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the developing countries to act as a bloc in GATT on G77 lines in now increasing.

This serves to accentuate the role of those who set themselves up as leaders of

this Group. India and Brazil have been prominent in this regard. Neither seems

to see much advantage in a new Round: and Brazil takes a particularly negative

line on services (apparently distrusting any international initiatives in this

sector, even in UNCTAD, because of a preference for national "self-sufficiency").

We will need to demonstrate to the developing countries, including some of the

NICS, that many of them are wholly dependent on an open trading system and that a

policy of self sufficiency runs counter to all the trends towards increasing

interdependence in the world economy and to their interests. If they turn their

backs on the GATT, or try to turn it into another UNCTAD, they will lose their

one effective forum for exerting pressure for improvements in developed countries'

trade policy.

Conclusion

21.

The GATT needs a new Round soon to give it new impetus. The present work

programme is drawing to its end and a new political commitment is needed to secure

real progress in new and often contentious areas. For the UK, a new Round offers

the prospect of progress in priority trade policy fields. But we need proper

preparation and broad agreement as among GATT members on the agenda. The position

of developing countries will be crucial. A GATT Round which produced no consensus

and broke up in acrimony would be positively harmful. Equally, GATT's authority

and the multilateral trading system itself could be severely weakened if GATT does

not have the confidence to address major new issues through a Round. We shall be

feeling our way between these two potential pitfalls. But, on balance, we feel

the GATT has to take the risk of embarking on a Round.

ITP Division

Department of Trade and Industry

Fohminnu

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