TNAG-0132-FCO40-168-Tariff-preferences-for-developing-countries-1969 — Page 193

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charged with m.f.n. rates of duty. The other possibility was that m.f.n. tariff

rates would be reduced to the levels operative on imports from developing count. 26. The Group agreed that it was not possible to make a recommendation at this

stage on the depth of tariff outs. The Group emphasized that any arrangement for

special tariff treatment would not prevent developed countries from consulting among

themselves to decide whether they would be prepared to make further m.f.n. tariff

cuts.

Safeguard and Adjustment Procedures

1

27. The Group agreed that some provision would have to be made enabling donor

countries either to discontinue or modify the grant of special tariff treatment on

particular products or to impose limits on the volume of such products admitted on

special tariff terms. This would be necessary in order to mitigate the possible

effects of increased competition in their markets, or to provide a means of safe-

guarding the export interests of third countries, whether beneficiary countries or

not.

28.

The conventional method of dealing with this contingency would be an "escape clause" provision which could be used if the donor country judged that increased

competition in its market, arising because of the grant of special taxiff treatment, had resulted or threatened to result in injury to a domestic industry or to an expret industry in a third country. The escape clause action night take the form of removal

of the product from the scheme entirely, an increase in the special rate of duty, cr

a tariff quota.

29. Another method of dealing with it, which was described in the Group's interim

report, would be the tariff quota cum "adjustment procedure" device under which special tariff treatment would in principle be limited for any product to an amount or value equivalent to a specified proportion of national production or consumption, without regard to the concept of injury to a specific domestic industry; and a developing country might cease to qualify for participation in the "quotas" for particular products in individual developed markets on the basis of its export performance in those products in these markets. The imposition of the total tariff quote as well as the use of the adjustment procedure might be mandatory or permissive. 30. Although the Group devoted a considerable part of their time to the examination of the merits and shortcomings of the different methods of providing against the possible dangers referred to in paragraph 27, they were not able to reach agreement that any one method was so demonstrably superior to the others or was so sufficiently free from risks or difficulties of its own that they could recommend it for general

acceptance.

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