Jun 27, 1985

BRAZIL EXPLAINS STAND ON SERVICES ISSUE.

GENEVA, JUNE 25 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The government of Brazil has reiterated its view that any possible future negotiations on services should be totally independent of GATT negotiations on goods, and without any "parallelism" or "trade-offs".

The Brazilian position has been stated in a communication of the Foreign Ministry of Brazil, issued in Brasilia on Monday, and circulated here among GATT delegations and made available to newsmen by the Brazilian delegation to GATT.

The U.S. and other western countries have been pressing for some time now for a new round of trade negotiations in GATT, and including new issues like trade in services.

Third World countries have been opposed to this, and specifically have been opposing any GATT consideration or negotiations on services and other new issues not within the GATT competence.

The latest Brazilian communication is in response to reportage in western media after the informal meeting in Stockholm (June 8-10) of some Trade Ministers.

Some of these reports had said that Brazil had put forward "a compromise" involving parallel but separate negotiations on trade in goods and services, resulting in a breakthrough in GATT, and that Brazil would have no objection to use of GATT facilities for these parallel negotiations on services.

Since then, a U.S. Embassy press release here has quoted an unnamed U.S. Trade Official as saying that the Reagan Administration has now agreed to the concept of separate multilateral talks on trade in services, and that the administration would now support a "two-pronged" approach to the new round of trade talks – one on services and the other on goods.

The U.S. press release said that under this approach, "proposed by developing nations" at Stockholm meeting, services would not be under the same GATT rules as now applied to goods, but that new disciplines would have to be developed under the GATT for services.

The Brazilian moves at Stockholm were interpreted by western media as involving a move away from the joint stand (of June 7) in GATT Council of 25 Third World countries including Brazil, who had rejected GATT jurisdiction in services and had proposed, subject to some prior conditions, a new round of negotiations in GATT confined to trade in goods only.

In clarifying the Brazilian stand, the Foreign Ministry of Brazil has reiterated the stand in GATT of the Third World countries.

The industrial countries, it said, are now expected to present their positions through concrete proposals to the GATT bodies on a new round of negotiations in goods, so that a meeting of high officials could be convened and preparatory work for a new round could be taken in hand.

The present talks in Geneva, the Brazilian note said, have been stalled because of "an undesirable overlapping" of entirely different issues – one relating to GATT commitments on trade in goods, and the other on possible international negotiations on services.

The Brazilian note explained that while defending the exclusion of services from a new GATT round, but to overcome the "present difficulties", the Brazilian Foreign Minister, Olavo Setubal, had put forward at Stockholm a formula to ensure "an entirely independent treatment of the negotiation process on goods from a possible negotiation process on services".

Towards this end, the Brazilian note said, any negotiations on services must involve a "prior understanding" on five conditions:

The negotiation process must be totally independent from the negotiations in GATT on goods.

There shall be no parallelism between the two processes nor shall "any trade-offs between each of the negotiations be sought".

"Above all, GATT rules shall not apply to negotiations on services, which would have to start from scratch, that is, from the definition of the rules and principles which could be applicable to the new area".

On the procedures, the Brazilian note said that "the negotiations on services shall be prepared by a group of high officials, totally distinct from the one responsible for preparing the round on goods", and "all procedural matters, such as submissions, venue for the negotiations, secretariat support, must be defined prior to the meting of high officials".

The Brazilian note did not say where these discussions on procedural matters would take place, and who would constitute the "group of high officials" who would prepare for the negotiations on services.

But Brazilian diplomats here explain that all these questions would have to be discussed and agreed upon.

Several other Third World countries have from the time of the 1982 GATT Ministerial meeting, put on record their reservations and challenging GATT jurisdiction in the services area.

The 1982 GATT Contracting parties Ministerial declaration agreed that on the services issue, interested countries should prepare national studies, and exchange information among themselves through international organisations like GATT.

The 1984 session of the GATT Contracting Parties decided that such exchange of information in GATT should be organised by the chairman of the GATT Contracting Parties.

The GATT Contracting Parties are due, under this decision, to examine at their annual meeting in November 1985, whether in the light of the national studies any multilateral framework is appropriate or desirable on the issue of services.

The 1984 decision also provided for a limited role of the GATT secretariat in the servicing of these meetings.

Several Third World countries are against the GATT secretariat having any further role than this and are of the view that any future discussions on the need for a multilateral framework on services or negotiations on them should be held in a "neutral forum" and not under GATT auspices nor organised by its secretariat.

The Brazilian note also underlined the fundamental importance of trade liberalisation for Brazil, and notes that Brazil found itself now in the difficult circumstance of having to continuously generate a trade surplus of the magnitude of 40 percent of its annual export revenue, solely to meet interest payments due on its foreign debts.

This was the reason, the Brazilian note said, that Brazil has been insisting on the need for a clear link between trade liberalisation and the reform of the international monetary system.

The collapse of the international monetary system was one of the main causes of the serious balance of payments situation in Brazil and other Third World countries.

"Though highly useful as an objective, a multilateral negotiation on the liberalisation of trade in goods, in order to be viable, cannot do without parallel and equally intensive efforts in the monetary and financial fields", the Brazilian note added.