CONFIDENTIAL
BACKGROUND
NOTE
18
UNCTAD: TARIFF PREFERENCES
FOR DEVELOPING COUNTRIES
1. At the second session of the UN Conference on Trade and Development (UNCTAD) at New Delhi in March 1968, agreement was reached between the developed and the developing countries to recommend the introduction, as soon as possible, of mutually acceptable, generalised, non-reciprocal, non- discriminatory system of preferences". The machinery and detailed application of such a system were not, however, decided upon at the conference. The developed countries took the view that it was for those among them which envisaged granting preferences to define these in the first place, while recognising that detailed consultation with the develop- ing countries would be needed before the details were settled. As a forum for these consultations, the conference established the UNCTAD Special Committee on Preferences and instructed it to meet for the first time at the end of 1968 and again in 1969. The timetable envisaged provided for the system to be worked out during 1969 and many countries expressed a hope that it would come into effect early in 1970.
The Role of OECD
2. As the result of the UNCTAD decision, the Trade Committee of OECD set up an ad hoc Working Group to meet between the Committee's sessions and report to it regularly on progress. The membership of the Group includes all the members of the Organisation, together with Australia and New Zealand. The Group has met in July and September 1968 and in January 1969. It will hold further meetings in March and April.
3. After reviewing all the aspects of the question, the Trade Committce came to the conclusion, in October 1968, that the best way to make progress was to define more exactly the field to be covered by preferences and their magnitude. To this end all the countries envisaging the granting of prefer- ences agreed to prepare provisional or illustrative offer lists of products and to exchange them on 1 March 1969, together with memoranda setting out the assumptions made in preparing the lists and any conditions or exceptions attached to them. It was agreed that the offer lists, read in con- junction with the stated assumptions, qualifications and con- ditions, should provide as complete a picture as possible of the action contemplated by cach prospective donor. The offer lists will be on a different basis as regards processed agri- cultural products and industrial products. For processed agricultural products, defined as falling within chapters 1-24 of the Brussels Nomenclature, and for other products in these chapters (some of which are industrial products) prospective donor countries will provide positive lists of those items on which they are prepared to grant preferences. For manufac- tures and semi-manufactures falling within chapters 25-99 the list will consist of the items on which they are not prepared to grant preferences. Other lists of products to which special conditions apply may also be tabled if desired.
4. The prospective donor countries consist of all the members of OECD other than Turkey, Greece, Spain, and Portugal, together with New Zealand which now intends to table a posi- tive list. Australia, which unilaterally granted preferences
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/to developing