18. 8. 86 Official Journal of the European Communities No C 207/37 
Opinion on the forthcoming round of General Agreement on Tariffs and Trade (GATT) 
negotiations and the renewal of the Multifibre Arrangement 
(86/C 207/13) 
On 13 December 1984 the Economic and Social Committee decided, under the fourth paragraph of 
Article 20 of its Rules of Procedure, to draw up an opinion on the forthcoming round of GATT 
negotiations. 
The Section for External Relations, which was responsible for preparing the Committee's work on 
the matter, adopted its opinion on 13 March 1986, in the light of the report by Mr Brietenstein. 
At its 237th plenary session (meeting of 22 May 1986) the Economic and Social Committee adopted 
the following opinion unanimously, with three abstentions. 
Introduction standable, are dangerous because of the potential snowball 
effect. 
1. For economies to be successfully stimulated and 
gradually pull out of a recession which is having disastrous 
repercussions on employment, free, fair world competition 
is a sine qua non. This applies to both industrialized and 
developing countries. A proliferation of protectionist 
measures would merely push up unemployment further. 
The Community accordingly has a vital interest in taking 
part in a new 'round' of negotiations,within GATT, with a 
view to further liberalization of world trade. 
2. Parallel to the multilateral trade negotiations, the 
Community must embark with its partners on discussions 
aimed at attaining an organized monetary system with the 
main aim of averting currency flows that could distort 
trade. Such a system is needed if progress is to be made 
towards a single world market — which remains the 
ultimate objective. Here the Committee would draw 
attention to the positive role the European Monetary 
System (EMS) has played in the Community context. In the 
Committee's view, continued dismantlement of tariff and 
non-tariff trade barriers will be truly effective only if 
backed by an international monetary system which 
precludes frequent, sudden and sharp fluctuations in 
exchange rates. 
3. The Committee feels that, in the battle against 
protectionism, liberalization formulae should be sought in 
a multilateral context: GATT must therefore continue to 
serve as the forum for negotiations between partners. The 
Committee is totally opposed to any form of bilateralism 
which, in the absence of the most-favoured nation clause 
restricts trade between industrial partners. 
4. The Committee realizes that differing national 
standards of living are reflected in variations in production 
costs (technology and labour) and that these variations 
generate intense pressures on certain sectors in the 
industrialized countries. This state of affairs could lead to 
the adoption of national or international measures that 
jeopardize the whole concept of free trade, in an attempt to 
prop up production and employment in the short term in 
the countries concerned. Such reactions, while under-5. Any trade restriction, whether justified by structural 
differences or by economic and/or social policies, must in 
principle be regarded as a constraint on free trade and its 
duration must be strictly limited. 
6. The Economic and Social Committee urges the 
Council to give the Commission the negotiating brief the 
latter requires to reinforce the Community's international 
status as a single trade partner. To balance its traditional 
position as a major importer, the Community must 
increase its share of world markets. A large common 
market, besides entailing dismantlement of barriers to 
trade between the Member States, is also conducive to 
imports from non-member countries (economies of scale). 
Aims of the multilateral negotiations 
7. In the Committee's view, the forthcoming GATT 
negotiations must first consolidate the results achieved 
during the previous rounds, particularly the Tokyo Round. 
Such consolidation determines the credibility of the new 
goals regarding free trade and general application of GATT 
principles, viz. reciprocity and non-discrimination. 
8. Asa key component of the international trade system, 
GATT's institutional status must be supported and 
strengthened. 
9. On tariffs, the Committee is in favour of continuing 
to work for the lowering, or preferably scrapping, of the 
very high duties still levied on certain products in the large 
industrialized countries and the newly industrialized 
countries. In addition other industrialized countries (such 
as Australia and New Zealand) which have evaded the 
obligations created by their level of economic development 
should be induced to bind a greater number of their tariffs. 
10. Non-tariff barriers — which are increasingly a force 
to be reckoned with as pure tariff barriers recede — have a 
far-reaching influence on trade. The Tokyo Round — at 
the Community's instigation — did well to pinpoint them, 
No C 207/38 Official Journal of the European Communities 18. 8. 86 
and to some extent rectify them by framing 'codes'. The 
Committee considers that this work needs to be pursued, in 
greater depth, especially as the United States, to take one 
example, has not just interpreted some codes (e.g. anti­
dumping and anti-subsidies) in its own special way but 
does not guarantee the conduct of its 50 States (e.g. the 
government procurement agreement). As many countries 
as possible — including the newly industrialized countries 
— should join in this drive for liberalization. It also feels 
strongly that the restrictive practices (e.g. two-tier pricing) 
employed on commodity markets (giving some countries a 
virtual monopoly and pushing out others) should be 
included as a specific item of discussion at the next Round. 
11. The Committee feels that the GATT 'developing 
country' concept needs to be more clearly defined. 
Followng up its recent opinions on Community application 
of the generalized system of preferences to the developing 
countries, the Committee insists that these countries should 
gradually be brought within the scope of normal GATT 
provisions as they attain a certain level of development. 
There is no justification for the Community to grant tariff 
preferences to countries whose per capita GNP is higher 
than the GNP of one of its own Member States. 
12. Then newly industrialized countries, many of which 
erect excessively high tariff and non-tariff barriers to 
imports, must also gradually comply with normal GATT 
rules. 
13. Once again the Committee stresses the importance 
of trade between the United States and the Community. 
The Community (which together with the EFTA countries 
forms a large free-trade area) shares with the United States 
a heavy responsibility for ensuring the continuity of the 
world trade system. Since the climate in which such trade 
operates is of key importance for export-oriented invest­
ment, and hence in preserving jobs, the Committee 
considers that: 
— the Community must reach agreement with the United 
States to ensure that bilateral solutions devised to 
improve the bilateral balance of trade with Japan are 
not prejudicial to either of them, 
— the Community must continue to draw US attention to 
the drastic implications of the numerous bills before 
Congress calling for protectionist measures in specific 
sectors, 
— the Community, the EFTA countries, Japan and the 
other industrialized countries should join with the 
United States in striving for a monetary system that will 
confine exchange rate movements within agreed limits 
consistent with the currency's purchasing power. It 
must be remembered that the US trade deficit has been 
largely due to an overvalued dollar compounded by an undervalued yen. Recent dollar and yen exchange rate 
trends, however welcome they may be, must not lead to 
any slackening in efforts to this end. 
14. Given its persistent excessive trade surplus, Japan 
should take immediate steps, without any quid pro quo, to 
open up its markets more to foreign products. Japan's 
market is organized so differently form those of its partners 
that is must be required from the outset to adopt measures, 
for instance, to offset the protectionist effects of its 
distribution network. The Committee feels that the 
Community must keep up pressure on Japan so as to obtain 
import quota commitments to balance the latter's access to 
its partners' markets — and to guarantee and justify an 
uninterrupted flow of these Japanese exports. The 
Community must then hold negotiations with Japan on 
speeding up the dismantlement of tariff and non-tariff 
barriers, with the ultimate aim of achieving fair trading 
conditions. 
15. In an own-initiative opinion focusing on the 
Community's relations with the United States and Japan, 
the Committee will explore the matters touched on in the 
two previous paragraphs. 
Agriculture 
16. In the agricultural sector, the Community — which 
was endowed from the very start with its own common 
agricultural policy — must remain faithful to the basic 
principles underpinning its market organization policy, in 
which preferential treatment for Community goods and 
export refunds play a key role. The Community must also 
be in a position to preserve its share of the world market. It 
must be remembered that the Community ranks as by far 
the largest importer of farm products in the world and has a 
duty to defend its exports. 
17. The Committee observes that the increasingly 
disturbed situation on international markets for farm 
products is jeopardizing supplies to the developing 
countries as well as farm incomes in both the developing 
and industrialized countries. Agriculture, which has been 
dealt with separately in the past, should progressively be 
brought within the scope of the GATT multilateral 
negotiations. 
18. The Committee feels that greater account should be 
taken of the situation in the partner countries, i.e. the 
international context, (a) when the contracting parties 
frame their agricultural policies and (b) in connection with 
food strategy efforts made by, or to help the developing 
countries. 
19. In its common agricultural policy the Community 
tries hard to balance supply and demand, partly by 
requiring farmers to shoulder some of the responsibility for 
costs. 'To create a better balance it has been decided to 
18. 8. 86 Official Journal of the European Communities No C 207/39 
impose a virtual standstill in farm prices for 1986/87.' An 
agriculture bill adopted by the US Congress on 24 
December 1985 pursues the same goal but seeks to unload 
some of the costs of these agricultural reforms onto other 
countries. Consequently it is urgent for agricultural and 
trade policies to be coordinated on a basis of international 
partnership. An immediate start should be made on 
negotiating international agricultural-production agree­
ments in the GATT Committee on Trade and Agriculture. 
The results could then be consolidated during the actual 
Round. 
Textiles and clothing 
20. This key sector is discussed in detail in a separate 
chapter at the end of this opinion. 
Services 
21. The Committee is aware of the rapid advances in 
data communication and processing technology. These are 
of direct relevance to the productivity of the service sector 
in that they open up new opportunities as regards 
economies of scale. Moreover, some manufacturing firms 
are changing in some respects into service firms because of 
'natural' trends in their production, and the acquirement 
of, or mergers with, other firms. The demarcation line 
between producers of goods and producers of services is 
gradually fading. Governments should therefore steer clear 
of any protectionist measure in the services sector, since it 
could directly affect manufacturing trade. The Committee 
concludes that GATT should declare the contracting 
parties' firm resolve to neither erect nor tolerate new 
barriers to trade in services. 
22. The Committee observes that the United States as 
well as the Community are advocating the inclusion of 
liberalization of services in the forthcoming Round. 
Services are gaining in importance (in terms of job creation) 
as economies become wealthier; they account for an 
increasing share of total international trade. However some 
categories of services are not traded internationally. 
23. The Community recognizes the importance of 
services — particularly those which may be traded 
internationally. It must therefore accept that greater 
international competition in the services sector is likely to 
boost 'productivity' (output/input) and hence make for a 
better apportionment of international resources. The 
fundamental GATT rules (reciprocity and non-discrimi­
nation) should therefore gradually be extended to cover 
trade in services or be adjusted to ensure free and fair 
organization of such trade. For this purpose, as in the case 
of goods, multilateral negotiations on services should be embarked upon on the basis of most-favoured nation 
clauses so that account can be taken of the partners' level of 
commitment (as is currently done in certain GATT codes 
on commodities). 
24. The Committee understands why many developing 
countries are hostile and sceptical as to liberalization of 
trade in services. Nonetheless it hopes for extensive 
participation in the talks on 'services', and endorsement by 
participants of the commitments ultimately agreed upon. 
Cooperation with the industrialized countries should make 
it easier for the developing countries to opt for free trade, 
and hence reciprocity, rather than resorting to isolation 
tactics which could in the long run backfire on them. 
25. The Committee realizes the importance of inter­
national competition in services and advocates the 
dismantling of barriers to trade in 'marketable' services, the 
contracting parties should first agree on a 'stand-still', then 
lay down the rules and general principles applicable to 
services and devise solutions for each specific sector. Thus 
the following sectors (which are not listed in order of 
priority) applicable to services should be tackled separately 
but in parallel: 
— Banking, 
— Insurance, 
— Transport, 
— Telecommunications (software), 
— Consulting and other business services, 
— Tourism and related activities, 
— Distribution services, etc. 
26. Clearly services are becoming an increasingly 
important component both in added value and in consumer 
spending. Taxation of traded services is also an increas­
ingly important source of public revenue. Such transactions 
are often invisible and involve multinational companies 
which retain considerable autonomy in allocating their 
profits among several countries. The absence of a set of 
worldwide principles governing such matters could well 
trigger protectionist responses resulting in the distortion of 
competition in certain areas and eroding the consumer's 
purchasing power. 
High technology products 
27. The Committee observes that international trade in 
both manufactured goods and services is increasingly 
influenced by the technological policies of the GATT 
No C 207/40 Official Journal of the European Communities 18. 8. 86 
contracting parties, particularly the large trade partners. 
The Community, as part of its drive for a single common 
market, is promoting an ambitious technological policy 
which aims to exploit the size of the market for high 
technology products to stimulate economic recovery 
generating new jobs. 
28. Several factors militate for a 'new technologies 
code': (a) the wide-ranging programmes instigated by some 
governments, (b) the strategical interests invoked by several 
of them, (c) new international formulae for inter-business, 
inter-government and business-government cooperation, 
(d) the huge sums invested in particular projects and the 
hazards of investing in the development of products or 
processes which may well turn out to have a very short life 
and (e) the increasing internationalization of research and 
development and of the marketing of new technologies. 
This 'new technologies code' should, for instance, cover the 
tariff and non-tariff problems connected with trade in such 
products and services, including public purchasing policy, 
promotion of exports, strategical aspects and registration 
and testing standards and procedures. 
29. The contracting parties to GATT must in any event 
ensure that the international economic community shuns 
technological protectionism. Avant-garde technologies are 
obviously a challenge but they also open up new growth 
prospects. 
Safeguard clause 
30. The Committee remains convinced that the con­
tracting parties should do their utmost to avoid resorting to 
the safeguard clause provided for in Article XIX of GATT. 
In any event, safeguard measures must be of limited 
duration and be monitored by the GATT authorities. 
31. Where safeguard measures are necessary to preserve 
a particular key sector or an entire national economy, such 
measures must 
— normally be applied to one and all, 
—- though in exceptional circumstances they could be 
applicable on a selective basis should unfair practices on 
the part of one contracting party be the cause of 
another's difficulties. 
Settlement of disputes 
32. The Committee urges the Community to join in the 
drive to make the GATT dispute settlement procedure more effective, even if some GATT clauses have to be spelt 
out in greater detail. 
33. In the interests of better organized international 
trade, the procedures governing settlement of disputes 
between the contracting parties need to be tightened up. 
This applies both to goods and to services. 
Counterfeit goods 
34. The Committee would point to the steady prolifer­
ation of counterfeit goods, which has now assumed 
worldwide proportions. No country or productive or trade 
sector can consider itself invulnerable. Counterfeiting, 
which is contrary to fair business practice is not confined to 
luxury or high fashion products but extends to other 
manufactured goods. Producers incur heavy losses, 
resulting in largescale job-shedding. Some of these goods 
are a serious health and safety hazard, lastly, counterfeiting 
can be detrimental to economic growth in the developing 
countries. 
35. International conventions (the 1883 Paris conven­
tion, the 1891 Madrid Arrangement on sanctions for forged 
or misleading indications of origin and the 1958 Lisbon 
Arrangement on protection and international registration 
of indications of origin) fail to provide for adequate 
sanctions against international trade in counterfeit goods. 
36. The Committee recalls that the Tokyo Round 
negotiators did not have time to discuss the draft code on 
counterfeit goods presented by the US delegation. Sub­
sequently, in 1983, the Community took the step of 
reactivating work within GATT. The Committee whole­
heartedly endorses this initiative and would draw attention 
to the comments made in its opinion on the recent 
Community draft regulation on ways of controlling 
counterfeit goods ('). 
Conclusions 
37. In the Committee's view, recent trends in dollar and 
yen exchange rates, in interest rates and in oil prices, hold 
out a glimmer of hope for international economic recovery, 
especially in the Community. The Community, the 
industrialized countries and the developing countries have 
an undoubted interest in halting the protectionist pressures 
generated by the current economic difficulties. It must 
therefore persuade its partners to lose no time in embarking 
on a further round of multilateral negotiations within 
GATT. 
(') See the ESC opinion of the proposal for a Council Regulation 
(EEC) laying down measures to discourage the release for free 
circulation of counterfeit goods (OJ No C 218, 29. 8. 1985). 
18. 8. 86 Official Journal of the European Communities No C 207/41 
38. Concurrently it must start on talks aimed at 
achieving an ordered world monetary system. 
39. The Community must play its part in ensuring that 
bilateral agreements do not harm a third country's 
interests. 
40. The Community must give special consideration to 
negotiations on the following: 
— unresolved tariff problems, 
— non-tariff matters, 
— services, 
— high technology products, 
— safeguard clause, 
— dispute settlement procedure, 
— counterfeit goods, 
— agriculture, 
bearing in mind all that has been achieved by the common 
agricultural policy, the opportunities for development and 
development aid in the least-developed countries and the 
growth prospects inherent in the new technologies, 
especially in the light of recent progress towards a 
Community-wide market. 
41. Given its considerable economic weight the Com­
munity can play a decisive role in promoting international 
trade. Hand in hand with the gradual creation of a large 
single common market, the Council must give the 
Commission a broad brief to negotiate with other 
contracting parties on the increasing liberalization of trade 
along the lines set out above. 
42. The Committee would reiterate its belief that in all 
aspects of external relations the Community should seek to 
improve the social as well as economic situation in the 
world. In this connection it would draw attention to the 
importance which it has always attached in its opinions on 
international trade to respect for human rights — and in 
particular the observance of fair labour standards as 
defined by the International Labour Organization. 
Textiles and clothing — renewal of the Multifibre 
Arrangement 
43. The Committee considers that international trade in 
the textile and clothing sector could gradually be brought 
within the scope of normal GATT rules. As far as the 
Community is concerned, the current rationalization and 
restructuring process should: 
(a) already at this stage, in a climate of widespread 
reciprocity, allow a greater degree of liberalization than 
that specified by the existing Multifibre Arrangement 
(MFA); 
(b) justify the conclusion of a new Arrangement for a four 
to five year period, accompanied by bilateral agree­ments between the Community and the major suppliers 
among the developing countries. 
44. In the Committee's view, tariffs on textile and 
clothing imports from the poorest countries (as defined by 
Unctad) should be dismantled completely, and con­
sequently quota arrangements abolished. Special con­
ditions should be negotiated with Bangladesh. 
45. It is in favour of easing quota restrictions in respect 
of the various categories of products. 
46. It feels that efforts must be made, wherever possible, 
to step up quotas for children's clothing. 
47. The Committee recommends that the current 
breakdown of Community quotas into national import 
quotas be gradually abandoned so as to take account of 
Community decisions aiming to create a single common 
market. An industrial policy in this sector, coupled with a 
proper Community trade policy, should also, in the long 
run, result in Article 115 of the EEC Treaty being invoked 
less frequently. 
48. The Committee feels that it is too early to judge 
whether the forthcoming MFA should be the last. 
Everything will depend on market and employment trends 
in the sector. The annual increase in Community demand 
currently averages under 1 %. In the Community of the 
Ten two million jobs have been shed in this sector since 
1970. In the Community of the Twelve, the textile and 
clothing sector is still the largest industry, employing a 
workforce of around 3 200 000. Should liberalization 
outstrip the rise in consumption, the result — compounded 
by the inevitable productivity gains — will be a further 
annual loss of 100 000 textile jobs. To 'bleed the industry 
dry' in this way would quite simply be unacceptable to the 
Community, on economic, social and political grounds. 
Higher Community import quotas should therefore be 
tailored, wherever possible, to an increase in consumption. 
49. Consequently, the scope for greater flexibility and 
liberalization in this sector hinges on a higher degree of 
reciprocity (opening up of markets) by all the Community's 
trading partners. The Committee would have appreciated a 
firmer Commission stand to impress the principle of 
reciprocity on the newly industrializing countries in 
particular. 
50. The Committee feels that, in easing import restric­
tions, the Community should distinguish, in addition to the 
poorest countries referred to above, between: 
— newly industrialized countries which already apply 
reciprocal terms (e.g. Singapore and Hong Kong, which 
have no curbs on textile imports), 
— other newly industrialized countries, according to ease 
of access of their markets, 
No C 207/42 Official Journal of the European Communities 18. 8. 86 
— other developing countries, 
bearing in mind, in trade relations with these countries, the 
attitudes of the other industrialized partners (United States, 
Japan, Australia and Canada). 
51. The Committee approves of retaining: 
— the 'basket extractor' safeguard clause (reintroduction 
of quotas), 
— the 'anti-surge' clause (mechanism to prevent an 
excessively sharp increase in imports). 
52. However, it hopes that all contracting parties will 
act in such a way as to keep recourse to these clauses to a 
minimum and — should they have to be invoked — appeals 
for the broadest possible consultation of the parties 
concerned. 
53. It is most important that all parties to the Multifibre 
Arrangement should encourage respect of proprietorial 
trademarks, designs and models ('). 
(') In this connection, see the ESC opinion on the proposal for a 
Council Regulation (EEC) laying down measures to discourage 
the release for free circulation of counterfeit goods (OJ No C 
218,29.8. 1985). 
Done at Brussels, 22 May 1986. 
Gerd MUHR 
Own-initiative opinion on the effects of the CAP on the social situation of farm workers in 
the Community 
(86/C 207/14) 
On 18 December 1985 the Economic and Social Committee, acting under the fourth paragraph of 
Article 20 of its Rules of Procedure, decided to draw up an opinion on the effects of the CAP on the 
social situation of farm workers in the Community ('). 
The Committee's opinion is based on the information report drawn up by its Committee for 
Agriculture on the same subject (rapporteur: Mr Lojewski) (18 December 1985). 
The Section for Agriculture, which was responsible for preparing the Committee's work on the 
subject, adopted its opinion on 7 May 1986, in the light of the report by Mr Lojewski. 
The Economic and Social Committee adopted the following opinion unanimously at its 237th 
plenary session (meeting of 22 May 1986). 54. They should also refrain from any form of dumping 
or unfair practice in view of this sector's vulnerability in 
both the industrialized and developing countries. 
55. The Committee lays particular stress on the need to 
improve working conditions in the textile industry in all 
developing countries (in the broadest sense of the term). 
Many textile workers are badly paid and work under 
lamentable conditions (heat, noise, dust, working hours, 
child labour, trade union rights). The Committee therefore 
calls for the inclusion in bilateral agreements of provisions 
for the application of fair standards as laid down by the 
International Labour Organization. 
56. Lastly, the Economic and Social Committee urges 
the Community negotiators to take account of the 
implications of Portugal's accession and of the Com­
munity's special written commitments to the Mediter­
ranean countries. 
The Chairman 
of the Economic and Social Committee 
(l) The subject of this opinion is the situation of hired farm workers and workers in the first-stage processing 
industry.