CONFIDENTIAL
-10-
DSR 11C
country is a signatory of a government procurement
agreement, it would be possible to bring limited pressure
to bear. The country would be forced to explain itself;
but since the powers of GATT are largely persuasive and
its procedures fairly lengthy, the process is unlikely to
remedy the injury in the short-term. In the case of GATT
signatories which have not acceded to the government
procurement code (the vast majority including some
developed countries, notably Australia) it would in theory
be possible to take action under Article 17 of the General
Agreement itself, which requires state trading enterprises
to apply 'fair and equitable treatment' in foreign trade.
But no contracting Party has ever brought a case to test
what it means in practice.
(b) Other initiatives within the EC. The UK could argue for
a change in the distribution of EC aid or of EIB loans.
But it is extremely difficult to influence the direction
of such funds in the short term; the threat of action
might, however, have some persuasive value. If there is
an economic co-operation agreement between the EC and a
relevant economic group, we could also threaten to use our
influence to cool co-operative enthusiasm within the EC,
though in practice there are few agreement from which the
NICS derive enough benefit to make this an effective
sanction. However, the ACP signatories of the Lomé
Convention have an obligation not to discriminate among
EC member states. The Lomé machinery is cumbersome for
solving bilateral disputes but the pressure it exerts
could help bring results. More generally, our ability
to wave a big stick at LDCs over access to the EC is
limited because we are already hawkish in key areas such