Table of Contents

  • When they met in Melbourne in October 1981 Commonwealth Heads of Government had much to say on the subject of trade and protectionism. They expressed anxiety over the trend to increased protectionism, awareness of the importance of expansion of world trade to economic recovery and growth, and agreement that governments should make further efforts to reduce tariff and non-tariff barriers and achieve international accord on effective rules covering resort to emergency safeguards. They took special note that little progress had been made in eliminating quantitative restrictions against certain categories of manufactured exports of particular importance to developing countries, that the process of reducing barriers to trade in agricultural products had scarcely begun, and that the export of processed commodities continued to be constrained by trade barriers which escalate with the degree of processing.

  • At their Melbourne meeting in October 1981, Commonwealth Heads of Government requested the Secretary-General to commission a group of independent high-level experts.

  • The problems of commercial policy which we have been asked to consider cannot be isolated from the wider issues confronting the world economy in the 1980s. We begin, therefore, by analysing the more important trends at work in international trade and finance, the prospects for the 1980s and the problems posed by the changes in progress.

  • Though less comprehensive in its coverage than the proposed International Trade Organization (ITO) for which it substituted, the General Agreement on Tariffs and Trade (GATT) has nevertheless been the central institution in the world trading regime for 35 years. Above all, it was originally designed to encourage the dismantling of the barriers to international trade which had accumulated during the 1930s and the Second World War, and to prevent a relapse into the protectionist excesses of previous periods. The GATT thus found its raison d'etre in, and was influenced in the formulation of its operational procedures by, the bitter experience of the immediate past.

  • This chapter examines the nature and intensity of protection as currently applied by the major developed countries. It begins with the primary products which are of basic importance to the economies of many developing countries, particularly the poorer ones, and some developed countries; the focus is primarily upon agricultural products, where the barriers impeding the trade and the development of exporting countries, many of them non-tariff, are greatest. For fuels and minerals in unprocessed form, tariffs are of minor importance, and where other barriers exist, they derive from special conditions of trade in these products.

  • The emphasis in this chapter is on the effects on developing countries of barriers to their exports. Particular attention is given to the impact of different forms of protection, for even if levels of protection remain unaltered, there may be substantial benefits for exporters if the forms were to be changed. We concentrate on the barriers of the developed market-economy countries; less attention is given to the barriers erected by the developing countries themselves, even though they are on average higher than those of the developed countries.

  • All forms of protection, from a published tariff to an open or concealed subsidy, a quota on imports and other impediments to competition from abroad, involve intervention by government in order to assist particular domestic activities by placing foreign competitors under a handicap. The intention is usually to ensure the maintenance or enlargment of the resources engaged in the protected activity, either on a continuing footing or by giving time for a change of employment to some more remunerative activity. Sometimes there is a broader objective and the intention is not to favour any particular activity, but to achieve some radical transformation of the economy under close government control or to allow fuller employment of all available resources when international influences are exerting contractionary pressure.

  • No consideration of the extent and forms of protection would be complete without reference to the preferential and other special arrangements existing in individual markets, in favour of exports from developing countries. The most noteworthy of these are the various schemes introduced under the Generalized System of Preferences (GSP), which apply in principle to all developing countries, and the Lomé Convention which, with some exceptions and limitations, gives duty-free and quota-free trade access to the EEC for African, Caribbean and Pacific member countries (ACP). These arrangements replaced earlier preferences received by many countries from developed countries with which they had historical links; along with newer elements, they are applied to broader groups of both preference-giving and preference-receiving countries.

  • There is widespread anxiety concerning the prospects for international trade and the adequacy of existing international institutions to deal with trade problems in the 1980s. This anxiety is shared by both developing and developed countries. It has generated proposals for immediate and relatively marginal alterations in codes and practices, and much more ambitious suggestions for major institutional reform.

  • The slowdown in economic growth over the past decade has had its inevitable repercussions on the expansion of international trade. After 1973 this proceeded at less than half the rate of the previous decade and in the last two years it has virtually come to a halt.