LEARNING LESSONS IN EACH GENERATION?

7:29 AM Jul 30, 1993

LEARNING LESSONS IN EACH GENERATION?
Geneva July 30 (Chakravarthi Raghavan) -- It was in 1984, as an old GATT hand of those days recalls it now, that the GATT Council had before it a Tunisian request for extension of time to negotiate its accession to the General Agreement.

US delegate Peter Murphy, then in his early 40s and full of the elan and certainties of US officials of the Reagan era, was critical of Tunisia's repeated requests for extension and began with the sarcastic comment that he himself had been probably 10 or 11 when the request for accession had first come before GATT.

(The Tunisian application had been made in 1959 and Tunisia was allowed to undertake its tariff negotiations as part of then impending 1960 tariff conference (Dhillon Round). But with domestic opinion divided on accession and complications in 1980s of US demands on new entrants, Tunisia finally acceded to the GATT in August 1990, three years after Morocco which applied later than Tunisia completed its work in 1987)

Despite Murphy's remarks, the Council in 1984 agreed to the Tunisian request and two items later had to deal with another annual perennial -- the report of the working party on the US Agriculture waiver from GATT obligations, granted in 1955 without time-limit, but subject to annual reports and scrutiny.

In moving to that item, then Council chairman Felipe Jaramillo of Colombia, asked the US delegate whether he had been born when the waiver had been sought and granted. No one remembers Murphy's response.

As the new GATT leadership, Director-General Peter Sutherland and, to the extent he consults them, his three deputies, work out the processes to intensify consultations when GATT resumes work on the Uruguay Round in mid-September and attempts to conclude it, perhaps all of them should look into some GATT history and precedents and reasons behind them, most of it not likely to be found in any GATT documents or records, the old GATT hand remarked.

Since taking office on 1 July, Sutherland has aired many views about what he wants to do -- in statements before the GATT Contracting Parties, Uruguay Round Trade Negotiations Committee, and in media interviews, press conferences, as well as in private conversations with some delegates -- but much less on how he plans to achieve it.

He has indicated that he is not going to follow the earlier GATT/ Uruguay Round consultation and decision-making processes, that he plans to be very transparent by taking everything to the Trade Negotiations Committee etc -- but without adding real transparency as to whom he will be consulting and how, before taking things to the formal or informal meetings of the Trade Negotiating Committee.

But as well as could be gathered from his conversations and statements, he appears to be planning to promote US-EC agreements in as many areas as possible -- relying on his access at ministerial level at Brussels and key EC States and in Washington -- and then in bilateral consultations, push these agreements on others, giving those who disagree the choice of having to take responsibility for failure.

He began with the original EC view, sold by Leon Brittan early in 1993 to USTR Mickey Kantor, namely, to first create a big market access package (of the two, and then the quad, and then others), thus creating a big cake to tempt everyone, among countries and within countries, and use it to get an overall agreement with little or no changes in the 1991 December Dunkel Draft Text of the Final Act.

He also promised to shake the trees in Geneva, but on the day he took over as TNC Chair and just before the Tokyo G7 summit, he was advised by EC spokesman, Amb. Tran Van-Thinh, to harvest the coconuts, but not shake the tree lest it fall on his head!

After the Quad meeting and its market-access package (now seen by developing countries, after the disclosure of details, as emptier than it seemed when announced), Sutherland called for intense market access bilateral negotiations in July, promising to name names of those who came to Geneva for talks but were only having a good time here.

But in fact no serious market access negotiations have taken place since then in bilaterals -- the fault lying though with the Quad and their inability to proceed forward in bilaterals to present details or put forward their own revised "offers" to others.

At the TNC on 28 July (before the summer recess) Sutherland named no names nor did any finger-pointing at the Quad and particularly the EC, US and Japan -- but spread the blame (without names) on "a number of delegations" who were yet to provide more complete information on possible concessions in market access and services and delay in exchange of sectorial information which was essential to get negotiations actually moving in market access and in services.

He also spoke of the linkages seen by many between the market access negotiations, particularly in textiles and agriculture, and "certain related issues" in the DFA (presumably a reference to the need to tackle, resolve and settle issues about changes in the text), as well as the vast amount of technical work and substantive negotiations to be done in other areas of the DFA, in particular the MTO and dispute settlement.

In the work programme for resumed negotiations in September, he has envisaged market access negotiations -- revised and improved agricultural and non-agricultural offers, sectorial proposals such as steel and DFA issues directly linked to market access, especially agriculture and textiles, moving forward together -- similar actions on initial commitments in services and remaining textual issues and annexes, and his own plan to start consultations immediately on organization of work and future planning on DFA text, for example, on institutional issues. Over the next fortnight though, Sutherland and his top aides too will be away from Geneva as also the GATT negotiators.

None of the key delegations from the South, after carefully studying the text of his 1600-word statement at the TNC and based on the limited conversations he has had with some of them, are clear on the Sutherland processes, and don't seem enthusiastic over what they guess it may be.

In any event, there are still major differences between the US and EC on market access (reduction of peak tariffs on textiles and clothing, and zero tariffs on glass and ceramics -- sought by the EC -- zero tariffs on electronics, and now oilseeds and products, sought by the US), and differences on services sectors including the audio-visual service.

These make any US-EC accords difficult enough. The European exchange rate crisis (since the TNC adjourned) and a possible collapse of the ERM and the resultant instabilities and variations on exchange markets will make agriculture and non-agriculture concessions and deals even more difficult, and any overall Uruguay Round settlement now problematic.

For developing countries to "contribute" by accepting these zero-tariff or peak tariff reduction calls, without serious offers from the US and EC on agriculture and textiles and clothing, including on faster integration and growth in annual quotas -- is even more problematic.

And the third pillar of the Sutherland strategy or tactic, appears to be first to get US-EC agreements on the texts in institutional questions (MTO and definitive application of the Uruguay Round agreements vs GATT-II and provisional application as now in relation to GATT) and dispute settlement and multilateral justiciability of domestic procedures; and persuade both to abate their demands for other changes in other parts of the DFA,

Armed with these, Sutherland's tactics as far as others can guess at it, appears to involve using US-EC accords, in non-structured bilateral consultations, to get all others to fall in line.

While he has not indicated apparently to delegations, who have tried privately to probe him how he would do these consultations, and Argentine after some persistent questions at the TNC failed to get a satisfactory answer, some of his press comments suggest that he would not follow the socalled 'Green Room consultations' or the 'Rossin process' of his predecessor, Arthur Dunkel.

It was in relation to these talks by some GATT officials, that the old GATT hand recalled the Jaramillo-Murphy exchanges in the Council and suggested that Sutherland, without being burdened by the past, would still do well to learn GATT history and precedents. Otherwise, he might suddenly be faced at the TNC by some old-hand -- may be a Lacarte who was in GATT in 1947 itself, and a few others who have had a few postings in Geneva and in their capitals on trade policy questions -- who knew past practices and procedures and precedents and challenge things.

And atleast on the four-track process after Brussels and the DFA text, it was a TNC decision and Sutherland might suddenly be confronted with it -- for having virtually ended on his own both the third track on legal and technical work on the text and the fourth track for changes in the DFA.

And the emptier the market access package is, as now,or will be on present indications at end, the easier it would be for any one to challenge the consensus in a TNC, one delegate said, noting that while everyone publicly affirms the importance of concluding the Round, for its benefits to the world economy and the consequences of failure, in private few share any such views and see it all as irrelevant for the moment.

When GATT was conceived (as an offshoot of the Havana Charter negotiations) and came into being, Sutherland and his three aides were either tots or in schools. Sutherland was born in April 1946 and joined the Bar in 1969. Warren Lavorel was born in October 1935 and, after education in California, joined the US foreign service in 1963. Anwar Hoda, born in November 1938, joined the Indian administrative service in 1962 and worked in the Bihar State government, coming to New Delhi and the Indian commerce ministry in 1974. Jesus Seade, born in December 1946 completed his academic studies and doctorate in economics in late 1970s and in economics faculties in the academia from 1980.

The GATT came into being in 1948 and, for quite a while, when Wyndham White was the Executive Director, it was a cozy club of the US and Europeans with a few developing countries (India, Brazil, Burma, Chile, Cuba, Pakistan), with the US the dominant economic power, but encouraging Europe and Japan to undertake trade policies discriminatory against US.

At the time of the second D.G., Olivier Long, when the number of developing countries began growing and their consent had to be obtained, the practice of limited prior consultations began around the time of the Tokyo Round -- in the socalled 7+7 -- seven from the North including US, EC, Japan, Canada, an EFTA member and Australia; and seven from the South including Brazil, India, Colombia, an Asean, Korea, Egypt. This also led to Long's initiative of the CG-18. US-EC accords were not automatically accepted.

They did meet in the Director-General's conference room (which even then had green wallpaper decor) though it was not called 'Green Room' consultations. It was during Dunkel's period that this characterisation came into vogue and, when others not included 'muscled' their way in by creating problems on issues where they had not been consulted, gradually the number of participants expanded leading ultimately to the Rossin process (of 19) over the Uruguay Round DFA text.

The EC's Tran Van-Thinh (in an interview to the Wall Street Journal) recently fondly recalled the very early days (of this period) and was all for reintroducing whisky into smoky negotiating rooms (Sutherland in the WSJ interview 'groaned' about talk of bringing in whisky -- unless it be Irish whisky!). He was not reminded perhaps of Irish wakes.

But by now many negotiators of key countries, even those who occasionally imbibe whisky or wine, take care to drink only orange juice or non-alcoholic beverages.

Any event, the Uruguay Round is no longer like the GATT of old days, whose agreements clinched in such surroundings and presented to the public through managed information and by an obliging media in glowing terms, had no immediate visible effects in the commerce and domestic economy of countries.

GATT was conceived of (and remains so 45 later) as a mere provisional and temporary arrangement, and not very evident among the international systems and organizations. Its tariff concessions and their effects were none too visible to the public in countries: the goods entering a domestic market after paying tariffs and passing the customs borders, as a result of the tariff concessions exchanged, merged into the domestic market and not too visible or in such quantities as to cause any domestic vibes.

GATT negotiations and trade concessions were somewhat esoteric and far removed from real life. Governments were all interventionist in the economies and the neo-classical economists and their trade theories and policy advices, while ensconced in secure professorial tenures or in international bureaucracy with assured and rising emoluments and pensions etc, about labour market rigidities, were hothouse plants.

To the extent they began having visible effects, there were departures and special and differential treatment for the industrialized countries: for the US over agriculture through the waiver of 1955, for the EC a similar unchallenged CAP and its variable levies via the Rome treaty, for the US and EC on textiles and clothing to be able to take discriminatory import restrictions against (Japan first, and then developing countries) and now ranging over the whole gamut of sectors and products -- footwear, machine tools, electronics, automobiles, steel etc.

But after the Uruguay Round, in the market will be, not Adam Smith's invisible hand, but the very visible presence of the 'foreigner' -- the Transnational Enterprises in production of goods and services and the way of life of elites they will promote and their impact in driving domestic enterprises to the wall and impoverishing peasants -- and the political fallouts for governments.

In this situation, it may be fine to talk to government leaders of lack of 'political will' and 'political leadership'. But the first law of politics is acquiring office and survival in office and 'leadership' for actions at the cost of immediate unpopularity can come only to those who have no rivals to challenge them.

And currently, none of the governments of the North or the South (where there is an attempt at democratic governance) are enjoying that luxury.