Negotiations on tropical products - GATT update

The international trade environment will be profoundly affected by the Uruguay Round of trade negotiations in progress in Geneva. To keep our readers informed, Business America publishes periodic reports on developments there. In this issue, negotiations on tropical products are discussed. For a general review of- overall progress in the Uruguay Round negotiations, see Business America, May 8, page 11. Uruguay Round participants are working in the context of the tropical products negotiating group to eliminate the range of barriers, both tariff and otherwise, to trade in tropical products. Tropical products are of primary export importance to less developed, mainly tropical and semi-tropical, countries. Many such products, however, particularly in their more processed states, are also produced in, or compete with products produced in, developed temperate zone countries. The area of tropical products is of commercial interest and importance to the United States for two reasons.

First, the United States produces and markets, nationally and internationally, a number of products which are considered tropical products by this negotiating group. These items include fruits, nuts, wood, tobacco, rice, and rubber in both their processed and unprocessed forms. Second, developing country markets are frequently closed or highly protected against imports. Consequently, the interest of the developing countries in achieving liberalized entry for tropical products into U.S. and other developed country markets presents us with an opportunity to achieve liberalized access to their markets in exchange.

The U.S. Uruguay Round negotiating policy of requesting market access liberalization from developing countries in return for U.S. tropical product concessions has, in general, been unfavorably received by the developing countries. A number of developing countries maintain that the tropical products negotiating group should consider only developed country unilateral concessions. However, the United States and a number of other developed countries have indicated that in the Uruguay Round reciprocal concessions are expected from developing countries.

Until last December's Montreal Ministerial meeting, the U.S. proposal in the tropical products negotiating group was linked with the U.S. proposal in the negotiating group on agriculture. Our agriculture proposal calls for the worldwide elimination of all trade barriers on agricultural goods, fish, and wood products . Our agricultural tropical products offer similarly calls for worldwide elimination of trade barriers affecting such goods. For non-agricultural tropical products, such as jute, rubber, and wood products, the United States has consistently supported a request-offer negotiating format.

Prior to Montreal, the linkage of tropical products negotiations with the agriculture negotiations resulted in a U.S. agricultural tropical products offer requiring strict multilateral reciprocity by all participating countries. This approach was widely denounced as unrealistic and unworkable, even by our developed country colleagues. As the December Ministerial drew closer, pressure developed on all participants, especially on the developed countries and particularly on the United States, to submit tariff reduction offers in tropical products so that a concession "package" could be put together before or at Montreal.

Many Uruguay Round participants feared that non-participation by the United States in the tropical products "package" could jeopardize the entire Uruguay Round. In the interests of contributing to such a package, the strict linkage to our agricultural proposal was altered. The United States presented an offer to reduce tariffs by 25 percent on 42 agricultural and seven industrial tropical products. Because it signaled a change in the U.S. approach to the negotiations, the U.S. offer was greeted with enthusiasm by most developing countries.

Most of the other developed nations and a number of developing countries also contributed to this tropical products "package." A limited number of countries implemented concessions immediately after the Montreal Ministerial. Most of the countries participating in the tropical products negotiations, however, did not contribute to the package.

At the April 21 meeting of the negotiating group on tropical products, Japan announced that it had put its 179 tariff reductions or eliminations into effect on April 1, thus becoming the first major contributor to implement itsproposal. The European Community announced that it would have all elements of its contribution in effect by July. Similarly, the Nordic countries, Switzerland, Austria, and New Zealand indicated implementation by July 1. Neither the United States nor Canada provided firm implementation dates, although the United States indicated implementation would probably be accomplished before August.

Although the U.S. tropical products offer does indicate a change in our approach in this negotiating group, it does not mean we have completely broken the linkage with our agriculture proposal. Implementation of the U.S. concessions will be on a temporary basis until Dec. 31, 1992, or until the end of the Uruguay Round negotiations, whichever comes later. In terms of industrial tropical product concessions permanent implementation will depend on the receipt of equivalent market-access concessions from the principal beneficiaries of U.S. tariff reductions. Permanent implementation of U.S. tropical product concessions will also depend on a successful outcome for the entire Uruguay Round negotiations.

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