Friday, August 28, 2009
Role of GATT for Developing Countries
Before the Kennedy Round (1964-67) developing countries gained vary little from the GATT except that they could u se quantitative restrictions to correct disequilibrium in balance of payments and benefited, from tarrif reduction by developed countries. But the principle of reciprocity for trade concessions went against the developing countries, because they were unable to provide equivalent benefits to the developed countries. For instance tarrifs on total manufactured imports by developed countries averaged 11 percent but where 17 percent on those from developing countries. Moreover, GATT did not take any initiative on trade barriers on agricultural and tropical products of developing countries.
The concept of “special and preferential” treatment for developing countries was formally introduced into the General Agreement in 1957. Under it negotiations would take in account the needs of LDCs form most flexible use of tarrifs protection to assist their economic development and the special needs of these countries to maintain tarrifs for revenue purposes. On the recommendation of the Haberler Report, the GATT started an action programme in 1958 which recommended that the developed countries should reduce taxation and trade barriers on industrial and primary products of developing countries.
In 1963, the contracting parties agreed on a more flexible attitude towards LDCs. Accordingly, tarrifs on some tropical products like tea and timber were reduced or eliminated by developed countries. In 1965 a new Part IV on Trade and Development was incorporated into the General Agreement dealing with the principle of non-reciprocity for developing countries. It states that “the developed contracting parties do not expect reciprocity or commitments made by them in trade negotiations to reduce or remove tarrifs and other barriers to the trade of less developed contracting parties. If further adds that “the less developed contracting parties should not be expected in the course of trade negotiations, to make contributions which are inconsistent with their individual development, financial and trade needs, taking into consideration part trade developments”.
The Kennedy round (1964-67) bestowed some benefits on developing countries when 37 developed countries reduced tarrifs on manufactured goods. But little attention was paid to the problem of developing countries.
In 1970, the Generalised System of Preferences (GSP) was introduced which permitted developed countries to grant unilateral tarrif preferences to developing countries. In June 1971, the GATT waived the MFN treatment obligation for developed countries for a period of ten years to the extent needed to grant preferential treatment under the GSP which has since been extended further.
It was however in Tokyo Round (1973 – 79) that a number of agreements on subsidies and counter vailing duties covering agricultural, fisheries, and forestry products; on customs valuation, on government procurement, on technical barriers to trade, on import licensing, on dairy products; on bovine meat and on civil air craft were reached. It was a triumph for developing countries for these agreements contained special provisions for developing countries. The
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