Dec 21, 1990

SUSTAINABLE DEVELOPMENT WILL BE JEOPARDISED BY URUGUAY ROUND.

BRUSSELS, DECEMBER 19 (TWN) – The Uruguay Round is not about "trade" and technical issues in the normal sense of the term, but is eminently a political issue involving economic and social policies of countries and global issues of environment and sustainable development and agreements should not be concluded through the GATT's secret process but only after full public debates, a senior Third World journalist and analyst of GATT affairs urged here.

The plea was made by Chakravarthi Raghavan author of the book "Recolonization: GATT, the Uruguay round and the Third World" who addressed the European Parliament's Committee on Development and Cooperation, at their invitation, on the GATT and Uruguay Round and the recent Brussels meeting.

In the discussions and in questions, a number of Parliamentarians expressed their sympathy and support for the viewpoint of the speaker. A number of them also raised issues about North-South negotiations and the recommendations of the Brandt and Bruntland Reports. All of them wondered about the effects of the breakdown in the Uruguay Round talks on the Third World?

In answering the questions, Raghavan referred to the debate in the Committee earlier in the morning on issues of democracy, human rights, the rights of women and children in the Third World and said that all these objectives of European Parliamentarians would be thwarted if the proposals of the ICs in the Uruguay Round were incorporated into agreements.

The Third World journalist, who was applauded by the Parliamentarians several times, said that often one had the feeling that the trade negotiators and policy-makers often seemed to be working at cross-purposes with the Parliamentarians and parts of government and interested in Third World development.

He often wondered whether the EC's development bureaucracy and the trade negotiators knew what the other was doing or the effects on the overall objectives.

When the Commission representative at the meeting, Sydney Friedman, assured that there was full coordination, Raghavan said he was glad to hear that though this did not seem to be reflected in the EC proposals in the GATT and in the draft final act.

For example, he said, Claude Cheysson as Development Commissioner had agreed at UNCTAD-7 that Third World countries should be helped to fight capital flights and dishonest trading by under or over-invoicing. At the same time, the EC had been pushed in the Uruguay Round for disciplines preventing pre-shipment inspection agencies from looking and comparing prices charged for exports from a country to different parts of the world.

The real issue in the Round and in GATT negotiations, he said, was one of public accountability and democratic participation in decisions and it was not a trade issue to be left to EC Commission bureaucrats and Commissioners and their counterparts in the other countries for concluding agreements in the secrecy of the GATT processes. It was one that concerned the European Parliament.

Though the Brussels talks had collapsed over the agriculture issue, there were also a number of much wider issues, both in the so-called new themes on the agenda as well as some very old issues, where the proposals of the leading industrial countries would result in serious setbacks to development in the Third World.

The failure of the Brussels meeting he told the Parliamentarians, was being used to create a sense of panic among the public over possible trade wars and collapse of the world economy. Any recession in the world economy or downturn was already under way, and the GATT outcome or trade round could not be blamed, just as the GATT could not really claim credit for the post-war expansion which was due to other causes.

The post-Brussels situation was being sought to be used to put through "deals" against wider public interest by making use of the non-transparent processes of the GATT, he warned.

A functioning rule-based multilateral system was in everyone's interest, but if the proposals of the major trading partners on the new themes, including on so-called intellectual property rights, investment, services, as well as in other areas were put through, the outcome would be a tyrannical system that would push the economies of the Third World back to their colonial era and condemn their people to be perpetual hewers of wood and drawers of water.

Even if the governments of the Third World were coerced to accept such a regime, such a system would not long endure. In an increasingly interdependent world, the economic and social upheavals in the South would not leave the North untouched, he warned.

Though Agriculture had gripped public attention at Brussels, there were other major issues of disagreements among the ICs as well as between them and Third World countries - on intellectual property rights, investments, services and on new GATT rules on subsidies, dumping, countervailing, etc.

In services, though the U.S. had originally pushed for an agreement, it seemed less enthusiastic. It had originally sought through an agreement instant liberalisation of Third World markets through right of establishment and national treatment of U.S. service enterprises. But the framework agreement that was emerging no longer suited the U.S. and hence its demand for conditional MFN and derogation of many of its sectors from the agreement.

Referring to some double standards of the ICs, he pointed out that though government subsidies would be the most effective way of correcting market imperfections faced by Third World countries in exporting to industrial markets, and while Europe and U.S. continued subsidisation of agriculture whether as export subsidies (by EC) or offsetting payments in the U.S., they wanted Third World to eschew subsidies in industry.

While seeking right to retaliate against Third World exports of goods for failure to liberalise in services or enhance patent protection, the U.S., EC, and others who had put forward a sectoral agreement for financial services want to make sure that a Third World country would not be able to engage in "cross-retaliation" such as asking a Northern bank or insurance company to cease operations as a establishment to be closed down because of trade restrictions by the home country in textiles or other products.

It was difficult to see how all these highly sensitive and political issues would be sorted out by technical negotiators in Geneva between Jan 15 and early February.

GATT Director-General Arthur Dunkel had now been entrusted with the task of pulling a rabbit out of the hat - by holding consultations and promoting agreements in all areas. However, in reality any resumption of talks or agreements appeared to be predicated on U.S.-EC bilateral deals on agriculture, with Dunkel then playing the role of a broker in persuading others to accept it.

It also appeared to be predicated on evolving some kind of a "mini-package", with the others "scaling down their ambitions", but providing with substantial agreements sought by the U.S. on intellectual property, investments, services, subsidies, countervailing measures, etc., that would be "acceptable" to the U.S. Congress.

At another level, it also seemed that those who launched the Round in 1986 on some assumptions were no longer serious.

The U.S. administration and the EC Commission had launched the round and brought others to join by holding out some carrots and threats. While the U.S. and the EC were trying to negotiate with each other and other countries, the two had also been trying to use the Round to have their way over their domestic constituents.

The U.S. administration probably wanted to get its ideas into a Uruguay Round agreement, and then use it and the "fast-track" procedures against Congress to change domestic laws and jurisdiction.

The Commission bureaucracy also had in mind its vision of post-1992 EC single market, and trying to use the Round to in fact negotiate and prevail over the member-states.

The events since then including the U.S. now becoming the world's leading debtor and beholden to foreign savings as well as losing the edge it thought it had in several service areas, the developments in Eastern Europe and its higher priority for the EC had brought up a new situation.

Behind the drive for the new round and one that is still pushing are the TNCs, who now operated and traded globally and want the same rules in all the countries and assuring them the same rights.

The TNCs accounted for only 20 percent of the world trading community but accounted for nearly 80 percent of the trade and, perhaps there was something to be said for their aims.

There was nothing wrong in TNCs seeking level playing fields around the world with clear rules about their rights. But every right had an obligation and if there were to be internationally laid down rules applicable in all countries, there should also be rules clearly laying down obligations of TNCs, and of the governments of their home countries that champion the TNCs.

Also, through the rules for TRIPs, TRIMs, etc., the industrialised countries were really pushing their neo-mercantilist ambitions and trying to prevent the Third World from following policies that the ICs had done in the past to industrialise themselves.

The "market" as preached, rather than as practised, was now the new dogma, more so after the collapse of the Berlin wall. But instead of the profit motive being an engine of growth and prosperity envisaged by Adam Smith, they now had greed and avarice of enterprises and countries, and this was really responsible for the collapse at Brussels.

In the discussions that followed, Terence Wynn of the UK said that with or without GATT, the Community would have to do something about its agricultural policy. For a successful conclusion of the Round everyone would have to work towards a real compromise. Ms. Maartje van Puttan of Netherlands raised the issues of fair and just trade and wondered what would happen when banks and insurance companies and financial institutions from the industrial world were able to establish and compete in the Third World, particularly when .the IMF and the World under Structural Adjustment Policies were pushing these countries to deregulate and privatise.

Sydney Friedman, representing the EC Commission referred to the Havana Charter and the idea of an international trade organisation which had been aborted because of U.S. opposition and asked whether it was not time to revive the idea and use the Uruguay Round to create an organisation embracing all the issues including goods and services and intellectual property. He also referred to the unsuccessful efforts in UNCTAD for technology transfer and to evolve a code and asked whether intellectual property rules in the GATT would not help technology transfer.

Friedman also wondered whether there was not the danger of regionalization - such as the U.S.-Canada free trade agreement, the proposed U.S.-Mexico agreement and the America’s initiative?

Raghavan suggested that if the EC and other ICs were really serious about a new ITO, they should take it up in universal fora like the UN General Assembly and UNCTAD-8, and engage in wide public debate, and not try to bring it about surreptitiously through the GATT's non-transparent processes as was attempted in the "draft Final Act" for Brussels.

The EC's ideas for a Multilateral Trade Organisation was not really an effort to revive the Havana Charter and International Trade Organisation idea, but to create a framework that would allow the ICs to engage in "cross-retaliation" against the Third World for not liberalising the service sectors or providing uniform standards of IPR protection?

The UNCTAD efforts at technology code were thwarted by the North and so were the efforts in the World Intellectual Property Organisation to revise the Paris Union. Now they were turning around and suggesting that intellectual property rights issues should be dealt with in the GATT framework. It would not result in technology transfers or promote innovation, but would only ensure import monopolies for the Northern TNCs who hold patents and other such rights, secure for them rentier incomes, and prevent the Third World countries from adopting the same methods by which the ICs developed their technologies and industrialised.

They were also trying to mislead their public by putting the issue in terms of piracy and copying of computer programmes or audio-visual tapes, etc. - issues that were governed by the separate item relating to trade in counterfeit goods.

They were through GATT trying to upset the balances built into the intellectual property system of rights of owners to be balanced by their obligations to society through full disclosure and working of the patents. Some of their proposals such as for process and product patents and their applicability to biotechnology would have far-reaching effects.

As for the concerns over regionalization, he noted that the EC its web of agreements was also a regionalization. If the EC was really serious, it should promote changes in GATT under which any regional arrangements would be valid only when approved. The Rome Treaty he noted had never been approved or sanctioned in GATT.

Raghavan agreed with van Puttan that the genes being manipulated and incorporated into new varieties of animals or plants originally came from the Third World and had been appropriated without any compensation. But the issues went beyond that.

Any GATT regime in intellectual property protection would have severely damaging effects on worldwide efforts to protect the environment and promote sustainable development and this was an issue that the European Parliament and its Committee should address.

Safeguarding the environment and promoting sustainable development was too serious an issue concerning the entire public to be left to be negotiated in trade terms within the secret processes of GATT, he added.

On the question of North-South negotiations and the issues raised by the Brandt, Bruntland and other reports, he said that the realities of the inter-dependence of economies and issues required restructuring of international economic relations. The issues raised by the South in the 1970’s under the rubric of New International Economic Order, etc., though there was a lot of rhetoric behind, also had some hard compelling issues that remained valid.

If the Uruguay Round collapsed that need not be the end of the road. The wider issues of economic and social policy, and the new concerns all ought to be debated and, through North-South dialogue and negotiations in more democratic fora, the world economy and international relations should be restructured, he said.