CURRENT GATT WORK ON TRADE BARRIERS By Gardner Patterson I. INTRODUCTION. II. INDUSTRIAL PRODUCTS. III. AGRICUL- I. INTRODUCTION Shortly after the conclusion of the Kennedy Round, the contracting parties to the GATT decided to press ahead with preparations for further advances in the multilateral liberalization of international trade. These preparations have been going forward in Geneva for the past three years on the basis of a work program adopted by the Contracting Parties at their session in November 1967. This decision by governments demonstrated their recognition both of the great economic benefits that had resulted from successive GATT tariff and trade negotiations in the past, and of the need to maintain momentum if these benefits were to be preserved and protectionist pressures successfully resisted. Moreover, the Kennedy Round brought out clearly that a lot of time could be saved in future negotiations if the necessary technical data could be collected and organized well in advance; if governments had a better understanding of the problems that would arise in the negotiations; and if conclusions could be drawn as to possible solutions to these problems. The current GATT work program is designed to do these three things. When the program was launched, it was clear that no major government would be in a position to propose a new GATT trade negotiation for some time and the work under the program in this pre-negotiating stage is being done without commitment on the part of governments. The program covers both trade in agricultural products and agriculture; both tariff and non-tariff barriers. Throughout, special attention has been given to problems affecting the trade of developing countries. But since, as I understand it, this paper is not intended to cover this subject, this important part of GATT's work is not dealt with here. The following pages indicate the main problems that have been revealed in the course of our work and, as far as possible, the methods Gardner Patterson is the Assistant Director General, Department of Trade Policy, General Agreement on Tariffs and Trade. that might be used to deal with these problems in future multilateral negotiations. There are some comments on negotiating prospects. Discussion of methods and techniques of negotiation are still going on in GATT; what is said on the subject in this paper is, therefore, necessarily tentative. The comments on negotiating prospects are purely personal. Non-tariff Barriers When the General Agreement was drawn up in 1947, with much United States initiative, a series of provisions was written into it primarily to reduce tariffs, but also to avoid frustration of tariff conces sions through the use and effects of non-tariff measures. The principal topics, besides provisions on tariff reduction which are so covered by this code of good behaviour, are quantitative restrictions and co-operative arrangements on foreign exchange restrictions, internal taxation and border tax adjustments, the special problem of cinematographic films, freedom of transit, anti-dumping and countervailing duties, customs valuation, fees and formalities connected with importation, marks of origin, publication and administration of trade regulations, production and export subsidies and State-trading enterprises. The GATT provisions are often very brief, laying down only the main principles to be followed. Despite the developments which have taken place since the GATT was drafted, the re-examination which is now taking place in Geneva under the Trade Expansion Program has shown that the validity of the basic principles on non-tariff barriers remains unimpaired. An attempt to deal with non-tariff barriers in the Kennedy Round gave limited results, the main achievements being the negotiation of the Anti-Dumping Code and the Agreement relating principally to chemicals which provided for action on the American Selling Price System of valuation for customs purposes, discriminatory road taxes on automobiles in several European countries and barriers to the import of canned fruit into Switzerland. At that time it was frequently asserted that the influence of non-tariff barriers to trade was increasing, in particular because tariffs are now generally low and bound against increase. Discussion of the question was then, however, rather diffuse and hampered by a general lack of precise knowledge. Following the end of the Kennedy Round in 1967, the GATT decided, therefore, as part of its overall work program; to draw up an inventory of all non-tariff measures suspected of interfering with the free flow of trade, irrespective of whether these were applied in conformity with GATT rules or not. This inventory was drawn up on the basis of notifications submitted by governments, after consultation with traders, of such measures that were met with in their export markets—in other words each notified the restrictions of others. The inventory now consists of over 8001 separate items.2 The second stage, the examination of the inventory, consisted of a detailed discussion of each case, giving countries maintaining the measures the right of reply. They explained the reasons for the application of the measures; economic, social, political, strategic, to safeguard health and morals, etc. Not unexpectedly there was a tendency in many cases to explain that the trade effects of the measures were small. Also, not surprisingly many were not convinced. No attempt has been made to reach agreement on the restrictive effect of the measures in precise quantitative terms. Each individual government must, of course, make its own assessment of the trade effects of measures under discussion before it can conclude a negotiation. The process of mutual education which this examination involved was extremely useful. It increased the understanding of many problems 1 This is quite an arbitrary number to which no special significance should be attached. In the numbering, the quantitative restrictions of most countries, which may run to fifty or a hundred individual 4-digit tariff items, count as one or perhaps two items, and similarly a country's government procurement policy, though it affects many different products, counts as one barrier. At the other extreme, some notifications counted as "an item" affect only a few products, or even one product when imported from one country. 2 These have been grouped or arranged into five general categories: Section 1. Government participation in trade, including: (a) production subsidies; (b) export subsidies; (c) countervailing duties; (d) government procurement and restrictive business and union practices; (e) state-trading enterprises in market-economy countries. Section 2. Customs and administrative entry procedures, including: (a) customs valuation; (b) anti-dumping practices; (c) customs classification; (d) formalities connected with importation. Section 3. Industrial, health and safety standards, and packaging, labelling and marking regulations. Section 4. Specific limitations on imports and exports, including: (a) licensing arrangements; (b) quantitative restrictions including embargoes; (c) bilateral agreements; (d) voluntary restraints; (e) motion picture restrictions; (f) minimum prices on textile imports. Section 5. Restraints on imports and exports by the price mechanism, including: (a) prior deposits; (b) administrative and statistical duties; (c) restrictions on foreign wines and spirits; (d) discriminatory taxes on motor cars; (e) special duties on imports; (f) credit restrictions for importers; (g) variable levies; (h) border taxes. which hitherto had been ill-defined. In some cases the initial examination made it clear that certain problems did not exist, had been misunderstood, or overstated. It has become clear also that mere disparity can form a systematic barrier. Governments are now in a better position to explain to businessmen the rationale, workings and effects of the measures concerned. This task is important as the present time when a determined effort is needed to improve the climate of international commercial relations. The third stage is still going on as this paper is written. This consists of the exploration of possible ways in which problems arising from the measures could be dealt with. It is clearly understood that this exploratory work is preparatory in nature and involves a search for possible solutions, not a commitment on the part of any participating government to take or to join in any action discussed. The work is being done in five working groups, each dealing with one section of the inventory as detailed in the footnote on page 628. Other classifications also suggest themselves and have a bearing on the types of solutions being accepted. Firstly, one can distinguish multilateral. plurilateral, bilateral and even unilateral problems. Multilateral prob lems, by their nature, interest all members of the GATT and often relate to subjects which are already dealt with in the text of the General Agreement. Our work shows that the problem in such cases often stems from the fact that the text of the General Agreement is not sufficiently precise and the solution may therefore be a more detailed code of behaviour for adoption by the major trading countries. The Anti-dumping Code is an example. Plurilateral problems are problems in which a number of, but not all, specific governments have significant interest. Solutions to these problems are likely to be found by negotiations among the interested parties but the form of solution will vary from case to case. An example, again from the Kennedy Round, is the ASP agreement. Bilateral problems are similar and would usually be dealt with directly by the two parties concerned. Some significant barriers of rather general interest may call for nothing more than action by one country to bring its regulations into conformity with existing rules. There is no absolute division between these categories. It is a matter of judgment whether a number of related bilateral or plurilateral problems should be dealt with individually or through the establishment of generally agreed international rules. The work now being done on the inventory of non-tariff barriers naturally tends to concentrate on the more general problems. Some specific bilateral problems may, however, be very important in trade terms and may be important elements in future negotiations. Certain general problems have been left to one side for the moment if they are being studied in other international organizations-e.g. restrictive business practices on which the OECD has done a lot of work. Another distinction which has a bearing on the type of solution to be sought is between measures which are applied as instruments of com |