7:34 AM Aug 31, 1993

TNC MEET SHOWS SOME HIDDEN ROAD BLOCKS AHEAD

Geneva 31 Aug (Chakravarthi Raghavan) -- The Uruguay Round Trade Negotiations Committee (TNC), meeting after a summer recess, heard some pep talk from GATT Director-General and TNC Chair, Peter Sutherland, on need to conclude the Round and reiterated the work programme agreed before the summer break in July.

Sutherland reiterated at the TNC the 15 December deadline, and said the negotiations would end then whether there was an agreement or not.

Participants at the TNC later said that while the 15 December deadline was an effective one, in terms of the US fast-track authority, whether the Uruguay Round is to be ended or not was not something for Sutherland to decide but the TNC and the GATT Contracting Parties.

Sutherland also announced at the TNC that a Ministerial Conference to sign the Uruguay Round accords would take place in April, and that between completion of substantive negotiations in mid-December and this April meeting, he would hold consultations on a Joint Declaration (to be adopted at the Ministerial Conference) and a future work programme to accompany the final agreements.

Some long-time GATT observers saw in this last reference to a work programme to the usual GATT practice of shoving on to a future work programme all unresolved issues, with issues of concern of developing countries normally put on such a work programme.

The TNC meeting, while it heard pep talk and appeals from Sutherland to governments to resist protectionist domestic lobbies, failed to remove the uncertainties created by the latest French-German statements on revisions to the agriculture text -- uncertainties created last week by the press conference statement of German Chancellor Helmut Kohl, and reiterated by him in a Sunday magazine interview and by the government spokesman in Bonn Monday.

Participants were generally agreed after the meeting that no effective market access negotiations could take place until after the meeting of the EC Council of Ministers on 20 September.

While no direct references to these were made at the TNC, Uruguay spoke of need for maximum restraints in seeking changes to the Draft Final Act, if the Round was to be concluded by 15 December and referred in this connection to the proposals already made for weakening the agricultural text of the DFA (a reference to the Blair House accord), and the new suggestions for further weakening them. For the agreement to get Uruguay's consensus, it needed effective market access in agriculture and textiles, he said.

This was taken by other participants to mean opposition to the proposals to change the Agriculture text and the Blair House accord as demanded by the French, with some German support now.

The TNC also agreed to an open-ended informal group under chairmanship of Amb. Julio Lacarte-Muro of Uruguay "to complete the work still required" on the institutional issues surrounding the proposed Multilateral Trade Organisation (MTO) and the Integrated Dispute Settlement System.

Lacarte-Muro had chaired till 1991 December (when Arthur Dunkel tabled the Draft Final Act text) the group on dispute settlement and institutional questions. He had also run against Sutherland to succeed Dunkel, but withdrew in the final days.

At that time there had been reports that he would be accommodated in a suitable position in the Uruguay Round negotiations.

At the TNC, while there was wide support in general for the renewed work programme aiming at concluding the Round by 15 December, and specifically for the Lacarte group to look into the 'institutional issues', there was some uncertainty over what it would really be doing.

A GATT spokesman, briefing the press after the meeting, said that the group was an "informal group" to complete the work on these issues and could do what it wanted. However, participants at the meeting said that India, with indirect support from the EC, had objected to the Lacarte group being able to consider substantive questions such as whether there should be an MTO at all, and insisted that these and other such substantive questions could only be considered in a separate process.

The GATT spokesman would merely say that India had made some comments and that it was his understanding that it merely said the Lacarte group should proceed from where the issue was left by the legal drafting group in June 1992.

Indian Amb. Balkrishna Zutshi later however said that in his intervention, after that of the US, he had made clear his understanding that the mandate of the group would not cover the "track four process" relating to the MTO and Dispute Settlement, and that India's consensus was based on this understanding.

In Jan-Feb 1992, in agreeing on a further process to conclude the negotiations on the basis of the DFA, the TNC, under the chairmanship of then GATT Director-General Arthur Dunkel, had agreed on a four-track process, with questions about substantive changes in the text of the DFA to be made by consensus being reserved for the track four process.

At the TNC, the US Uruguay Round coordinator, John Schmidt, in supporting the Sutherland programme and the Lacarte group, suggested that the group should consider whether an MTO was needed at all, and whether they were not unnecessarily complicating the Uruguay Round negotiations with such important political issues. He asked delegates to have an 'open mind' to see whether the substantive questions could not be accommodated in some other way without burdening the system unnecessarily with another organization. He also made a reference in this connection to the one-country-one-vote principle in the MTO text and the US objections to it.

The draft MTO text provides that amendments to the MTO and agreements annexed to it have to be proposed by consensus, but that any amendment would become effective and binding on all when a two-thirds majority accepted it.

The US, in the informal process of consultations in December 1992, had come out against the MTO and had asked for a looser arrangement in the shape of a GATT-II, similar to the present GATT and its provisional protocol of application without the binding effect of an international agreement in domestic law.

According to participants, Indian Amb. Balkrishna Zutshi, in his intervention, challenged the US and the Sutherland proposal to allow the Lacarte group to "flush out" the issues including the substantive question of changes in the DFA on the MTO.

Zutshi is reported to have recalled that since January 1992 (when the Dunkel DFA text was tabled and taken as a basis for further negotiations and conclusion of the Round), it had been on the basis of "globalization of the negotiations".

In this view it was Zutshi's understanding that the Lacarte group would not be a "track four process" relating to the MTO and Dispute Settlement, and would merely take off from where the legal drafting group had left this issue in June 1992.

Hugo Paemen for the European Community appeared to provide some indirect support to the Indian view when he said that the EC had supported the strengthening of the multilateral system and the creation of a successor organization to GATT and "these are fundamental issues that will not fall within the mandate of the group".

Apart from raising questions about the scope of work in the Lacarte group, Zutshi also raised questions about how proposals for changes in the DFA to meet other concerns would be dealt with.

He told the TNC, "If clarifications were not available and a process would not be available, my authorities would find it difficult to take the necessary decisions (on accepting the DFA) and these will lead to delays."

In his concluding remarks, Sutherland reportedly said he had taken note of the comments of Zutshi and they would be given consideration in due course and "we will have to see how the group evolves".

This appeared to be both a reference to Zutshi's additional remarks that it was necessary to establish a process to address those concerns of delegations with regard to the DFA other than those relating to the MTO and Dispute Settlement and to resolve these concerns.

In various other comments, India supported by Asean and several other developing countries insisted that the evaluation of the results of the negotiations in the area of goods in terms of the objectives and general principles of the Punta del Este declaration was not a proforma exercise but one that should be done well in time in order to bring about the changes in the texts or the agreements needed to achieve these objectives.

This was with reference to Sutherland's remarks that he would continue consultations with delegations "with a view to determining the most opportune time for conducting this evaluation".

After the TNC, some delegates suggested that the Sutherland way of conducting consultations, with individual delegations or groups representing a view, rather than a plurilateral one where the participants could exchange views, negotiate with each other rather than individually with the GATT head to determine what or what was not acceptable, was probably responsible for the discord that came up at the TNC and could create more problems in the weeks ahead.

As a Latin American delegate later put it, "At the TNC now we just have individual country statements, no debate or discussion among the participants. This creates problems."

In his pep talk to the TNC, Sutherland underscored the substantial economic benefits to be gained from a Uruguay Round package and the dangers of a "self-inflicted wound" that would flow from failure to conclude the Round.

Any failure, he said, would undermine the multilateral trading system with unpredictable economic, political and, even security consequences -- with mushrooming trade disputes between regional blocks causing serious damage to the world economy.

(In a Speech Tuesday evening at Koln, Germany at a dinner of German industrial employers, Sutherland dredged up the OECD development centre's 1990-1991 study about an alleged benefit of 200 billion dollars out of the conclusion of the Uruguay Round -- a study which in 1992 had been dismissed by the OECD Secretary-General as just a theoretical exercise -- and appealed to German and European industry to speak up in its own interest and pressure their governments to conclude the Round without yielding to protectionist lobbies).

Sutherland told the TNC that powerful vested interests and lobbies might frequently appeal to governments to maintain protectionist positions, but that governments should demonstrate political leadership.

Sutherland repeated the call for immediate resumption of market access negotiations and put forward negotiating offers or improvements, even on a conditional basis. While 54 participants out of a total of 116 had so far tabled comprehensive offers in the area of goods, he found it "disturbing to say the least" that so many delegations had yet to put forward their offers. He urged these delegations to do so immediately.

As per earlier agreed schedule, Sutherland also called for the finalisation of the text of the framework agreement on Services and its annexes in negotiations beginning in the week of 13 September and to quickly dispose off the remaining issues thus providing momentum to the overall outcome.

On the issues in the DFA other than MTO and Dispute Settlement, Sutherland said he was aware of a number of issues within and across individual texts in the DFA. The Legal drafting group had been dealing with some of them. And while the services of this group might be needed in the future,he would for the present keep the group on hold.

On the "other significant outstanding" DFA text issues, including those related to market access, Sutherland said he would stay in touch with delegations and would address them "at the appropriate time".

This coupled with the concept of conditional offers should ensure that linkages in negotiations become a dynamic force for moving the process forward rather than an excuse for creating blockages, he said.

The GATT head then added: "...seeking substantial and widespread changes to the DFA would not be conducive to a successful conclusion and all participants will have to exercise maximum restraint and self-discipline in this area. Indeed, any delegation seeking changes should be ready to accept that it will have to demonstrate to its negotiating partners that the proposed change is a matter of major substance and has good prospects of attracting consensus multilaterally".

A number of delegations (Mexico, Austria, Canada, Australia, Korea, Japan, Pakistan, Malaysia, Egypt), in their interventions all stressed the need for discipline by all in seeking changes in the DFA and the need for such changes to maintain and reflect a balance.

Some participants saw in this an indirect caveat that Sutherland or anyone should not assume that changes sought be the US and EC commanded a consensus and should be acceptance to all and that some wider consultations to establish such a consensus would be needed.

As one Third World delegate put it afterwards, "It is just being assumed that the Blair House accord (on agriculture between the EC Commission and the US) commands consensus. But neither this, nor for that matter, several of the DFA texts negotiated in a very small group or groups, has ever come up for consideration..."

However, the Sutherland process of conducting individual consultations, and daring those who disagree to do so at the TNC when he finally brings the issue before them, could force many to acquiesce in a consensus which the US and EC seek to establish, by canvassing capitals directly and pressuring them to ask their delegates in Geneva not to object.

But this could prove to be as risky a game as that of Sutherland's predecessor in the latter half of 1990 (in the run-up to the Brussels ministerial meet) and subsequently in 1991 when he stood on the sidelines waiting for the US and EC to reach accords which could then be forced down on the others.

Sutherland also announced Tuesday that he would pursue consultations on how to achieve the Punta del Este objective of giving special attention to the problems and needs of the least developed countries.