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South Feels Threatened by EC's Interest in the East

The European Community's plans to extend the Generalised System of Preferences to the Commonwealth of Independent States are worrying Third World nations, for it will be at their expense.

Shada Islam writes from Brussels
THIRD World fee) threatened by new European Community (EC) initiatives to include the newly independent republics of the former Soviet Unto'n in a special EC trade regime — meant exclusively for developing countries.
The European Commission recently unveiled controversial new plans to extend the Generalised System of Preferences (GSP) to the grouping of the Commonwealth of Independent States (CIS).
Officials in Brussels say the qualitative change in the GSP is needed for political and economic reasons. The exSoviet States need tariff benefits to sell in the EC,' an EC official told IPS.
The proposals are expected to fuel already growing complaints from the Third World that the EC Is reducing its trade and aid commitments to the South, in favour of its neighbours to the East.
Asian and Latin America countries, which have traditionally used the GSP to sell their Industrial and processed farm products in the EC, say the Commission move will 'dilute' a system designed to
boost Third World development.
The EC introduced the GSP — a preferential trade arrangement under which developing countries are granted special tariff concessions on their exports to the EC — in 1971.
(The GSP, for generalised, non-reciprocal and non-dis-criminatory tariff preferences favouring the developing countries, was put in place as a result of an UNCTAD decision. Later, It was given a waiver in the General Agreement on Tariffs and Trade, or GATT, so that the developed countries who give such preferences are not obliged io extend them to other GATT contracting parties under the most-favourednation clause).
Since then, almost all Asian and Latin American nations have utilised the system to gain a competitive tariff edge over rival EC imports from industrialised nations.
"We have found the GSP very useful," says a Hong Kong trade expert.
Major beneficiaries of the scheme also include South Korea, the ASEAN (Association of Southeast Asian Nations) countries, India and Pakistan.
"The system is meant fpr the Third World," one Asian diplomat said. 'As far as wc know the Commonwealth states have not been classified as such.'
Asian experts argue that the inclusion of the former Soviet states In the GSP could 'dilute' the usefulness of the system for 'real' developing countries. EC officials in charge of development policy are also believed to be against changes in the GSP list of beneficiaries.
Some have warned that the Commission's new proposals lack 'coherence'. Only countries which have been recognised as developing nations by the United Nations should be given the benefit of the GSP, they argue.
"The Community should help countries in the East on a bilateral level of course, but not by using a tool of its development policy reserved for developing countries," an EC de-
velopment expert underlined.
But, others in the European Commission claim that given their economic problems, the ex-Soviet republics need special assistance to sell more of their products in Western Europe.
At a special European parliamentary hearing, focusing exclusively on the political and economic problems of the , former Soviet republics, EC Commission vice-president Frans Andriesscn noted that the newly independent states would have to make sacrifices to escape their tragic situation'.
But, he said the West must support them in this effort. "You cannot believe that three quarters of a century of economic mismanagement can be undone without a long period of structural adjustment and advice."
A recent European Commission report also argues
that GSP benefits will help the newly independent republics to restructure, redeploy, and revitalise' their economics.
"Following the upheaval they have experienced, the countries which formerly made up the USSR arc now facing a political, economic, social, moral and cultural crisis of such magnitude, that it is the Community's duty to use every possible means to provide comprehensive assistance,” the report says.
The Commission report also suggests that the ex-Soviet republics be given GSP benefits for a period of three years, while the new government try to restructure' thetr economies.
Just three years or not. the new proposals are bound to strain the EC’s already troubled ties with several Asian countries — particularly with the recent suggestions that the region's newly industrialised countries (NICs) could be taken out of the GSP.
The EC has already alienated several textile-exporting nations by turning down demands for quota increases in 1993, while expanding the quotas of some of the East Europeans. And earlier this
year, the Commission said that it was planning to slop tariff preferences for Hong Kong. South Korea and Singapore, as part of a plan to focus the GSP on the poorest Third World Nations.
Brussels officials say that such proposals have been put on ice for the moment, pending the conclusion of the Uruguay Round of trade liberalisation. Meanwhile, developing countries feel more and more that they are getting the bitter end of the stick.
Even the 69 African, Caribbean and Pacific (ACP) states which have since 1975 enjoyed a special trade pact with the EC are worried that the EC wants out of the relationship. At the end of their biannual Joint Assembly in Luxembourg in September, ACP officials said the EC had sent all the signals that It did not want to continue the LOME agreement.
They are sick and tired of us," an African delegate said.
— Third World Network
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Shada Islam is a correspon dent for Inter Press Service, with whose permission this article is reprinted.