General Agreement on Restricted
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GENERAL AGREEMENT ON RESTRICTED C/W/590 2 June 1989 TARIFFS AND TRADE Limited Distribution COUNCIL June 1989 DRAFT DEVELOPMENTS IN THE TRADING SYSTEM SEPTEMBER 1988 - FEBRUARY 1989 Report by-the Secretariat TABLE OF CONTENTS Page Introduction 2 OVERVIEW OF DEVELOPMENTS 3 DEVELOPMENTS IN TRADE POLICIES AND MEASURES 7 I Soctoral Developments 7 1I Regional Developments 34 III Tariffs and Related Matters 42 IV Genteralized System of Preferences 57 V Quantitative Restrictions and Other Non-Tariff Measures 60 VI Government Aids, Subsidies, Anti-Dumping and Countervailing Actions 68 VII Export Restraint Arrangements 89 VIII Other Trade Policy Developments 93 - Coutmertrade 96 - Bilateral trade agreements 99 IX ProspeCtive Trade Policy Developments 103 X Movements in Exchange Rates 113 XI Trade-Related Developments in Other Fields 122 * * * APPENDICES I Notifications Related to Requirements Applicable to Contracting Parties Generally 126 II Notifications RequA red from Certain Contracting Parties 144 III Notifications under the MTN Agreements and Arrangements 146 IV Notifications under the HWA 150 V Export Restraint Arrangements: Voluntary Export Restraints, Orderly Marketing Arrangements, Export Forecasts, etc. 156 89-0769 C/W/590 Page 2 INTRODUCTION 1. The present report covers developments in trade policies and related matters in the period 1 September 1988-28 February 1989, and is intended to provide a basis for the review of developments in the trading system by the Council at its special meeting to be held on 21 June 1989. 2. Since 1980, the Council has held periodic special meetings to review developments in the trading system. Initially, such meetings were related exclusively to the 1979 Understanding regarding Notification, Consultation, Dispute Settlement and Surveillance (BISD 26S/210). They were concerned primarily with reviewing developments covered by paragraphs 2 and 3 of the Understanding, which deal with the notification of tEnde measures, and by paragraph 24, which concerns surveillance of developments in the trading system. In July 1983, the Council agreed to extend the scope of its special meetings to include monitoring of paragraph 7(i) of the 1982 Ministerial Declaration (BISD 29S/11). The Council also agreed that such special meetings should preferably be held twice a year. In paragraph 7(i), contracting parties undertook "to make determined efforts to ensure that trade policies and measures are consistent with GATT principles and rules and to resist protectionist pressures in the formulation and implementation of national trade policy and in proposing legislation; and also to refrain from taking or maintaining any measures inconsistent with GATT and to make determined efforts to avoid measures which would limit or distort international trade". 3. The Punta del Este Ministerial Declaration also recognized the importance of surveillance both for the standstill and rollback commitments in that Declaration and for the functioning of the GATT system. On 8 April 1989, new procedures to strengthen the General Agreement through a tighter dispute settlement mechanism and a new trade policy surveillance scheme, temporarily put on hold at the end of the December 1988 meeting in Montreal, at Ministerial level, were agreed to when the whole package of agreements was formally adopted. 4. The aim of the current secretariat document, the twelfth and last in the existing series, is to focus on substantive developments in policies and measures during the period under review indicating whether or not these had been notified to the CONTRACTING PARTIES. Mention of a policy measure or action in this document should not be taken to imply any judgement on its legal status under the General Agreement. 5. The document largely follows the pattern set by its recent predecessors. First comes an overview of major developments and trends in the period under review. The main body of the report provides a survey of information on measures affecting trade in important product sectors and in certain regions followed by a summary of changes in customs tariffs and non-tariff measures and of subsidies, anti-dumping measures and countervailing actions. The report also deals with so-called voluntary C/W/590 Page 3 export restraints and other trade policy developments. In addition, attention is drawn to prospective developments as well as other developments relevant to the trading system, including movements in exchange rates. The appendices provide a detailed listing of all notifications made to the GATT under the respective notification requirements of the General Agreement, the HTN Codes, or the Multifibre Arrangement, respectively. 6. The information given in this report is based as far as possible on notifications to the GATT. Where appropriate, reference has also been made to paragraphs appearing in previous documents of this series. In addition, use has been made of official sources and of the economic press; in many cases, clarification has been sought directly from the delegation of the country concerned. The document is not and cannot reasonably aspire to be exhaustive, but in order to make it an increasingly effective tool for surveillance, it would be helpful if governments were to supplement the secretariat's efforts by contributing information on all measures and developments which they consider relevant to the purpose of surveillance by the Council at its special meetings, whether or not they are directly affected by them. re3sgonsbility for the document remains,-however, that of the secretariat. OVERVIEW OF DEVELOPMENTS 7. Both in the field of trade flows and of trade policies, the period under review witnessed a number of contradictory developments. 8. World trade and the global economy as a whole continued to expand at a rate higher than the average for the 19809. In general, demand, output and employment continued to grow in the industrialized countries, though there were signs by the beginning of the second quarter of 1989 that the threat of inflation and tighter monetary policies may bring about a slowing down of the pace of expansion for the rest of 1989 and for 1990. 9. While world trade grew, there was little progress, indeed some setback in adjusting the large trade and payments imbalances in the global economy. Japan's trade surplus showed an upward trend as did that of the Federal Republic of Germany. Both US exports and imports expanded but the former at an increasingly uneven pace. Partly as a result of measures of trade liberalization and partly because of changes in currency values, the trade and payments surpluses of so-called newly industrialized countries, particularly in relation to the United States, tended to decline, but not at a rate sufficient to relieve pressures on them for faster adjustment. For the group of heavily indebted countries, last year's export growth was strong enough to raise the dollar value of their combined merchandise exports above the 1981 peak. However, the trade performance of individual debtor countries varied widely and for most of them the higher export growth was not sufficient to offset the effects of rising interest rates and the lack of fresh capital flows. C/W 590 Page 4 10. In the field of trade policies, the agreements reached at Montreal and completed at the April meeting of the Trade Negotiations Committee overseeing the Uruguay Round provided a striking affirmation of the readiness of governments to work out problems in their trade relations through multilateral negotiations aimed at further trade liberalization and the strengthening and improvement of trade rules. In the area of tropical products, these agreements have already permitted the introduction of a number of market opening measures, some of them modest, affecting a broad range of countries. A freeze on certain aspects of agricultural policy measures has also been introduced, though its application to certain types of measures, such as export subsidy programmes, is not clear. Agreements to improve the GATT's dispute settlement procedures and institute a mechanism to review trade policies of GATT members have also been put into effect. Governments have also shown a certain restraint in pursuing particular bilateral conflicts where these threatened the negotiations on the multilateral trading system. Among those that may be mentioned in this context are the steps taken to de-escalate the conflict over the EEC prohibition on hormone-fed beef and the subsequent retaliatory increases in US tariffs, as well as the qualified US rejection of the Section 301 petition against Japanese rice import restrictions. The upholding of the Presidential veto of the US Textile Bill and the continuing efforts at trade liberalization by a number of developing countries, despite the mounting debt and balance-of-payments pressures on some of them, could also be added to the more positive side of the trade policy picture, as could the recent decision by the Swedish Government to remove quantitative restrictions on imports of textiles and clothing. 11. The fact that the number of trade disputes brought before GATT panels for settlement was at an all-time high and that over the past six months four new panels were set up to deal with disputes in the agricultural sector, could be seen as an indication of the greater readiness of governments to use multilateral dispute settlement procedures for a clarification of their GATT rights and obligations, a trend which has been linked to the launching of the Uruguay Round. However, problems encountered