UNITED NATIONS
Distr.
LIMITED
JijCN .14/L.217 31 January 1965 Criginal, NqGLISH
(fi
COUNCIL ~
ECONOMIC AND
SOCIAL
Submission by the GATT Secretariat
ACTION BY GATT ON TRADE AND ~~=:;;;;:~:::'-:::'::==:":~~-1 ECONOMIC COMMISSION FOR AFRICA
Seventh session
Nairobi, 9 - 23 February 1965 Provisional agenda item
5.
1. IJIlTRODUCTION
The efforts GATT is directing towards the expansion of international trade have for some time become increasingly focussed on specific trade and development problems of developing countries. This trend is inter alia a reflection of the growing importance of these countries in GATT. In
1>~7 the General Agreement was signed by twenty-three contracting parties, nine of which were developing countries. Particularly, with the establish- ment of new independent States in Asia and Africa, there has been a
corresponding growth in GATT membership and today, of the sixty-four contracting parties, fcrty-one are developing countries and, cf these, twenty-one are members of the Economic Commission for Africa. In addition, seven countries in the region are either provisional GATT members or are applying the GATT on a de facto basis pending a final decision on accession.
It is thus clear that members of the Commission have a vital interest in the way in which problems confronting them in the field of trade and
development are dealt with in GATT and this paper describes the more important activities of the CONTRACTDTG PARTIES in this respect. Among these
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activities might be specifically mentioned the adoption by the CONTRACTING PARTIES, towards the end of
1964,
of the new Part IV of the GATT on Trade and Development. The importance of the Kennedy Round of trade negotiations and of the work of Committee III, set up under the GATT Programme of Trade Expansion in1958,
the Action Committee, established following the meeting of Ministers in May1963,
and of the Committee on Trade and Development provided for in the new Part IV of the GATT, should also be particularly emphasized. These topics take up most of this paper, but the other activities of the GATT which are also described belcw make an important contribution to the objective of expanding the export earnings of developing countries and thus facilitating their economic development.E/CN.14!L.217 Page 3
II. TIlE NEW PART IV OF TIlE GENERAL AGREEMENT
In a report which Committee III submitted to the meeting of Ministers in May 1963 it was pointed out that, while many of the activities of the CONTRACTING PARTIES have their roots in specific artioles of the Agreement, certain other important activities which are likewise designed to further
the objectives of the GATT, as set cut in Article I, are based on more ", general provisions relating to joint action. At the meeting Ministers
reoognized that an adequate legal and institutional framework to enable the CONTRACTING PARTIES to carry out the work of expanding the trade of the less- developed countries was needed. They agreed that a committee should be
established with instructions to examine all relevant aspects which the CONTRACTING PARTIES would have to take into account in discharging their responsibilities in this connexion. The Committee on Legal and Institutional Framework which was established agreed that the provisions to cover the
activities of GATT in the field of trade and development could most appropria- tely be drawn up in the form of a chapter on trade and development for
incorporation in the General Agreement.
The result of the work of the Committee was placed before a Special Session of GATT which convened in Geneva in November 1964, and agreement was reaohed on a text of a new Part IV of GATT. It was decided to open the Protocol amending GATT so as to i;~corporate tete nejz Part at a closing meeting of the Session, later fixed for 8 February 1965. A Declaration providing for the de faoto application of the Chapter, pend~ng the entry into force of the Protocol, is to be submitted for adoption at that meeting. The Protocol will enter into force definitively upon aoceptance by two thirds of the contracting parties.
The first of the three new Articles whioh oonstitute Part IV spells out the general principles and objectives which will govern the polioies of the contracting parties in relation to the developing countries. Arnong these are provisions relating to access to world markets for primary produots and the devising of measures aimed at improving and stabiliZing commodity markets.
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The developed countries agree not to expect reciprocity, in return ror concessions extended to the less-developed countries in the course of trade negotiations, by w~ of contributions which are inconsistent with their individual development, financial and trade needs. The second Article sets out certain undertakings by the developed and the less-developed countries in furtherance of the objectivGs. Except where compelling reasons make it impossible, developed countries agree to refrain from increasing barriers to exports of products of speoial interest to the less-developed countries, and to give high priority to the reduction of existing barriers. High priority is also to be given in any adjustments of fiscal policies and the reduction or elimination of fiscal taxes. A procedure for consultation has been provided to deal with difficulties arising in the implementation of these oommitments. The developing countries undertake to implement the provisions contained in the new Article for the benefit of their mutual trade in so far as they find that this is consistent with their individual needs. The third of the new Articles lists various forms of joint action to promote the trade and development of less-developed contraoting parties and oovere studies and consultations in respect of trade and development needs of less-developed countries over a wide field.
The new Chapter oonstitutes an important achievement in the annals of GATT in so far as it tends to give a firm contractual and legal basis for new important commitments in respect of the trade of less-developed countries in accordance with the needs of their development.
The Legal and Institutional Committee recommended that in order to provide for effective supervision of the provisions of Part IV there should be
established suitable machinery on a permanent basis. At the Special Session the CONTRACTING PARTIES agreed to the establishment of the Committee on Trade and Development with the main task of keeping under continuous review the application of the provisions of Part IV of GATT. The Committee will oarry out or arrange for consultations which may be required in the application of the provisions of the Chapter and formUlate proposals on any matter relating
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to the furtheranoe of the provi.sions. It has been agreed that to this end the Committee should take Over the functions of Committee III and the Action Committee. There ars a number of issues which could not
be finalized by the Legal and Ins·bitutional Committee whioh the Committee on .Trade and Development will take over; th,se inolude a review of Artiole XVIII of the Agreement.
This provision is of partioular importanoe in view of the faot that, while the new Chapter together with the Committee on Trade and Development provides a firm institutional basis for the work of GATT in relation to trade and development, whioh goes far beyond the provisions adopted at the
1955
review session when these matters for the first time were before the CONTRACTING PARTIES, there still remain issues to whioh the developing countries attaoh importanoe and for whioh solutions have to be found. It has thus not proved possible to have provisions relating to the important and oontroversial issue of preferenoes inserted in the new text. The Committee will speoifically oonsider and make submissions to the annual GATT session on proposals how to deal "ith this problem. At the Speoial Session contraoting parties were invited to submit by the end of1964
proposals ccncerning the granti~g of preferences on selected products by industrialized countries to less-developed countries as a whole, and the granting of preferences on selected products by less-developed countries to all other less-developed countries.
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III. EXPANSION OF TRADE OF LESS-DEVELOPED COUNTRIES
A. Participation of developing countries in the Kennedy Round
'llien GATT Ministers decided in M~
1963
that thsre should be a further round of trade negotiations, special attention was given to considerations relating to the participation of the developing countries in the negotiations.In particular, it ;ras formally recogni:oed that "in the trade negotiations every effort shall be made to reduce barriers to exports of the less-
developed countries, but that the developed countries cannot expeot to receive reciprocity from the less-developed oountries". At a meeting of Ministers
in I~ay
1964
fo'~ally opening the trade negotiations, these prinoiples were reaffirmed and it was agreod that the objective of reducing barriers to the exports of the deYeloping oountries sho~ld be borne partioularly in mind in the appro~ch to the question of exceptions to the rule of the across-the- board reduction in the tariffs of the industrialized participating countries.It has been aereed th~t t~ese exceptions muct be kept to the bare minimum necessitated by re2SO~S of overriding national interest, and that they should be subject to confrOn~G3.ti011and justification. It might be noted that the text of the n~'I" PaY.'t IV of tae General Agreement, in setting out certain principles and objectives, specifically inoludes the principle of non- reciprocity in trade negotiations on the part of developing countries.
A special Sub-Co~nittee of tho Trade Negotiations Committee has been set up to deal with any problem arising in the negotiations which are of special interest to the developing oountries. Seven member countries of the Eoonomic Commission for Africa have participated in the work of the Sub- Committee.
A procedure bas been elaborated in the Sub-Committee under which individual less-developeC'_ countries are invited to indicate products whose Gxclusion from the exceptions lists presented by developed countries they regard as being of special importance. The procedure also applies where less-developed cOlUltries wish to seCl~e tariff concessions of more than the
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50 per cent agreed as a working hypothesis in the negotiations. It should be noted in this connexion that the developed countries have expressed themselves prepared to consider the possibility of taking such steps as are open to them to make cuts deeper than 50 per cent in, cr even to eliminate completely, duties on products of special interest to developing countries.
Under this procedure a large number of developing countries have submitted lists of products of interest to them.
As a further proce1ure to ensure that the interests of developing countries in this context are fully safeguarded, it has been agreed that, at an early stage in the negotiations, there will be a special examination of exceptions of special interest to less-developed countries, and that, in cases where, after the general process of consultation and confrontation, there remain in the lists of exceptions products of special interest to less- develcped countries, eithe:' the Sllb·-Commi t'cee or some other body will seek what alternative positive neesuros can be taken.
In the cas" of tr-opt cal pi-oduot s (coffeo, cocoa, tea, oilseeds, tropical timber, and bananas) !.t has been decided that the Special Group on Tropical Products will operate ~"" a negotiatins body under the aegis of the Trade Negotiations Committee, and that any residual problemc, after the completion
of negotiationG i':1 the Konnod; Ro'-!nd would be r-ef'cr-red to the Trade and Development Com~it~0e.
As regar~s thd contribution which the less-developed countries themselves will make to the negotiatiots, it has been agreed that this contribution has to be considered not in the light of reciprocity, but in the light of the trade and development needs of the developing countries. The question of the contribution which ·oho less-davel.oped countries may make assumes special significance in cases where, in the course of negotiations, they receive requests for concossions from other developing countries.
Some less-developed countries have important export interests in certain temperate foodstuffs. The rules to ~ovorn and the methods to be employed in the negotiations on these produots have not yet been worked out, but intensive discussions on this sector of the Kennedy ROQ~d will shortly be starting.
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B. Activitiee of Committee III and the Action Committee in the removal of trllde barriers
Committee III has done important work for the developing countries since its inception in
1958.
The Committee's approach to the trade problems of the developing countries has been systematio and has oontinually expanded in scope during the period of its operations up to the time of the reoent establishment by the CONTRACTING PARTIES of the new Committee on Trade and Development. The evolution of this approaoh may be briefly set down as follows:(a) identification of barriers to trade on a oommodity-by-eommodity basis;
(b) continuing efforts to achieve the remova.l of these barriers;
(0) parallel extension of the commodity-by-commodity approach through the broad study of development plans and export potential;
(d) consideration of other measures to expand exports (e.g. preferences, trade informa.tion and trade promotion servioes, production and
marketing techniques, and relationships between trade flows and financial assistance).
The above process has sometimes led to the establishment of new machinery such as the Speoial Group on Trade in Tropical Produots in 1962 and ths establishment of the GATT Trade Centre, to which further reference is made below.
Further impetus was given to the activities of the CONTRACTING PARTIES in this sector when, in 1963, at their meeting in May the Ministers established a GATT Programme of Action and an Aotion Committee to supervise the implementa- tion of the Programme.
The Action Programme provided, in seven points, for a standstill
provision as regards the erection of new tariff and non-tariff barriers; the elimination of quantitative restrictions; duty-free entry for tropical
products; elimination of tariffs on primary products; the reduction and elimination of tariff barriers to exports of semi-processed and processed
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..pr.od.uct.sa.nd~'fina.lly,a.. pr.ovisionfor reporting on meas=es taken by
contraoting parties with respect to these barriers ·to trade •. There was an eight point in the Programme which urged the contracting parties to give ocnsideration to the afroption of other appropriate measures which would faoilitate the efforts of the developing countries to diversify their economies, strengthen their export capacity and increase their export earnings·.
As a result of the efforts made by Committee III and the Action Commi :~E
there has been substantial progress in the elimination of barriers affeoting the trade of less-d.eveloped ccuntz-i.es , part i cuLar-Ly in the field of quantita- tive restrictions, while there has been some limited progress in the removal or suspension of tariffs on exports of thece cotmtries. As already mentioned above, it is expected that the procedurGs established for the Kennedy Round of trade negotiations will secure significant benefits for less-developed countries •
. Some progress has been made in creating better conditione in world markets for some of thetropic~l products exported by developing oountries.
Most industrialized countries have taken action to eliminate or suspend duties on tea and tropioal timber, and there are prospects for further improvements in this respect. As regards other products such as coffee ar coooa it has been found that, because of the existenoe of different marketing systems, it may be possible to take far-reaching action only through broad arrangements between countries involving more than one element of policy.
The detailed examination of products of interest to the developing oOtultries by the Action Ccmmittee has so far concerned a total of approxim- ately eighty items (Brussels Tariff Nome~clature). The Committee recently discussed an enlargement of the list of produots in accordance with what had been envisaged by c:'.:r Ministers in May 1963. The developing couzrtr-Les have made it clear thatthoy expact; action not only in respe<;lt of the
products identifiod"!>y Gommii;tee III but also on other products which they have notified as being ofint.erost to them.
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Among the more important of the activities pursued under point (viii) of the Action Programme has been the study of a proposal for the establish- ment of preferences by developed countries in favour of less-developed
oountries and by less-developed oountries in favour of one another. This examination has not yet yielded agreed conclusions. Reference has already been made to this question above in connexion with the establishment of the new Committee on Trade and Development.
Another important set of ideas which have been put forward for
discussion in this connexion are those relating to measures for stabilization of commodity prices and organization of commodity markets. The CONTRACTING PARTIES to GATT have been concerned for many years with the problem of icstability in the field of commodity traJe. Since 1957 the CONTRACTING PARTIES have undertaken periodic reviews of trends and developments in the field of commodity policy on the basis of a report submitted by the Chairman of the ICCICA, and other relevant documentation, particularly that of the FAO. The CONTRACTING PARTIES have also more than once reaffirmed their readiness to deal, upon the request of one or more contracting party, with the special difficulties arising in connexion with international trade in primary commodities. The growing international recognition of the need for stabiliZing and expanding the export earnings of less-developed countries from primary products, which also found expression in the recent United Nations Conference on Trade and Development, has reflected itself in the agreement that the Kennedy Round of trade negotiations should deal not only with the problem of trade barriers in tropical products but also of prices.
Appropriate provisions for co-operative action aimed at ensuring stable, equitable and remunerative prices for primary products so as to provide these countries with expanding resources for their development have also been written into the new Part IV of the GATT already referred to.
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C. GATT studies of development plans and aid and trade relationship The decision that GATT should embark upon a programme of development studies opens up a new field of work. It constitutes a significant part of the work of Committee III and is aimed at obtaining a clear analysis of export potential, market prospects and any further action that may be required to overcome any diffioulties that the studies reveal. The ways, to achieve these general objectives may be briefly referred to.
In the first place, the studies will aim at assisting the individual developing countries to assess more closely the likely trade implications of their developmental efforts as regards both exports and imports. It is hoped that projections and estimates of this kind will be of help both for development planners, in selecting priorities, and also for international lending agencies and governments active in the field of bilateral aid.
The studies will also endeavour to bring out the potential rale of the export sector as a whole in individual developing countries and thus to focus attention on the international action that will be required in order to remove barriers, which would otherwise frustate the growth of exports of these commodities. This oould also facilitate the working out of international arrangements in respect of individual commodities.
A further aspect conoerns the way in which the studies can acquaint developing countries with one another's development plans and in particular their import requirements and targets in relation to exports. The availabi- lity of information of this kind, which will beoome really important only after a number of studies have been completed, might also serve to facilitate
the work being undertaken in the Economic Commission for Africa in the field of regional co-operation.
Among the studies which the GATT secretariat is at present undertaking in oollaboration with outside experts and international agencies, a number concern African countries selected for pricrity soudy in agreement with the Governments concerned. Upon completion of the studies it is the intention to send a mission to the oountries with a view to finaliZing the documents in consultation with the authorities, so that the studies might thereafter be submitted for consideration by the appropriate body in GATT early in
1965_
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It is to be hoped that in assessing export prospeots and possibilities of the developing oountries in relation to their import needs and requirements and the role of finanoial assistance, these studies will contribute to a
better understanding in the developed countries of the need for pursuing trade policies which will permit and facilitate im,'Jrts of commodities of which the developing countries are, or can become, efficient producers. From the point of view of the less-developed countries, a fuller awareness of the direction in which export efforts could usefully be expanded should help them to reduce the reliance on uneconomic import substitution and thus encourags optimum utilization of resources including those made available through external assistance. The studies could thus be instrumental in contributing to more effective international co-operation in the use of trade as a means of economic development.
It may be appropriate to emphasize that in oarrying out the studies, GATT will be restricting itself, as far as possible, to its particular field of competence. Though it is the intention to collaborate closely with
international agencies having jurisdiction in the field of payment and
financial assistance, the GATT studies will not seek to examine or arrive at any determination in regard tc matters concerning fiscal, monetary or
payments policies eto., which are normally dealt with by such other bodies.
D. GATT Trade Information and Trade Promotion Advisory Services
An important facet of GATT's activities for the benefit of developing countries is the new Trade Information and AdYisory Services, decided upon by the CONTRACTING PARTIES in March 1964, and closely linked with the
development plan and trade and aid studies referred to above. The practical carrying out of the new services takes place in the International Trade Centre, operating in the GATT secretariat.
The Centre, which began its operations in May 1964, is being built up step-by-step, under the guidance of a Special Expert Group and under the supervision of the CONTRACTING PARTIES in order to ensure that it will
achieve its primary objective of assisting the developing countries in their efforts to expand their export trade.
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During the present initial stage of operations, the Centre is in the prooess of bUilding Up its dooumentation unit and has started to operate a
"olearing-house" for trade information and a Correspondence Answering Service. The information collected relates not only to commercial policy matters, such as tariffs, quantitative restri~tions and other trade regula-
tions, but also to market intelligence and market research. The Centre is assisting exporters in making the necessary contacts with trade organizations and importers, either directly or through the national liaison network whioh is gradually being built up at a governmental as well as at private industry level.
Another of the Centre's activities in the field of information is the preparation and publicaticn of a Register of Souroes of Trade Information, in a form designed to take into aooount the special needs of the developing oountries.
The Centre has begun the publication of a quarterly (intended later to beoome monthly) trade news bUlletin, called the International Trade FORUM, the first issue of whioh was published in the beginning of December 1964.
The FORUM is designed basically to draw attention to the trade promotion problems of the less-developed countries and to provide practioal information and advice, both to governments and to private traders. The Centre is also preparing, in collaboration with national trade promotion services, a manual On the operation of efficient export promotion services.
Another important part of the Centre's activities in this field will be the arrangements for training facilities in export promotion. This activity will take varicus fcrms; it may be provided either within the Centre itself, or in the context of the established GATT in-service training programme for officials from developing countries (referred to below), and further through facilities to be provided by member governments and national trade promotion agencies. The response to requests for assistance in the last-mentioned form has been very encouraging and already several industrialized countries have made available, on their national trade promotion courses, places for officials from developing oountries nominated through the GATT Centre.
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The question of additional publications and of any further extension of the services to be provided by the Centre, particularly in relation to marketing and production techniques, will be ccnsidered by the experts under whose guidance the Centre operates when they meet in February 1965.
The Group is composed of representatives from both developed and developing countries.
A point to be emphasized is that all the services of the Centre are available to all interested oountries, whether GATT members or not.
Though the Centre has been in operation for only a short period, it is obvious that it oorresponds to a real need. The Centre has recived an increasing number of enquiries requesting specific information on trade barriers, potential export markets, advice on marketing techniques, how to carry out studies on marketing .and trade promotion, etc.
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IV. OTHER ACTIVITIES
Among matters which should be mentioned in connexion with GATT's work for the benefit of less-developed countries is its technical assistance programme. Although this programme is comparatively modest, considerable importance is attached -t,'l it by eovernm",,+s and the demBf10 on the limited resources of the secretariat has been on an increasing scale.
As in the previous nine years, the GATT secretariat organized in 1964 two training courses in Geneva for officials holding fellowships granted by the United Nations Bureau of Teohnical Assistance (BTAO). The course, of about five and a half months' duration, were open not only to officials of GATT member governments but also to officials of other countries, members of the United Nations. The seventeenth course,for English-speaking partici- pants, began in February 1964 and was attended by officials from a number of African countries, i.e. Kenya, Nigeria, Tanganyika and the United Arab Republic; the eighteenth course, for French-speaking officials, began in July and included participants from Congo (Brazzaville) and the United
Arab Republic. Over the years, in all about 125 officials, of which twenty- eight have come from Africa, have participated in the courses, which, as experience has shown, have been of considerable value to the developing countries, especially these which have only recently acquired full autonomy in the conduct of their commerU~~L pOLicy,
Further, during the past three years, t~e GATT secretariat has organized in Africa, in co-operation with the Economic Commission for Africa and with
authorities, short introductory courses in foreign trade and commercial policy. The six oourses so far arranged have been attended by a total of 104 officials from Member governments of the Commission. The 1964 oourses, each of one month'S duration, took place in Kenya and Cameroun. Officials from the following countries attended the course in Nairobi : Ethiopia, Kenya, Malawi, Somalia, Tanzania and Uganda, while on the course in Yaonde and Douala the following countries were represented: Burundi, Cameroun,
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Congo (Brazzaville), Congo (Leopoldville), Dahomey, Gabon, Mali, Niger.
Rwanda, Senegal, Togo and Upper Volta. The basio feature of these oourses is to oombine leotures and disoussions of the various aspeots of oommeroial polioy, as applied to developing oountries, with disoussions of the
praotioal trade problems existing in the oountries where the oourses are held.
Finally, the GATT seoretariat is prepared to oonsider requests for assistanoe by individual newly-independent States relating to speoifio problems in the field of oommeroial polioy. In this oonnexion it might be mentioned that a mission from the seoretariat visited East Afrioa in the beginning of 1964.
