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TWN Info on WTO Issues (June04/4)

11 June 2004

Third World Network

GSTP NEGOTIATIONS TO BE LAUNCHED AT UNCTAD XI

One of the highlights at UNCTAD XI, which starts in Sao Paulo on 14 June, is the launching of a new round of negotiations on the Global System of Trade Preferences Among Developing Countries (GSTP).† This is scheduled to take place at a special meeting of GSTP participating countries on 16 June, to which all G77 members are also invited.

The GSTP is a scheme in which developing countries who take part give trade preferences to one another.†† The preferences will not apply to developed countries.

This is legal under the WTO rules, in terms of the GATT 1979 enabling clause.

Below please find an article by Chakravarthi Raghavan (Chief Editor, SUNS) on the state of negotiations to prepare for a new round of GSTP, which has been taking place in Geneva in recent months.† The article was published in the South North Development Monitor (SUNS) of 1 June 2004.

The article is reproduced here with the kind permission of Mr. Raghavan.† Permission for any further reproduction by email or hardcopy should be sought from Mr. Raghavan at sunstwn@bluewin.ch

Another article on the GSTP in general by Mr. B.L. Das will also be sent to you separately.

With best wishes

Martin Khor

TWN

GSTP NEGOTIATIONS TO BE LAUNCHED AT SAO PAULO

By Chakravarthi Raghavan,† Chief Editor, South-North Development Monitor, Geneva, 1 June 2004

The Committee of Participants of the Global System of Trade Preferences Among Developing Countries (GSTP) agreed at their meeting in Geneva to launch a Third Round of trade negotiations among developing countries under the GSTP.

The chair of the GSTP Committee of Participants, Amb. Alfredo Chiaradia of Argentina, announcing the decision to launch the Third Round, said that Ministers of GSTP member countries will convene in Sao Paulo, Brazil in June (on the occasion of the UNCTAD Conference there) and launch the Third Round of negotiations and invite the members of the Group of 77 and China to join† the Agreement.

Chiaradia expects the Third Round of negotiations to begin in November and to be completed in two years, and provide for preferential trade arrangements among the 44 GSTP member countries.

The Committee of Participants have laid down a clear programme with a number of tasks to be fulfilled in sequence. Foremost among them, and to be completed before the end of the year, is examining the possibility of clarifying, or improving if necessary, the provisions of Article 9 of the GSTP, and other relevant provisions as appropriate.

Article 9 deals with the issue of extension of negotiated concessions at the end of the round among the participants - and has given rise to a problem in interpretation and how to deal with Ďfree ridersí among the non-LDC participant members.

A related decision of the Committee of Participants said that this issue should be resolved and decided in accordance with Art. 7.2 of the GSTP - decision by consensus if possible, and otherwise by a vote, with two-thirds majority required for substantive questions.

The GSTP was established in 1989, and serves as a framework for the exchange of trade preferences among developing countries to promote trade among them.† Developing countries see a vast potential for this trade. The mutual trade of GSTP members is estimated to be close to $2 trillion in 2000 - or about 55% of the trade of all developing countries.

At the time of establishment, it was seen as a framework, and thus minimal exchange of concessions were made among the members to sign on and bring the Agreement into force and get the necessary GATT authorization.

A second round of negotiations was conducted and concluded, but never came into force, as a result of the problems that arose over some of the leading and richer developing countries not actually negotiating or exchanging concessions, but wanting to get the benefits of concessions exchanged among others on an MFN basis - a free rider problem.

This is the task that has now been entrusted for solution to the GSTP Negotiating Committee, open to all interested participants, to undertake the preparatory work and supervise the overall conduct of the negotiations - with its various tasks to be considered and completed in sequence.

Some of the developing countries, who did not participate or exchange concessions in the Second Round, nevertheless want the concessions exchanged among the participants who negotiated to be extended to those who did not participate in the second round and exchange concessions - citing the MFN framework of a multilateral agreement like the GATT and the WTO.

Other major developing countries however insist that apart from LDCs who are to get non-reciprocal benefits, at the end of the negotiations, concessions exchanged among two participants should be applied to all the GSTP members who participated in the negotiations.

Among some of the suggestions for expanding the South-South trade, both non-agricultural and agricultural, that some trade experts from the developing world have put forward is resort to tariff cutting formulae that would take account of the different situations of the members.

After the Article 9 issue is resolved, the Negotiating Committee will establish the modalities and approaches of the market access negotiations and to conduct the negotiations.

A technical working group of the Committee of Participants has prepared some Recommendations in this regard.

Besides the GSTP members, interested members of the Group of 77 and China have been invited to participate in the Third Round.

At a Third World Network organized NGO forum at the WTO on Wednesday, responding to a Northern NGO participant, who asked what the bigger developing countries were doing to provide market access for the LDCs and other developing countries - implying they should do so at the WTO in the context of the Agriculture Negotiations -† Brazilís Amb. Luis Felipe de Seixas Correa said that developing countries would take care of the South-South trade and the market access for the LDCs in the context of the GSTP.

The concessions and benefits exchanged among GSTP members will not apply to the industrialized countries - in terms of the GATT 1979 Enabling Clause.

 

 


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