Nov 11, 1986

URUGUAY ROUND – U.S. WANTS TOOTHLESS SURVEILLANCE.

GENEVA, NOVEMBER 8 (IFDA/CHAKRAVARTHI RAGHAVAN)— The group of negotiations on goods (GNG) of the Uruguay round has be unable to organise and get the Multilateral Trade Negotiations (MTNS) in goods going, according to sources within the GNG.

They blame the difficulties on the U.S. for its stands on the role of the GNG itself, and its effort to block a strong surveillance mechanism on the standstill and rollback commitments.

The GNG, which held a day-long meeting Friday, under, the chairmanship of the GATT Director-General, Arthur Dunkel, is to meet again on Wednesday, sources within the GNG said.

The agenda before the GNG, the sources said, include the establishment of a surveillance mechanism with terms of reference, the establishment of negotiating groups, and a decision on requests from other international organisations for observer status.

The Punta del Este declaration launching the Uruguay round of MTNS constituted a Trade Negotiations Committee (TNC) to carry out the negotiations, and meeting at Ministerial level as appropriate.

While a single political exercise, the Uruguay round involves an MTN in goods as a decision of the GATT Contracting Parties, and a separate exercise on services, decided by Ministers in their capacity as representatives of governments

The Punta del Este declaration established the GNG to carry out the programme of negotiations on goods, and a Group on Negotiations on Services (GNS) to deal with the service matters.

Both, the GNG and GNS are to report to the TNC.

While launching the MTN in goods by a decision of the GATT CPS, each participant undertook specific standstill and rollback commitments, effective September 20 and until the formal completion of the negotiations.

As a part of the commitment, each participant also agreed that the implementation of these commitments "shall be subject to multilateral surveillance", and that the TNC would decide on the appropriate mechanism "to carry out the surveillance, including periodic reviews and evaluations".

In the organisation of the negotiations on goods by the GNG the Punta del Este declaration asked the GNG to designate the appropriate mechanism for surveillance of commitments to standstill and rollback.

Third world sources said that in the informal consultations earlier in October, an understanding had been almost reached on the setting up of the surveillance mechanism, asking it to submit its reports both to the TNC and the GNG, with the GNG carrying out an overall review of the implementation of the commitments.

Third world sources said that the U.S., which had virtually agreed to the proposals, however held back its formal approval, just on the eve of the first meeting of the TNC held on October 28.

Ultimately, at the meeting of the TNC, the chairman, Uruguayan foreign minister, Enrique Iglesias, outlined the "ideas" about the surveillance mechanism, and the TNC took note of these, agreed on further consultations, and for the GNG to designate the surveillance mechanism.

Sources said that subsequent to the meeting of the TNC, the U.S. has been reselling from its earlier positions, and has now virtually come out against any meaningful surveillance mechanism or any overall role for the GNG in the negotiations on goods and supervising the work of the various negotiating groups.

Third world sources, and some Europeans, link the U.S. position to the outcome of the congressional elections where the democrats have got control of the senate also.

In the informal consultations, the U.S. reported to have said that in Washington’s thinking, the GNG should have minimal supervision of the negotiating groups, and would have no role on surveillance excepting to designate the mechanism.

At the meeting of the GNG Friday, the U.S. delegate, Amb. Samuels is reported to have blamed the secretariat for not having cleaned up the final text of the Punta del Este declaration, and eliminated the references to the surveillance mechanism both under the TNC and the GNG.

Third world sources said that while this was an error, because of the high pressure of last-minute night-long negotiations, any cleaning up should have resulted in placing the full responsibility for the surveillance mechanism and overall appraisal in the GNG, and not the TNC.

Samuels in private consultations has been reportedly underlining that the standstill and rollback commitments were 'political' and not legal, and hence any appraisal should be only by the TNC as a political body. In the U.S. view, the surveillance mechanism should merely collate the notifications from participants and any relevant information provided by the GATT secretariat, leaving it to the TNC to conduct its appraisal.

Since the TNC is expected to meet at a political level infrequently, perhaps once or twice more before the conclusion of the round, the U.S. would thus be able to avoid its protectionist actions being put under the spotlight over the next two years.

Third world countries have not accepted this position.

They underline that the "political" commitment to standstill and rollback was a commitment by Ministers to carry out what is the legal obligation of each Contracting Party not to take or maintain protectionist steps in violation of GATT provisions.

They also underline that while undertaking the commitments, each participant also agreed that the implementation shall be subject to multilateral surveillance, and the designated appropriate mechanism should "carry out the surveillance, including periodic reviews and evaluations".

The third world countries are also insisting that the commitments became effective from September 20, and hence the setting up of the surveillance mechanism has a high priority, and should at least be simultaneous with other decisions by the GNG on the organisation of the negotiations.

Privately the third world sources say, the U.S. now finds that its own actions, and ones that a Congress controlled by the democrats would initiate, would be a major focus of surveillance, and hence wants a toothless mechanism.

They note that the U.S. Trade Representative, Clayton Yeutter, while repudiating any Administration move to "embrace a protectionist modus vivendi" - as a response to the elections and the electoral mandate - has said: "at the same time, we recognise there will be additional members of Congress who will wish for legislation in this area and we'll have to attempt to reach a reasonable accommodation with them".

The administration’s current negotiating authority for the Uruguay round is due to expire early in January 1988, which means that it would have to seek new legislative authority from Congress, where the democratic controlled Senate and House would use the opportunity to put in some provisions or secure "reasonable accommodation" from the Administration, as envisaged by Yeutter.

A large number of third world countries say that the only way they could get a meaningful surveillance mechanism in place would be to link it to the setting up of Negotiating Groups and the formulation of a negotiating plan.

Apart from the surveillance issue, the us views on what the GNG should do also appears to be counter to the actual provisions of the Punta del Este declaration, and the decision of the GATT Contracting Parties.

The Punta del Este declaration has given specific mandate to the GNG on the organisation of the negotiation, directing it among others, to:

--Elaborate and put into effect detailed trade negotiating plans prior to 19 December l986,

--Establish negotiating groups as required,

--Decide upon inclusion of additional matters in the negotiations, and

--Coordinate the work of the negotiating groups and supervise the progress of the negotiations.

In the informal consultations and at the GNG Friday, the EEC reportedly has already charged the U.S. with trying to rewrite the Punta del Este declaration.

In the us view, the GNG should have minimal supervision over the negotiating groups, and the negotiating groups should elaborate their own negotiating plans, and conduct the negotiations.

All that the GNG should do, in this us view, is to set up negotiating groups.

There have been two sets of proposals in this behalf, a Swedish proposal for nine separate groups, and an alternative one by Jamaica for seven groups.

The principal difference between the two has been that the Swedish proposal envisages separate groups on "trade-related investment" issues and on "intellectual property rights", while putting negotiations on textiles as part of the work of the negotiating group on tariff and non-tariff measures, natural resource products and market access.

This is what the us wants, arguing that separate negotiating groups on intellectual property and investment are politically necessary for the Administration, while separate group on textiles is politically difficult.

India and some others argue that for them a separate group is also politically necessary, and either there should be separate groups for each of the three or none for any of them.

The Jamaican proposal puts the us issue's along with other issues about GATT articles under one group, and the textiles under the market access group, with the provision that as negotiations progress, separate working groups or subgroups could be formed for investment, intellectual property and textiles.

Brazil and some others have suggested that the declaration envisages the GNG drawing up detailed negotiating plans before December 19, and the setting up of separate group or groups only later as appropriate. In this view, the first two tasks assigned to the GNG, namely drawing up a negotiating plan and designating a surveillance mechanism, which could begin its work, should the priorities and decided first.