GATT NEWSLETTER

33 January-March 1 985 POLICIES FOR A BETTER FUTURE

Programme of action proposed by a group of eminent and independent persons

Fritz Leutwiler, Chairman of the group (right) hands the report to Arthur Dunkel, Director-General of G A TT

On 27 March, in the presence of press representatives, Mr. Fritz Leutwiler, Chairman of the group of seven eminent and independent persons which has been studying problems facing the international trading system, handed the group's report to Arthur Dunkel, Director-General of GATT. Mr. Dunkel had invited the group to draw up the report. Commenting on the release of the report, entitled "Trade Policies for a Better Future - Proposals for Action"', GA'lTs Director- General said: "I hope that the report «ill be read tery widelv and will stimulate discussion among businessmen, trade-unionists, consumer groups and all those with an interest in the trading svstem. The report has been written for those affected by trade policv decisions as much as for those who make them. I also hope, of course, that the governments of GATT contracting parties will give the recommendations the careful and serious attention they deserve. For m\ part, I shall be doing so..." "I believe the group has done the world a sen ice. For some years, those of us personally involved in trade policy developments have been convinced that the ability of countries - developed and developing alike - to grow and prosper has been endangered by abuses and distortions of the open-trading system. This report - from a wholly independent group - sets out, in terms that all can understand, their judgement of what has gone wTong and how can be put back on the right tracks". Below is a summary of the report, drawn from the introduction. Nevertheless the report constitutes a whole, and should be read in its entiretv.

1 "Trade Policies for a Better Future - Proposals for Action". Geneva, 1985 Price Swiss Francs 15.-. Available in English, French, Spanish and German editions from: GATT Secretarial, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21, and through booksellers; in the United Kingdom, orders should be placed with H M SO, P. O. Box 2 76, London S W8 5D T, and in the United States with UN IP UB, Box 433 Murray Hill Station, New York, N. Y. 10157.

1 TRADE POLICIES FOR A BETTER FUTURE (continued) Introduction and summary g^-, °m-mm" The decade of inflation, unemployment and stagnation which began in 1973 has been succeeded by the beginning of an economic upturn - but that long-sought recovery is far from secure. ^^i^Ê In the industrialized nations, unemployment remains high and growth is still relatively weak. In the developing world, there is a shortage of the domestic and external resources needed for y\ growth, and in some countries huge foreign debts threaten to abort recovery before it can begin. Even in the United Members of the group, from left to right: Professor Mario Simonsen, Director of the Postgraduate States, where the economy has improved School of Economics of the Cetulw Vargas Foundation. Rio de Janeiro; Dr. Sumitro most visibly, it remains an open question Djojohadikusomo. Professor of Economics at the University of Indonesia; Dr. Indraprasad Patel. whether and how long the growth can be Director of the London School of Economics and Political Science; Dr. Fritz Leutwiler /Chairman), sustained. until the end of 1984 Chairman of the Swiss Sational Bank and President of the Bank for International Settlements, now Chairman-designate of Brown Boveri. Switzerland; Senator The challenge is clear. How can the William Bradley (New Jersey}; Dr. Pehr Gyllenhammar. Chairman and Chief Executive Officer of current upturn become the beginning of Volvo (Sweden): Dr. Guy Ladreit de Lacharnère. Vice-President of the International Court of a new era of non-inflationary growth, Justice. lower unemployment and rising standards of living? Open international trade is a key to Fifteen recommendations for putting sustained growth. Trade opens vast markets to each nation's enterprises. It the trading system on the right path carries technology and innovation around the world. It spurs each nation to In the Third Chapter "The way forward" the group makes the following greater productivity. fifteen recommendations for specific, immediate action to meet the present crisis in the trading system: Today, however, the world market is not opening up; instead, it is being choked 1. In each country, the making of trade policy should be brought into the by a growing accumulation of restrictive open. The costs and benefits of trade policy actions, existing and measures. Demands for protection are prospective, should be analyzed through a "protection balance sheet". heard in every country, and from one Private and public companies should be required to reveal in their industry after another. The trading rules financial statements any subsidies received. Public support for open set under the General Agreement on trade policies should be fostered. Tariffs and Trade are increasingly ignored or evaded. 2. Agricultural trade should be based on clearer and fairer rules, with no special treatment for particular countries or commodities. Efficient In the industrialized world, countries agricultural producers should be given the maximum opportunity to have imposed a patchwork of compete. restrictions on their , sometimes disguising them with the polite name of 3. A timetable and procedures should be established to bring into "voluntary restraints". conformity with GATT rules voluntary restraints, orderly Everywhere, governments increasingly marketing agreements, discriminatory restrictions, and other provide subsidies to favoured industries trade policy measures of both developed and developing countries and to farmers. In many developing which are inconsistent with the obligations of contracting parties countries, measures to protect infant under the GATT. industries and preserve foreign exchange have outlived their usefulness. 4. Trade in textiles and clothing should be fully subject to the ordinary rules of the GATT. Demands for protection may be understandable during periods of 5. Rules on subsidies need to be revised, clarified and made more economic stagnation and hardship. To effective. When subsidies are permitted they should be granted only workers facing the loss of their jobs, the after full and detailed scrutiny. real but intangible promises of must come as cold comfort. But trade 6. The GATT "codes" governing non- distortions of trade should restrictions act only as brakes on each be improved and vigorously applied to make trade more open and economy's ability to take advantage of fair. new technology, and to grow. If today's threatened workers - and their children 7. The rules permitting customs unions and free-trade areas have been - are to be assured of abundant jobs distorted and abused. To prevent further erosion of the multilateral in growing economies, they will need the trading system, they need to be clarified and tightened up. opportunities offered by more open (Continued on page 3) (Continued on page 3)

2 trade. They will also need bold programmes to enable them to benefit from these opportunities, including short-term adjustment assistance and Fifteen recommendations(continued) long-term education. If the trend toward trade restriction 8. At the international level, trade policy and the functioning of the continues, the sustained economic trading system should be made more open. Countries should be growth we seek will become impossible. subject to regular oversight or surveillance of their policies and The current signs of worldwide recovery actions, about which the GATT Secretariat should collect and publish will turn out to be only a sad illusion. information. And deteriorating trade relations will also create new political conflict. 9. When emergency "" protection for particular industries is needed, it should be provided only in accordance with the rules: it The alternative is a new commitment to should not discriminate between different suppliers, should be time- open trade, backed up by improvements limited, should be linked to adjustment assistance, and should be in the operation of the GATT system. subject to continuing surveillance. Both developed and developing countries have a contribution to make in 10. Developing countries receive special treatment in the GATT rules. But this process. such special treatment is of limited value. Far greater emphasis should But better trade policies alone cannot be placed on permitting and encouraging developing countries to take put the world economy securely on the advantage of their competitive strengths, and on integrating them path to growth. That achievement will more fully into the trading system, with all the appropriate rights and require the wise use of monetary and responsibilities that this entails. fiscal policies, and of debt and 11. Governments should be ready to examine ways and means of development policies. expanding trade in services, and to explore whether multilateral rules Our report is in three chapters. can appropriately be devised for this sector. 12. In support of improved and strengthened rules, GATT's dispute settlement procedures should be reinforced by building up a permanent roster of non-governmental experts to examine disputes, Chapter One, "The and by improving the implementation of panel recommendations. Challenge of Economic Third parties should use their rights to complain when bilateral Change" agreements break the rules. 13. We support the launching of a new round of GATT negotiations, examines the role of international trade provided they are directed toward the primary goal of strengthening in the world economy. It argues that: the multilateral trading system and further opening world markets. - Advances in technology, industrial change and population trends, as well as 14. To ensure continuous high-level attention to problems in international rising demand and output in developing trade policy, and to encourage prompt negotiation of solutions to countries, give the world economy the them, a permanent Ministerial-level body should be established in potential to achieve a new era of growth. GATT. Expanding trade will be essential in achieving growth. 15. The health and even the maintenance of the trading system, and the stability of the financial system, are linked to a satisfactory resolution - Rapid change will be painful for the of the world debt problem, adequate flows of development finance, labour market, as old jobs cease to exist better international coordination of macroeconomic policies, and and workers are forced to move on to greater consistency between trade and financial policies. new jobs and skills. The temptation simply to resist change will be very great. But change is not only inevitable: it is the key to growth and to a better future. - Economic prospects will be critically stimulate and promote investments by - Developing countries have been influenced by financial and monetary providing reasonable confidence that placed in a separate and supposedly developments, and by the world's markets will remain open. privileged category from which they success in coordinating macroeconomic have in fact benefited little. policies, confronting the debt crisis, and - The trade rules are no longer seen as maintaining flows of development aid. fully effective, nor generally obeyed. Countries have abused the system's - Trade has a vital part to play in flexibility and have sought advantage Chapter Two, "Why open helping the world economy to take through national measures not trade is better trade" advantage of change. But the trading adequately dealt with in negotiations or system itself, the rule of law embodied in the GATT rules. looks at the pros and cons of liberal the General Agreement on Tariffs and trading policies. It makes the points - In some areas, such as agriculture, Trade (GATT) is suffering serious and that: countries have failed to live up to GATT continuing erosion. rules from the beginning. In others, they - Although the classic theory of - Trade rules that are consistently have found new ways to evade the intent international trade remains valid today, enforced and kept up-to-date enhance of the rules, by erecting such trade the real world is more complicated and everyone's freedom of action, give the barriers as "voluntary export restraints" cluttered than the economist's abstract trading system a sense of fairness, and and by providing subsidies to domestic model suggests. Unemployment and minimize political conflict. They help industries. (Continued on page 7)

3 Focus on... International trade in 1984: strong growth, but trade tensions persist

The volume of world trade increased by 9 per cent in 1984, continuing the recovery that began in 1983. This increase was the largest gain in eight years and brought the volume of world trade to an all-time high, the GATT economists report in their first estimates.1 The increase in value was only 6.5 per cent (SI.955 billion), owing to the fall in dollar unit values resulting from the continuing appreciation of the United States dollar. Imports into North America made a large contribution to the growth of trade, which was dominated by the dynamics of intercontinental trade between industrial regions. There is, however, a sizeable increase in the importance of developing areas (other members of OPEC) in the growth of world imports and exports; this trend is particularly pronounced in the case of South-East Asia. The trade deficit of the developing countries (excluding fuels) was reduced to $32 billion, thanks to a large increase (15 per cent) in their exports, and the terms of trade improved moderately for most of these countries. However, although the brisk expansion of world trade offers an improved climate for more liberal trade policy actions, commercial tensions between countries persist.

The growth of world trade was double about 6 per cent. The rate of expansion that of world production. was slightly faster in the developing Developments by areas countries and somewhat slower in the Industrial countries Although each of the main product Eastern trading area. The volume of The growth of the combined real GDP of groups participated in the trade manufactured exports by the industrial industrial countries accelerated from expansion, manufactures trade grew countries was up by 12 per cent, while 2 xh per cent in 1983 to nearly 5 per cent more than twice as fast as trade in those from developing countries in 1984. To a large extent this gain agricultural and mineral products expanded by 14 per cent and those from reflects an increase of almost 7 per cent (see chart). the Eastern trading area by 4 per cent. In in the GDP of the United States. dollar value, Japan became the world's In 1984 the volume of world According to many forecasters, manufacturing production increased by largest exporter of manufactured in 1984, edging out the Federal Republic economic growth in the industrial of Germany, which had held this countries will continue in 1985 at a rate position since 1970. slightly below 4 per cent. World Exports, 1973-1984 (Volume Indices 1973-100) Looking at the value of trade by Los products, exports of electronic products Developing countries " expanded by nearly 25 per cent, more On the basis of the limited amount of 170 than twice the average rate for all information available concerning Ma «IBC y,es manufactured goods. IfiO . domestic developments, it appears that .' Exports of textiles and clothing by the several developing countries improved ISO their overall economic performance y industrial countries increased less than 140 5 per cent, whereas exports of the considerably in 1984. Developing .. countries recorded a marked 130 developing countries recorded gains well above 20 per cent. Developing countries' acceleration in their exports of non-fuel 1?0 Aqr at. al exports of clothing, which had stagnated products ( + 12 per cent by volume) in dollar value since 1980, rose by more particularly manufactured products, 110 than 25 per cent in 1984, exceeding for mainly to industrial countries (especially the first time those of the industrial the United States), but also by reason of too 1 countries. Imports of clothing into the a modest recovery of intra-area trade United States, which absorbs roughly from the very depressed 1983 level. in one-half of the developing countries' nn total exports of clothing, increased by nearly 40 per cent. Mm* Eastern trading area 70 In Eastern Europe, exports and imports nn are both estimated to have increased in dollar value by 4 Vi per cent, leaving the so ' These are the first estimates by the G A TT trade surplus unchanged at about economists for the year 1984 and prospects for $5 billion. 1985, published in the form of a press release (GATT/1371). The report "International trade In the USSR, according to preliminary Sowce GATT iniernalonaLTrade 1984/85" will appear later. (Continued on page 5)

4 Value of World Trade by Areas in 1984 (Billion dollars and percentages)

Exports (f.o.b.) Imports (c.i.f.) Value Changes over Value Changes over previous years previous year

World 1 955 + 6'/2 2 020 + 6l/2 of which: Industrial countries 1210 + 6'/2 1 320 + 9 Developing countries 486 + 7>/2 451 - '/2 - all products except fuels 256 + 15 370 0 - fuels 230 + Vi 81 - 2'/2 Eastern trading area a 213 + 4 199 + 4'/2 a Imports f.o.b. except for China and Hungary. Sources: IMF, International Financial Statistics; UN, Monthly Bulletin of Statistics; OECD, Monthly Statistics of Foreign Trade; national statistics. estimates, the dollar value of exports China rose marginally, while imports declined The growth of China's industrial respectively. As a result, the $0.8 billion by about 2 per cent; the overall production was about 13 lh per cent. The trade surplus of 1983 turned into an merchandise trade surplus increased dollar value of exports and imports estimated deficit of more than $1 billion further to about $13 billion in 1984. expanded by 17 and 28 per cent in 1984.

Regional shares in the increase in the value of world trade

Analyzing the regional structure of - Japan participated in the current and United States exports accounted for trade, the GATT economists examined recovery more strongly than in the nearly 13 per cent of the increase in the the extent to which the economic past - especially on the export side; value of world exports in 1984. recovery process resembles that observed - developing areas (other than the North America aside, the focus of trade in the two preceding recoveries in 1968 members of OPEC), particularly and 1976. expansion has been shifting, over the South-East Asia considerably longer term, from Western Europe to the increased their participation in the Northern part of the Pacific Basin. The most striking features of this growth of international trade. comparison are the following: The engine of 1984 world trade growth - the contribution of North America was, of course, the brisk recovery of the was larger than in the previous United States economy, the GATT Improvement recoveries ; economists point out. United States - the share of West European imports imports alone accounted for more than in the trade surplus and exports was much reduced ; half of the increase in the value of trade of the heavily indebted countries Exports Imports

Expansion of the exports of the sixteen 1984 1976 1984 1968 1T6 1968 most heavily indebted countries was fairly general, though of varied extent. North America 20.0 12.1 24.1 29.3 23.3 63.0 Only two or three of them experienced a Japan 10.8 9.7 18.6 3.7 6.3 8.4 fall in export earnings in 1984. Western Europe 43.4 32.6 19.5 41.1 49.3 12.6 b The combined imports of these countries South-East Asia 2.7 7.8 14.4 4.3 5.3 9.1 declined further, albeit at a much less OPEC 19.4 1.5 6.2 -13.0 rapid rate than in the two preceding Other developing areas 13.0 10.3 years. 9.8 11.7 2.6 9.0 Eastern trading area 9.0 7.3 6.7 8.2 3.9 6.0 These developments combined to Other 1.1 1.3 3.5 3.1 3.1 4.9 produce a sizeable increase in the merchandise trade balance of the sixteen Total increase in world trade 100 100 100 100 100 100 countries considered ; their surplus is of the order of US$35 to US$40 billion, a Change over preceding years in US$. more than twice the amount recorded in b Four rapidly developing areas in South-East Asia. 1983. Source: GATT secretariat estimates. (Continued on page 6)

5 Tensions over trade policies persist (continuedfrom page 5)

In past cyclical expansions, the imports can, at best, have only a economists consider that the outlook rebound of international trade helped short-term impact on the current for a return to healthy economic to ease tensions between countries account deficit. It is widely growth in Western Europe depends over trade issues, but thus far in the recognized that increased restrictions on a determination to consolidate current recovery this expectation has on imports of particular products are and expand recent progress in been disappointed. ineffective as a way of dealing with a increasing structural flexibility and serious current account deficit. As for the pace of adjustment. Such efforts While a number of factors have general import restrictions, whether will be even more productive if they contributed to this situation, the most in the form of quantitative can take places in a liberal trading visible one is the lopsided nature of restrictions, import licensing or a environment. the economic expansion, according to surcharge, they reduce economic the GATT economists. International efficiency, thus stimulating inflation Japan responded more strongly than differences in the strength of the and penalizing export industries by Western Europe to the stimulus from economic recovery were reflected in increasing their production costs. the United States. Exports expanded trade, with the United States Even from a purely fiscal point of in 1984. by about 16 per cent in providing a disproportionately large view, a surcharge on imports is a very volume, and imports picked up as share of stimulus to the expansion of poor policy. And. since it is well. world trade in 1984. In that country, necessarily temporary, an import the economic recovery has been surcharge only postpones the need to The 1984 trade performance of the accompanied by a steady take more permanent steps to reduce heavily indebted countries appreciation of the United States the imbalance between government represented a switch from an import- dollar and an unusually large increase expenditure and revenue. contracting to an export-expanding in the United States current account adjustment path. Clearly, the ability deficit: both developments are posing of those countries to their The GATT economists suggest that debts depends on the success of the an increasing threat to international in addition to changes in domestic trade relations by adding to industrial countries in countering policies in the United States, an protectionist pressures. protectionist pressures. Not all increase in confidence in investment sectors of the United States economy prospects in other countries - as a The situation created by the have shared equally in the growth, result of either the spreading economic decline in large parts of however, so that demands for general economic recovery or the removal of Africa is very disturbing. Here again measures against imports have been obstacles to structural change - it is evident that an expanding world intertwined with increasingly would both reduce inflows of capital economy would greatly increase both pressing demands for protection of into, and attract capital from, the their export opportunities and the certain industries. United States (provided there is not prospects for aid. an offsetting rise in United States The GATT economists observe that interest rates). This could be expected In conclusion, the recovery of world in the present situation, if the United to result in a depreciation of the trade in 1984, brisk as it was, is no States Government wishes to reduce dollar and a reduction in the United reason for complacency. Tensions the current account deficit, the States current account deficit. over trade issues are at least as strong principal option available to it is to as during the recession years. Even reduce the Federal budget deficit in Despite the recovery in Western more so than in the past, the GATT order to reduce the Government's Europe, job creation remained economists believe substantial demand for borrowed capital. In stagnant and unemployment progress in improving trade policies contrast, increased restrictions on continued to rise. The GATT will require joint efforts.

GATT Bibliography

Les services, nouvelle donnée de l'économie by Jacques Nusbaumer, Ed. Economica, Paris, 1984 (137 p.). This publication situates services in the world economy and their dynamic role.

World Traded Services, the Challenge for the Eighties GATT FOCUS by Raymond Krommenacker, Ed. Artech House Inc., Dedham, MA 02026, USA, Newsletter published 8 times a year 1984 (222 p.) in English. French and Spanish by the GATT Information Service This study examines existing national and international activities in regard to traded services, underlining the advantages of a multilateral forum for negotiating Centre William Rappard, agreements in this sector. 154 rue de Lausanne, 1211 Geneva 21 (tel il 02 31) The views expressed are those of the authors, both members of the GATT ISSN 02564)119 Secretariat, and do not necessarily reflect the latter's views.

6 Coming GATT activities TRADE POLICIES FOR A BETTER Schedule of meetings for April: FUTURE (continued) 15-16 Technical Sub-Committee on Trade in Civil Aircraft 16-18 Textiles Surveillance Body labour mobility difficulties, exchange the industry in trouble? Will paying 17 Committees of the Dairy Protocols rate misalignments, security higher consumer prices protect jobs for 17 Committee on Import Licensing considerations and the need of more than just the short run? What will (special meeting) developing countries to launch infant be the effects on inflation? On long-term 17-18 Committee on Trade in Civil industries have all led governments to economic growth? Aircraft impose protectionist restrictions. But 22 ad hoc Group on Implementation of - Protection also carries political costs. the Anti- Code these valid arguments are seized on as 22 Committee on Anti-Dumping excuses for wholesale protection of Attempts to restrict and manage trade inevitably increase the conflicts among Practices (special meeting) special-interest industries. 22-23 Committee on Trade and nations. Development - Virtually all protection is introduced 23-24 Committee on Anti-Dumping - Contrary to widespread belief, Practices to avoid the consequences of economic protection cannot protect jobs for long. 24-25 Expert Group on Trade in change. But since economic growth is a Indeed, in many cases protectionist Counterfeit Goods process of adjustment to change, measures actually eliminate jobs. Jobs 25-26 Committee on Subsidies and attempts to avert it by imposing trade which are "saved" from the competition restrictions inevitably stunt an economy. of imports are preserved only at the 25-26 Working Party on Textiles and expense of jobs lost in the same Clothing - The "benefits" of are 29-30 Textiles Surveillance Body immediate and visible, while its costs are country's export sector. and 1 long-term and largely invisible. As a May - Instead, job losses in import- 29 Working Party on United States result, those who lose out rarely know competing industries can be remedied in Import Restrictions on Agricultural that they are being made to bear the two ways. One is the creation of new Products costs. In all countries, this creates a jobs, in export industries and through 30 Committee on Government fundamental imbalance in the process of faster economic grow th. The other is Procurement (special meeting) making trade policy: the advocates of energetic policies to help workers adjust, 30 COUNCIL protectionism start with built-in including policies to make high quality May: advantages. education available to all. 1-3" Committee on - In most public discussion of - Nor is protection an effective means 2-3 Services 6-7 Working Party on Natural Resources protection, the right questions are of securing other objectives such as 6-10 Committee on Technical Barriers to seldom asked. What will the total costs preservation of the farm sector, Trade be if trade restrictions are imposed? Is overcoming exchange rate difficulties, or 8-10 Committee on Trade in Agriculture protection the most efficient way to help seeking economic and social stability. 9-10 Committee on Customs Valuation (regular meeting and special meeting) 14 International Dairy Products Council (special meeting) IN BRIEF... 15 International Meat Council (special meeting) 20-21 Working Party on Natural Resources 20 Committee on Tariff Concessions 21 Group on Quantitative Restrictions and other Non-Tariff Measures Meeting on services need to ensure that action in this area 22-23 Working Party on Textiles and does not lead to any unwarranted trade At a meeting on services held on Clothing obstacles. 29 Working Party on Trade with 24 January, delegations examined Romania several national studies prepared by The group will continue its work on 29-30 Working Group on MTN participants and exchanged information 3 April. Agreements and Arrangements on the importance of services in their 29-31 Textiles Surveillance Body countries and problems encountered in 30-31 Services that area. They also discussed the future GATT Publications organization of their work and decided to meet again on 1 and 2 April. and has already opened major Practical Guide to the Agreement opportunities. Its commercial impact is on Government Procurement expected to materialize gradually as This Guide is a mine of practical purchasing entities become accustomed information intended for the business to the new procedures and as the Trade in counterfeit goods community and government circles business community becomes interested in government procurement. familiarized with the opportunities it The expert group on trade in counterfeit It indicates the rules of the Agreement opens in a market that has frequently goods held its first meeting on 11 March, and sales opportunities created by it, been closed to international competition. when it began to organize its work and together with information on the The value of all contracts awarded under heard the views of several delegations on benefits that the Agreement offers to the Agreement in 1982 was substantive matters. These include suppliers, tendering procedures, enquiry approximately US$30 billion. definition of counterfeit goods, the points for obtaining information on nature of problems in this area, forthcoming tenders, etc. The Practical Guide to the Agreement importance and significance of trade in on Government Procurement is available these products, existing national and The Agreement on Government from the G A TT Publications Service, international legislation, as well as the Procurement came into force in 1981 price Sw F 30.

1 should report without undue delay, so as underlined that they were of a limited COUNCIL to allow the Contracting Parties to and purely economic character. The ensure prompt settlement of disputes. Council agreed to revert to the matter.

In connection with the twenty-seventh annual report by his government on the Several developing countries expressed Lastly, the United States and several United States Agricultural Adjustment concern over proposed changes in New other countries having trade interests in Act, the United States representative Zealand's GSP scheme which would the leather sector drew the Council's informed the Council, on 29 January, have the affect of excluding from the attention to the slow progress being that because of an imbalance in US scheme any country with a per capita made by Japan in implementing the sugar supplies, the US authorities had GNP equivalent to GNP 70 per cent or recommendation of the panel which in been required, under Section 22 of the more of New Zealand's. The New- March 1984 had reported on Japanese Act, to impose a fee for the first quarter Zealand representative said that the restrictions on imports of leather. It was of 1985. Several countries expressed economic situation of his country and of noted that while Japan has liberalized their concern at the measures taken by certain developing countries had imports of certain products, some major the United States ' and at the changed considerably since 1972 when restrictions are still in effect. maintenance of restrictions under the the scheme had been introduced. waiver granted temporarily in 1955 by the Contracting Parties to GATT. The Council decided to set up a new working Reverting to the question of restrictions International Dairy party to examine the annual report by on imports of certain sugar-containing the United States. products introduced by the United States Products Council authorities in the context of the 1955 The International Dairy Products waiver, Canada drew the Council's Council held a special meeting on 11 and The European Community informed the attention on 12 March to the harmful 22 February and 8 March ; it reviewed Council, on 29 January, that it had effects of these measures on his the market situation following the concluded an arrangement with the country's trade interests. The Canadian European Economic Community's sale United States in regard to their dispute representative recalled that the waiver of butter at less than the minimum price. about the United States ban on imports specifically allowed any contracting At the same time the Council considered of steel pipes and tubes from the EEC party adversely affected to invoke the sales by other participants in the until the end of 1984 and their dispute settlement procedures International Dairy Arrangement in the restriction in 1985. That dispute had established by Article XXIII of the context of safeguard measures. The been brought to the Council s attention General Agreement; since no agreement Council noted with regret that the on 17 December 1984. had been reached in Canada's United States had confirmed its decision consultations with the United States, he to withdraw from the Arrangement. asked the Council to establish a panel to The European Community also examine the matter. The Council The Council had a substantive informed the Council of the opening of accepted the Canadian request, while discussion on proposals - made by consultations with the United States noting that the two partners were Austria inter alia - for redefining the under Article XXII of the General continuing consultations with a view to levels of minimum prices fixed by the Agreement, concerning the American reaching an amicable settlement. Protocols to the Arrangement. In the FSCA legislation, which has replaced absence of a consensus on this matter, the former DISC legislation, and its Austria announced that its Government intended to reconsider its participation compatibility with the General At the same meeting on 12 March, the in the Arrangement. Agreement. The EEC invited other Council decided to establish a panel to interested parties to participate in the examine the European Economic At its regular meeting on 27 and consultations. Community's request regarding the 28 March the Council gave further policies and practices of the Canadian consideration to this matter and provincial marketing agencies in respect reviewed the market situation for dairy The Director-General reported to the of the import, distribution and sale of products together with the possibility of Council on the status of work in panels alcoholic beverages. terminating safeguard action taken by established by it and by the committees that administer the Tokyo Round agreements. He drew the Council's The Council discussed in detail further attention to delay in the submission or action on the conclusions of the panel Morocco officially notified GATT adoption of some panel reports, established at the United States' request on 8 March of its intention to occasioned by continuing consultations to examine EEC tariff treatment on accede to the General Agreement. on the text or on further action on those imports of citrus products from certain reports. He noted that while the Mediterranean countries. Inter alia, the Understanding Regarding Notification, panel's report asks the EEC to take several participating countries. Some Consultation, Dispute Settlement and action by 15 October to limit the advers countries expressed the view that a Surveillance, adopted at the end of the effect on United States exports of the mechanism was needed to allow Tokyo Round, stipulates that panels preferential tariff treatment it grants on automatic adjustment of the minimum must give the parties concerned fresh oranges and lemons originating in prices to currency fluctuations. The adequate opportunity to develop a Mediterranean countries. The EEC, as Council noted that the Committees of mutually suitable solution, in the well as many countries which are in the the Protocols are to hold a special absence of any such solution the panels Mediterranean region or are linked to meeting on 17 April. In addition the the Community by preferential Committees examined the problem of arrangements, expressed reservations as the substantial stocks of old butter held to the legal justification for those in certain participating countries, and recommendations, while the United discussed possible means of remedying ' See below States and some other countries that situation.

8