GATT NEWSLETTER

December 1981

3T SESSION OF GATT CONTRACTING PARTIES

The present issue «/GATT Focus-the last for 1981-is largely devoted to reporting on the 37th Session of the GATT Contracting Parties, held in Geneva from 23 to 25 November. This year's Session is likely to be remembered principally for its unanimous decision (reported below) to convene a ministerial-level session in November 1982. But there was much more to its debates than this single decision- an opening statement by the Chairman of the Contracting Parlies, marked by a refreshing degree of optimism, reports from Chairmen of the main G A TT bodies, an item-by-item examination of matters brought before the G A TT Council during the past twelve months, and a lengthy series of statements by national delegates which bore witness both to the wide range of specific trade concerns of the 86 G A TT signatories and to their shared and vital interest in the health of the multilateral trading system. We are grateful to the anonymous delegate whose caricature enlivens this issue of Focus.

GATT's member States decide unanimously to convene their 1982 session at ministerial level The GATT, Contracting Parties the ministerial meeting, including make appropriate contributions to the (member states) will meet in November setting up appropriate institutional preparatory work. 1982 at ministerial level to "examine arrangements. The Council will decide On 7 December, the Council started the functioning of the multilateral the duration and precise date of the preparations for the ministerial meeting trading system and reinforce the meeting. It will be assisted by a by setting up the Preparatory common efforts of the contracting Preparatory Committee open to all Committee and by designating parties to support and improve the member states. The Council will also Ambassador Donald McPhail (Canada) system for the benefit of all nations"". arrange for other GATT bodies to as Chairman of the Committee.

The ministers will address themselves to "the implementation of the results of Election of officers of the Contracting Parties the (Tokyo Round) Multilateral Trade Negotiations, problems affecting the At the close of their 37th Session, the Contracting Parties elected the following officers: trading system, the position of developing countries in world trade and Chairman of the Contracting Ambassador Donald S. McPhail (Canada) future prospects for the development of Parties trade. Finally, in the context of their Vice-Chairmen of the Ambassador Anthony Hill (Jamaica) consideration of the work programme Contracting Parties .Ambassador André Ônkelinx () of the GATT for the I980"s. Ministers .Ambassador Marko Vrhunec (Yugoslavia) will also determine future priorities for Chairman of the Council co-operation among contracting Ambassador Bhagirath Lai Das (India) parties". of Representatives Chairman of the Committee The GATT Council has been entrusted on Trade and Development Ambassador Felipe Jaramillo (Colombia) with overall responsibility for preparing G A TT is the negotiated synthesis of our will to act, says Chairman of the Contracting Parties, Ambassador Gabriel Martinez

"if anything characterizes GATT and Much remains to be done GATT." said Ambassador Martinez, distinguishes it from other international for developing countries "has been their perception that there organizations, it is the importance of Ambassador Martinez noted that it was are major and important gaps in the ensuring the 'will' of the parties. The in the interest of all that the countries system which need to be filled by the advances, halts and retreats are due. and sectors now on the sidelines of the definition of appropriate and quite apart from the contributions and trading system should be brought into permanent rules". He mentioned in technical efforts of the secretariat, to it and contribute to strengthening particular the issues of safeguards and the will of the contracting parties. GATT and international co-operation. residual quantitative restrictions, and GATT is only, and could not be In particular, apart from some agricultural trade problems: he also otherwise than, the negotiated synthesis encouraging examples, not enough said many developing countries of our will to act". This reminder of developing countries had acceded to the considered the GATT system still did the framework in which GATT's General Agreement: their participation not fully meet their particular needs. activities are situated, given by in the Tokyo Round agreements was of "The time has come to take stock at Ambassador Gabriel Martinez great importance for the universal political level of our co-operation in (Argentina). Chairman of the character of GATT and for the GATT." he said, referring to the 1982 Contracting Parties in 1981. in his transparency of international trade ministerial meeting: and he noted that opening statement at the thirty-seventh relations. "the purpose of the permanent session, was also an appeal to GATT dialogue carried on by the Contracting members to take on their full "One reason why developing countries Parties is to establish binding legal responsibilities in a difficult period. are not yet participating fully in commitments".

The Chairman said the rules and trading practices established in the General Agreement must be respected. Committee on Trade and Development Over the past year, countries at all levels of development had expressed their interest in protecting the integrity Importance of programme of the GATT rules and their concern that, in settling disputes, no precedents of consultations on trade should be established which might the system. liberalization stressed

Presenting a report on the activities of the Committee on Trade and Development (CTD) over the past year. Ambassador Felipe Jaramillo (Colombia) said developing countries consider the Committee's work to be particularly relevant to Dialogue rather than confrontation preparatory work for the 1982 session of the Contracting Parties at ministerial level. The most encouraging element, he added, was the recent change of The CTD has decided to establish a "programme of consultations on trade attitude of countries in regard to liberalization" aimed at systematic identification and analysis of trade problems economic and trade developments: concerning tropical products and quantitative restrictions, so as to further liberalize "during 1981. we have largely trade in these areas. This programme of consultations between developed and renounced the easy way out of blaming developing countries, on a product-by-product basis, is currently being prepared one another for the difficulties these and consultations are scheduled for the first quarter of 1982. developments have brought. Instead, we have concentrated our attention on As regards the Committee's work on trade liberalization in the area of tariff exploring the possibilities of acting escalation. Ambassador Jaramillo said pilot studies were being prepared in GATT constructively together". on some areas of interest to developing countries. The two new sub-committees established by the CTD. on protective measures and on trade of least-developed countries, have been functioning satisfactorily. In response to a proposal made at the Paris Conference on the Least-Developed Looking to the future with cautious Countries, the life of the sub-committee on trade of least-developed countries has optimism. Ambassador Martinez said been prolonged. that "to overcome the difficulties in the textile and agricultural sectors we must Ambassador Jaramillo expressed the concern felt by developing countries over seek, through co-operation and implementation of Part IV of the GATT, and of the "enabling clause" granting dialogue, better answers than those special and more favourable treatment for developing countries. He mentioned in resulting from dialectics and particular differentiated application of GSP schemes by developed countries, and confrontation". the increasing deficit in developing countries' trade balances.

2 GATT IN 1981 Implementation of Tokyo Round Agreements judged satisfactory

The November 23-25 session of the Contracting Parties gave G A TT members an opportunity to Developing countries considered that review the organization's activities during 1981. Since the end of the Tokyo Round this annual United States non-application, in review has taken on particular importance because it covers not only activities of the Council respect of industrial fasteners from and its subsidiary bodies, but also those of the committees established to administer the Tokyo India, of the criterion of injury Round agreements. FOCUS has regularly reported on the work done by these committees. ' This article rounds up and supplements information already published. stipulated in the Agreement on Subsidies and Countervailing Measures, The second stage of tariff cuts was For example, the Committee on had important implications. implemented on 1 January 1981; the Subsidies and Countervailing Practices Fortunately, this matter was settled by third is to follow on 1 January 1982. and the Committee on Anti-Dumping mutual agreement between India and Measures have asked a group of the United States. Export credit In 1981. as in the preceding year, the experts to define objective criteria for subsidies granted on sales of civil main task of the committees has been determining when a producer and an aircraft have been the subject of lively to oversee implementation of the exporter or importer are considered to discussion in the Committee on Civil agreements by signatory countries. All be "related". The Committee on Aircraft, as has the quota system the Tokyo Round agreements have now Technical Barriers to Trade has taken applied by one country in this area. entered into force. The committees up the question of international and have examined national legislation and regional standardizing activities, and provisions to carry the Tokyo Round has decided to undertake a study on agreements into force at the national Safeguards private standardizing and certifying level. The committees have also bodies. The Committee on Government examined measures taken and notified Initiative for breaking Procurement has considered the by the signatories. Observance of these deadlock inclusion of taxes and customs duties in notification procedures is an essential the minimum value of procurement element of the agreements, designed to The Director-General of GATT contracts, and also the identification of ensure transparency in the sector drew the Contracting Parties' contracts published in accordance with concerned. In certain cases (dairy attention to the lack of progress the Agreement on Government products and bovine meat) reports have in negotiations on improvement Procurement. been drawn up on world production, of the international safeguard system. He said: "the situation is consumption and trade in these New tasks have been given to the still deadlocked, even though products. committees, such as the study on tariff many contracting parties are still escalation in relation to the degree of Apart from these administrative aspects, showing keen interest in seeking processing of products, and extension of various substantive questions have a more satisfactory settlement of the list of products covered by the arisen regarding the coverage of the this matter". He added that Agreement on Civil Aircraft, which has agreements. remaining disagreements were in been entrusted to a technical themselves a disturbing factor of sub-committee. uncertainty for the international 1 For ease of reference, this issue includes a subject index of articles that have appeared Lastly, certain basic issues have been trading system. in Focus during 1981 discussed in some of the committees. The Director-General announced his intention of initiating, within the next few weeks and more systematically than up to now. in-depth consultations with Council Chairman underlines four topics delegations in the hope of encouraging a real effort of The Council, which represents the GATT Contracting Parties between their annual compromise. He said this effort sessions held nine meetings in 1981. could be seen in the perspective of the 1982 ministerial session of Ambassador Donald McPhail (Canada) Chairman of the Council for the past the Contracting Parties. year, drew the attention of GATT's members to four essential aspects of the Councils activities: - The review of operation of the system of notification consultation dispute settlement and surveillance undertaken by the Council at two special meetings in the spring and autumn still needs further reflection by delegations. Coming GATT - The Contracting Parties could usefully consider follow-up on the reports of activities panels of independent experts set up to examine trade disputes: this question For the moment, no meetings are has been raised in the Council on several occasions. scheduled for January. The provisional programme of meetings for February is - The Council found that no progress had been made in the Committee on as follows: Safeguards although this matter was among the objectives of the Contracting Parties last year. The issue of "voluntary" restraints on exports, which were a 2-4 Committee en Government feature of trade relations in 1981. had also not been dealt with satisfactorily. Procurement 10-12 Consultative Group of Eighteen - Lastly. Ambassador McPhail recalled that on the initiative of the Consultative 18-19 Working Party on Structural Group of Eighteen the Council had proposed that the Contracting Parties hold Adjustment. their 1982 session at ministerial level. domestic sales of soyabean oil. where G A TT in 1981 (contd from p. 3) the Council was unable to reach a consensus on the panel's conclusions; and the issues of United States tax Trade Dispute Settlement legislation (DISC), and income tax The year 1980 saw increasing G A TT activity in the area of conciliation and practices maintained by . settlement of disputes, continuing into 1981 when seventeen disputes were brought Belgium and the ; in this before the Council, eleven of them concerning agricultural products. latter case, the agreement reached by the parties to the dispute was endorsed On four of these cases, consultations Spanish tariff treatment of unroasted bv the Council on 7 December. are under way or about to begin. If coffee imported from Brazil. Spain has they are not successful, a panel of announced that it will modify that independent experts could be set up to treatment in line with the panel's examine each case, under the recommendations. Multifibre procedures of GATT Article XXIII. Concerning the imposition of import' other cases have been settled in duty on Vitamin B12 entering the Arrangement the course of the year, either by United States, a panel set up at the withdrawal of the complaint (EEC request of the EEC has just begun its Intensive negotiations imports of poultry from the United work. All the participants in the States) or more frequently, by The EEC is currently examining negotiations for renewing the agreement between the parties: such conclusions reached by a panel in Arrangement Regarding agreements included cases concerning respect of its beef imports from International Trade in Textiles the U. S. complaint over Japan's Canada. (Multifibre Arrangement) have now restraints on imports of manufactured The Council has discussed several cases made known their positions: on tobacco. India's complaint against the which raise the question of follow-up 26 November the European U. S. regarding the imposition of on panel conclusions or on agreements Community presented a draft countervailing duty on Indian industrial reached between the parties to a protocol for extending the M FA. fasteners, and New Zealand's drawing dispute. These cases concern EEC This draft followed those already attention to a reported Japanese refunds on sugar exports, which have presented by the United States and decision to impose quotas on certain been the subject of several articles in by developing countries, as well as prepared edible fats. Lastly, concerning Focus; Spanish measures regarding specific proposals made by other delegations. As this issue of Focus goes to press, the negotiations have entered their Concerns and hopes of GA TVs intensive phase. member States For lack of space, we cannot report even briefly the thirty or so statements made on behalf of Consultative Group of nearly fifty countries, expressing their views on GATT's activities in 1981 and priorities 1 recommended for the future. Eighteen

Nevertheless, the Chairman of the Contracting Parties. Ambassador Martinez, identified in his The Director-General of GATT, summing up at the end of the session "five subjects of concern but also of hope" : who is Chairman of the Consultative 1. Disturbing trends in international trade and the increase in restrictive measures Group of Eighteen, drew the outside the GATT system were underlined by many delegations. That is why it is attention of the Contracting Parties important to renew efforts to strengthen co-operation and the international trading to the Group's discussions on system. agriculture which had made a good start and looked promising. He also 2. Although the number of trade disputes has increased sharply because of recalled the reasons why the Group protectionist pressures, this increase is also an indication of the vitality of the had proposed that a ministerial GATT system and of confidence in the consultation and dispute settlement meeting be convened in 1982. procedures as they emerged from the Tokyo Round. Nevertheless, certain countries stressed the need "for contracting parties to maintain the effective and timely The Contracting Parties have agreed on operation of the dispute settlement mechanism under continuing review and to the following membership of the Group give attention to the follow-up on panel reports". for 1982: Argentina. Australia. Brazil. Canada. EEC. Egypt. Finland, India. 3. Many speakers referred to outstanding problems in need of urgent solution. The Japan. Nigeria. Pakistan. Peru. attention given by the Consultative Group of Eighteen to problems affecting trade Philippines. Poland. Switzerland. Turkey. in agricultural products was welcomed and "the hope was expressed that issues USA. Zaire. affecting agricultural trade would receive serious consideration". The need to find solutions for improving the international safeguard system was also underlined. Many delegations expressed their hope for an early understanding on co-operation possibilities in the field of structural adjustment, and welcomed the work being GATT FOCUS done on this issue in GATT. Newsletter published 10 times a year 4. Many representatives underlined the severe economic problems confronting in English, French and Spanish developing countries and the need for those countries to be integrated more by the GATT External Relations and closely in the international trading system. This aspect was linked to further trade Information Division liberalization in areas of interest to developing countries. Centre William Rappard, 5. Lastly, noted the Chairman, "the importance of a mutually satisfactory 154 rue de Lausanne, 1211 Geneva 21 agreement on trade in textiles for the future of co-operation and for confidence in (tel il 02 il) the trading system was recognized by all participants".

4