Mar 1, 1986

THIRD WORLD OBJECTS TO SERVICES IN PREPARATORY COMMITTEE.

GENEVE, FEBRUARY 28 (IFDA/CHAKRAVARTHI RAGHAVAN) – Third world countries have made clear that while they are willing to continue with the current separate GATT exercise for exchange of information on services, they will block efforts to push the services issue in the GATT Preparatory Committee.

This indication is reported to have been given at this week’s meetings of the GATT Preparatory Committee, chaired by the GATT Director-General Arthur Dunkel.

The Preparatory Committee was set up by the GATT Contracting Parties (CPS), at their annual session in November 1985, to determine the subject matter and modalities for a Multilateral Trade Negotiations (MTNS) and prepare, buy mid-July 1986, recommendations for a programme of negotiations for adoption by ministers at a meeting to be held in September 1986.

In its work, the Preparatory Committee had been asked to take into account the elements of the 1982 GATT Ministerial work programme and the views expressed (on a new trade round) in the Senior Officials Group (SOG) that met in October 1985.

While setting up the Preparatory Committee, the GATT Contracting Parties had also continued the separate group, chaired by Amb. Felipe Jaramillo of Colombia, for exchange of information on services, and asked that group to prepare recommendations (on the appropriateness and desirability of multilateral action on services) for the consideration of the CPS at their next session.

These two decisions, with deliberately fudged language, left in the air the question whether the Preparatory Committee could deal with "trade in services" or recommend its inclusion on the agenda of a new round.

After the meeting of the CPS last November, the U.S. had claimed that it was entitled to raise the services issue in the Preparatory Committee, while India and Brazil, the two major third world opponents of the U.S. move, had insisted that the only place where the services issue could be considered was in the Jaramillo group.

In preparation for this week’s meetings of the Preparatory Committee, the GATT Director-General, Arthur Dunkel, had circulated a list of subjects that would be considered at this week’s meeting, and this had mentioned the services issue.

At this week’s meeting, Dunkel reportedly made clear that the items in his note were merely a list of topics that had figured in the GATT work programme or the senior officials group, and in no way implied an agenda for the new round.

In opening the discussions on services, Dunkel also drew attention to the separate decision of the CPS for the continuation of the separate exchange of information.

The GATT spokesman who has been declining after previous meetings of the committee to provide any details of the discussions or the major protagonists on either side of an issue, seemed willing this time to provide some details of the views expressed, on the services and intellectual property issues – both being pushed by the U.S.

The spokesman said that the industrial countries in the main insisted on the competence of GATT to deal with this issue and the need for it to figure in the new trade round.

Many third world countries, he said, were "simply neutral", and willing to listen but without any commitments to agree on negotiations or for its inclusion in any draft declaration to be prepared for the consideration of the Ministers.

Some of the third world countries, he added, were unhappy with the subject being discussed in the preparatory Committee.

Third world participants later said that this was somewhat misleading.

They noted that except for Israel, none of the third world countries (like Asian, South Korea or Chile) who give some pro forma support to the U.S. spoke up at the meeting. The others, who did, either opposed GATT consideration of the issue or at best seemed willing to continue to "listen" in the separate Jaramillo group, but without any commitments.

According to the spokesman, in the U.S. view, the negotiations on services in the new round could result in creating a general framework of rules applicable to services, leaving scope for the traditional negotiations involving exchange of benefits and concessions.

There were also suggestions for possible inclusion of the subject in the new round, and resulting in separate GATT codes as in respect of government procurement or technical barriers to trade.

But according to participants in the meeting, the EEC had said that at present it favoured inclusion of the issue as an item for the new round, though it was not yet clear on the objectives and modalities of the negotiations on this.

To reach conclusions on this, the EEC would like to carry on with the separate exercise on exchange of information on services.

The EEC representative also noted the discussions on some of the service issues in other international fora like UNCTAD, and the need to pursue them, in order to obtain a better understanding of the issues involved.

Japan and Canada are reported to have supported the U.S. position. The Nordics, while supporting inclusion of the issue on the agenda, also recognised the complexity of the issues.

Among the third world countries, India is reported to have reiterated its view that the subject was not within the competence of GATT and could not figure in any new trade round.

The question of the subject figuring in any GATT negotiations could come only in the light of a positive decision by the Contracting Parties on the desirability and appropriateness of multilateral actions.

Yugoslavia, Egypt and Argentina also took a similar stand.

Brazil in addition is reported to have expressed the hope that it would not be put into the position of having to object to inclusion of any recommendation on services in the Preparatory Committee.

This was taken to be an indirect way of advising the committee that Brazil would oppose incorporation of any recommendation on this in any document of the Preparatory Committee.

Several other third world countries underlined that in any event services was not an issue of priority, and GATT should focus in the next round on priority issues of trade in goods.

Sri Lanka reportedly made the point that little data or information available on services, that bulk of services were not tradeable, that the issue itself was alien to GATT.

It was best therefore to continue the exploratory work in the Jaramillo group. Sri Lanka did not envisage an early end to this exercise or the issue reaching a stage where it would ripe for inclusion in a new round.

Nigeria, using the language used earlier by the U.S. and EEC on the issue of liberalising trade in textiles and clothing, advised "caution and prudence" in dealing with services.

Peru and Cuba objected to the inclusion of the subject on any GATT round or agenda.

Jamaica stressed the need for continuing the exchange of information in the separate group, and trying to reach a decision there by consensus.

Only after that the question of modalities of negotiations, cross-linkage with other negotiations and treatment of third world countries could arise.

The U.S. would appear to have expressed its unhappiness and disappointment at the stand of the opponents to the services issue, and underlined the high priority the U.S. attached to the subject in relation to a new round.

At the same time, the U.S. is reported to have indicated its willingness to pursue the issue in the Jaramillo group.

Brazil stressed that its not objecting to delegations expressing themselves on the subject in the Preparatory Committee should not be taken to mean that it recognised the right of the Preparatory Committee on deal with it.

Brazil reiterated its hope that it would not be placed in the position of objecting to proposals in the Preparatory Committee over services, thus prejudicing the other work of the committee.