Mr. Kurt Kwasney - Chief, Structural Adjustment Section, International Trade Division, United Nations Conference on Trade and Development (UNCTAD), Geneva

"The Shift to Reciprocity in Trading Relationships between North and South: How will the South be Differentiated and Graduated?"

Comments

Dr. Gonzales asked for an example of reciprocity between a developing and a developed country forcing the former to extend comparable, reciprocal concessions to another developed country (He wondered whether one example was Mexico's trading relationship with the US within NAFTA and how this affected its status with the European Union).

Mr. Kwasney answered that Mexico's reciprocity towards the US within NAFTA had no bearing on its GSP status with the European Union. He explained that under the Lomé Convention, a developing country was required to extend the reciprocity it gave to one developed country to EU members, but that since Mexico was not part of the Lomé convention it was unlikely that Mexico would be graduated from the GSP because of the NAFTA pact. The EU's GSP scheme applied a complicated formula to determine which countries and products would be graduated, allowing for countries to be partially instead of fully graduated. Mexico's status with the EU would therefore depend, in large part, on its delegation's bargaining skills.

Someone else then wondered whether Mr. Kwasney anticipated developing countries having to go to GATT to extent the ten and, in some cases, fifteen year terms under Article 24 governing interim arrangements leading to FTA covering substantial trade.

Mr. Kwasney said that to do so would go against the prevailing trend which was towards shorter and not lengthened terms. He referred to Article 24 of the Agreement, which specified a ten year period, 15 in special cases. He did not expect that developing countries would be very successful lobbying to extend these terms.

Another participant asked about the future of the GSP.

Mr. Kwasney noted that while GSP arrangements were unilateral and there existed no formal criteria, graduation was becoming more and more frequent and qualifications for and access to GSPs were getting stricter. Developed countries, the ones who set the rules, favoured reciprocity and regarded graduation as the next progressive step towards full reciprocity. He projected that over the long run GSP would eventually disappear.

Dr. Ramesh Ramsaran observed that the countries in greatest need of GSP seemed to be the worst governed. He wondered how their systems of governance would affect their access to the GSP scheme.

Mr. Kwasney said the United States, more than the E.U., were careful in linking GSP concessions with their notions of good governance and democracy. It was currently more popular, however, to make linkages with workers' rights, human rights and child labour, and in some states, where standards were deemed to have been violated, GSP benefits were being withdrawn.

Dr. Gonzales wondered whether, in this climate of increasing reciprocity, developing countries were properly evaluating their trade options.

The primary issue was power, observed Mr. Kwasney. The more bargaining power the developing state had, the more equal the terms it could bargain for. It would be more advantageous for less developed countries to delay reciprocity but they might not be able to do this. More advanced developing countries might feel capable of competing under the graduation scheme and might actually push for graduation and eventually reciprocity.