SERIE RESEHRCH mEntORIMDn TOWARDS A GLOBAL SYSTEM OF TRADE PREFERENCES AMONG DEVELOPING COUNTRIES

This paper studies two attempts that have been made to stimulate trade among developing countries by means of a trade-preferential system under the auspices of GATT and UNCTAD. It wil! be shown that these attempts have not been successful when measured in terms of the number of countries that have offered so-called "concessions" and the number of products for which substantial tariff cuts have been proposed. As shown, the lack of success is due to abrupt changes; in Jhe framework in which the negotiations take place and to the insufficiënt economie and politica! contributions by the larger developing countries. TOWARDS A GLOBAL SYSTEM OF TRADE PREFERENCES AMONG DEVELOPING COUNTRIES 1. GENERAL CONSIDERATIONS Economie policies in many developing countries have resulted in complex trade and industrialization regimes that have had a profound impact on the structure and market orientation of production. A wide range of tariff and non-tariff barriers have protected the manufacturing sector from international competition and have stimulated an inward-oriented pattern of industrial development. Production has become inefficiënt in many industries and comparative advantages have been exploited only to a limited extent. However, it would be a fallacy to charaeterize industrial policies of developing countries as a continuous move towards more protection against international competition and a further seclusion from world markets. Many countries have made attempts to liberalize their economy so as to create a structure of production which makes a more efficiënt use of available factors of production and is more capable to reap advantages of international specialization. Such attempts have been undertaken by individual countries as well as by (regional) groups of countries that have been cooperating to establish trade preferential areas. The most ambitious attempt to co-ordinate liberalization efforts of developing countries has been the proposed Global System of Trade Preferences amon Developing Countries (henceforth GSTP) that wil! be discussed in this paper. By way of introduction to a review of an earlier attempt to create a preferential trading system among developing countries under the auspices of GATT, and the more recent attempt under the auspices of UNCTAD to create a GSTP, we shall made some general observations on implementing rule systems in the area of international trade. Gains of trade and liberalization donot depend on reciprocity. Nevertheless, co-ordination of liberalization attempts may be advantageous to all countries engaged in such attempts provided that a number of conditions are met. To be successfully implemented, the rule system must, first of all, be acceptable to all partners in the negotiations. Negotiating countries may differ widely in economie structure, conduct and performance, and consequently have different power positions from which they enter negotiations. The size of the domestic market and the competitiveness of domestic suppliers are