TNAG-0132-FCO40-168-Tariff-preferences-for-developing-countries-1969 — Page 185

PART II

Question of Principle

1. Should developed countries grant special tariff treatment to products of developing countries? The Group considered that two basic issues were involved, one pragmatic and the other of principle. The pragmatic issue is whether special

tariff treatment can be expected significantly to improve the export earnings of developing countries. The issue of principle is whether the grant of such treatment might be expected so to undermine the m.f.n. principle that the risks outweigh the possible advantages for developing countries. Although logically distinct, there is a connexion between these issues. If it were concluded that developing countries could not expect to derive much effective benefit in terms of higher export sales from the grant of special tariff treatment, it would strengthen the case against allowing departure from Article I of the GATT. If, on the other hand, it could reasonably be inferred that developing countries would derive valuable: trade benefits, it might be held that there was sufficient justification to face, trying to minimize, the risks involved.

2.

while

The Group last year devoted much time to consideration of the probable effects on the exports of developing countries of various types of trade policy measures, including special tariff treatment. They concentrated in particular on existing preferential arrangements between some developed and some developing countries in the hope of being able to make use of these precedents in arriving at some judgment about the likely effects. They were unable to do so then and are in no better position to do so now. Indeed, the Group would go further. Just as they have not found it possible to make any quantitative judgment of the influence which existing preferential arrangements, same of long-standing, have had on trade flows, they believe that it would be impossible in the future, even if special tariff treatment were granted, to determine with any useful degree of precision the extent to which the grant of such treatment had stimulated total imports into their markets from developing countries. The factors influencing trade patterns are too varied to enable the effect of tariff changes to be isolated and quantified, whether in the

short or lenger term.

3.

Although the Group have found it impossible to form any quantitative judgment on the effect of the grant of special tariff treatment on the exports of developing countries, they recognize the strength of feeling on the part of the Governments of