309/0/11
NOVEMBER · 10
"Made in LDC"--Threat to Japanese Industry?
HE United Nations General Assembly will doubtless approve the non-reciprocal "preferences" system long awaited by the less-developed countries, and Japan will probably act in conformance from April 1971. More worrisome than the influx of goods from the less-developed countries (LDC) is intensification of competition in the North American market, which may seriously affect some of our less-advanced industries. But this should be a chance for unequivocal modernization of our Industrial structure.
In the men's wear department of Daic's chain of discount stores are displayed the firm's private-label “Blue Mountain" shirts, nearly 20 per cent of which are made in South Korea, While all the well-known Japanese brands of seamless hosiery are available in the Seiyu stores, few people are aware that stockings Imported from Israel are also on sale.
In the United States, among the private-label goods on sale at Sear's, J.C. Penney's and other big retail chains are such items as shirts, jerseys, children's wear, porcelain goods, sundries, and radio and television sets produced in Taiwan, Hong Kong, the Philippines, and other Asian countries. More and more products of the less-developed countries are being bought in the United States as well as in Japan, and this trend is likely to intensify.
The reason for this prediction is the proposed prefer- ential treatment to be accorded goods imported from the
· less-developed areas, at special low tariff rates or no duty
at all.
Background of the Preferences Proposal
With the slogan, "Trade, Not Ald,” the less-developed countries had for years been pressing for preferential treatment of their exports to the advanced nations, and the first step toward realization of this goal was probably made at the 1963 ministerial conference of the General Agreement on Tariffs and Trade (GATT). Then in 1964 was held the first meeting of the United Nations Commis- sion for Trade and Development (UNCTAD), while at the second UNCTAD conference at New Delhi in February 1968 the LCD demanded that preferences be granted from the early '70s. In June 1968, the Organization for Bronomic Cooperation and Development (OECD) es- tablished a special cominiiice on mom 16ciprocad prúder- ences, and with this group as the coordinating body the advanced nations undertook the drafting of their respec-
tive preferences proposals. By November 1969, these proposals had been submitted to the OECD, and another step forward was achieved. But because of conflict of interests, bargaining among the advanced nations, and proddings from the LDC subsequent progress was desulto- ry. Nevertheless, by September 1970, the final drafts of the preferences proposals of the member-nations were in the hands of the OECD committee.
Currently, discussions are still being held in connection with these proposals. But the LDC appear to feel that whatever the shortcomings it should be advantageous to accept the proposals as they now stand, secking improve- ments from time to time after the preferences system is in actual operation. With agreement reached, the final report of the OECD committee goes to the United Nations Trade and Development Board for submittal to the United Nations General Assembly session which opened on October 24. Upon adoption by the General Assembly, it will become obligatory for the OECD nations to grant to the LDC trade preferences in the manner agreed upon.
Effects on the Domestic Market not Serious Japan's preferences plan as originally drafted was far from acceptable to the LDC, and with the OECD member-nations urging reconsideration the proposal emerged in much improved form. In summary, the plan consists of the following points:
1) The basic formula will be similar to that proposed by the EEC countries, with ceilings set for goods from the LDC. So long as this limit is not exceeded, there will be exercised preferential treatment (no duty or half the normal rate). The ceiling levels will be computed by adding to the base-year volume from the LDC one-tenth of the volume imported from the advaned natione That is to say the LDC will be given the opportunity to take over, on preferential basis, 10 per cent of the volume
THE ORIENTAL ECONOMIST
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