus some procedural rules directed against some developing countries whose practices the US and EU did not like or to use against exports of some developing countries. Japan did not like the EU practice of using Japanese retail domestic sales price which ignored the costly Japanese distribution system. The AD agreement now removes this. The new agreement allows anti-circumvention measures, but has no clear rules. The new procedures would prevent the kind of action that Mexico indulges in -- levying a provisional countervailing duty and then begin investigation. But the AD agreement will make it easier for the US and EU to use AD measures on textiles. The developing countries pressed for and got a de minimis threshold level. But this was less than in the EU legislation. But according to Julio Lacarte-Muro, who had chaired the institutional group in the post-Brussels phase of the negotiations had a different perspective. "On enforcement," he said, "we have gone as far as we could. You cannot prevent any government from violating any international commitment. What you can do is to make them pay for it. That is what the WTO's Dispute Settlement Understanding does. If a country violates, there will be an instrument to apply against it -- retaliatory measures equivalent to the violation" To make use of these, and for asserting their rights, developing countries, both in Geneva and their capitals would need to have expertise and capability of following all these and make use of them. The trade issues, under the WTO which would be in a state of perpetual negotiations, cannot be handled by a handful of diplomats here, however clever they are. Das said that while the DSU had some built-in improvements, its only remedy was trade retaliation which was no remedy for a weak trading partner. And on this, the outcome of the Uruguay Round represented another important omission, and imbalance. Over the long term, the General Agreement, India's former negotiator there observed, has not been effective in ensuring observance of the rights of a weak trading partner. "Some of us had hoped," Das said, "that as a result of the Uruguay Round exercise, this process of retaliation will be there not only for the country whose rights have been breached, but that there would be some sort of multilateral retaliation, joint action of the CPs to retaliate against the country which is found not to meet its obligations. This has not happened. GATT has provisions for joint action, and it has been used for other purposes, but not for this." However, Das felt that the subsidies, antidumping and safeguards agreements were a vast improvement on the present rules -- from the viewpoint of legal procedures, and not from an economic viewpoint. There was an element of objectivity introduced in the determination of injury, in the linkage between industry of dumping and the injury caused by the imports. The provision for phaseout of 'grey area' measures was also a positive outcome. But in his view antidumping would be a 'double-edged' sword for the developing countries. As defenders (against antidumping actions) they will gain. But they will not find it so easy to impose or use this instrument and initiate actions, which one hopes they would given the general degree of liberalisation they are embarking upon. Most developing countries did not have the capacity to collect or analyze information relating to trade in their major trading partners either to initiate or defend against complaints of injury and present it before designated authorities. Developing countries would have to strengthen their commercial representation in major trading partners in order to collect systematically information to enable a determination of injury or dumping. They also have to give a detailed training programme to their own industry and trade which have to initiate the actions. Lacarte noted that in some of the agreements, like that on AD, the socalled "standard of review" concept had been brought, which gave greater leeway to the national authorities in interpretation. It would favour the governments that want to apply the AD instruments. A consequence of this would be that many countries would find it in their own interest to have AD legislation in order to protect its own producers and act as a deterrent against countries which use them.