Sep 4, 1985

CONSULTATIONS OVER AGENDA FOR GATT CPS’ SESSION.

GENEVA, SEPTEMBER 2 (IFDA/CHAKRAVARTHI RAGHAVAN) — The Director-General of the General Agreement, Arthur Dunkel, was due Tuesday to begin consultations on the agenda of the special session of the GATT Contracting Parties (CPs), which is being convened at the instance of the United States.-

The U.S. request has received the support of a majority of the 90 GATT CPs, required under the rules.-

The special session itself is now expected to be convened on September 30, and the notice of the meeting is expected to go out by the end of this week.-

Under the rules, such a meeting requires at least 21 days notice.-

The U.S., supported by the EEC, Japan and other Industrial countries, has been seeking a new round of Multilateral Trade Negotiations (MTNs) in GATT, and include within it new themes like "trade in services", which several leading Third World countries insist is outside the GATT jurisdiction.-

However the proposal for a new MTN, in goods and services, was brought up before GATT only in July, when various CPs presented their views in writing.-

At the GATT Council meeting in mid-July, the Industrial countries formally proposed the launching of a new round of MTNs, including both goods and services, and for setting in motion the preparations for it, through a senior officials meeting.-

At the Council session, Brazil had proposed two separate meetings, one on trade in goods which falls within GATT competence, and another separate meeting on the services issue, but within the framework of the 1982 and 1984 GATT decisions (which left open the issue of GATT jurisdiction in these areas).-

The OPEC countered with a move for a single meeting of senior officials to prepare for a new round of MTNs to deal with both goods and services and other new issues.-

With India, Brazil and several other Third World countries refusing to accept GATT jurisdiction on services, the GATT Council was unable to evolve any consensus on the issue of preparations through a senior officials meeting, and the Council was "suspended".-

The U.S. thereupon sought a special session of the GATT CPs "for an examination of the subject matter and modalities of a new round of MTNs".-

The U.S. made the move under a procedure never invoked before, and which enables any CP to seek a session of the CPs, and for such a session to be convened if a majority of the GATT membership accedes to the request.-

The 90 CPs of GATT were polled on the U.S. request, and asked to express their views by August 31.-

After more than a month of combined U.S., EEC, and Japanese pressures in various Third World capitals, by the August 31 deadline, 61 CPs had voted "yes" to the U.S. request for a special session.-

According to GATT sources, some of the Third World countries who voted "yes" have nevertheless made clear that their support was only for the meeting, and not for the agenda suggested by the U.S. in its request.-

Under the rules, the provisional agenda is to be drawn up by the secretariat in consultation with the chairman, who is currently Felipe Jaramillo of Colombia.-

The provisional agenda would have to be approved by the session of the CPs, and without a prior consensus, the CPs session would find itself embroiled in controversies over the issue of an agenda itself.-

The consultations being held by the GATT Director-General is aimed at avoiding this, and find a suitably worded "neutral" agenda which would not prejudge the issue of a new round, or the issues to be included or excluded.-

Soon after the U.S. had sought a special session, the European Community (which with Canada and Japan had supported such a session), sought to renew informal consultations among the major Industrial and Third World countries, in an effort to evolve a consensus on the substantive issues of a new round, rather than try to seek a decision through a vote at the session of the CPs.-

Apart from the confrontational approach involved in such a vote, it was also clear that the issue of GATT competence in the services area was one involving an agreed interpretation of articles one and two of the General Agreement and thus would require unanimity.-

Also, without the participation of India, Brazil and other major Third World countries, a new MTN would be meaningless.-

India, Brazil and other Third World countries strenuously objections to GATT involvement in the services area, would appear to have agreed to the initiative of the EEC representative to GATT, and agreed to participate in efforts to evolve a consensus.-

According to some Third World sources, while Brazil, India and others in this group had not given up their basic objections to negotiations on the services issue within GATT in a new MTN, nevertheless they had shown their willingness to try to evolve a consensus, on the lines of the and 1984 GATT decisions.-

These decisions envisaged exchange of information among GATT Contracting Parties on the services issue on the basis of national studies, and for the GATT Contracting Parties to take a decision at their regular annual session in 1985, whether any multilateral action on services was "appropriate and desirable".-

The 1984 decision also authorised the chairman of the GATT CPs to organise the meetings of the GATT CPs for the exchange of information in their national studies, and for the GATT secretariat to provide some limited, but clearly defined support for such meetings.-

Without in any way giving up their stand on the issue of GATT competence, the third World countries showed their interest in participating in the process suggested by the EEC that could result in a consensus.-

However, these efforts were unable to move forward, because of lack of support from the U.S., according to some Third World sources. -

The U.S. has reportedly said that the efforts at a consensus had not succeeded in July, and that it had been forced to seek a session of the CPs, and hence saw little purpose in pursuing the efforts for a consensus.-

The consensus efforts were around proposals for a so-called "two-track approach", namely for two separate meeting of senior officials, one to deal with the issue of "trade in goods", and the other with the questions of "trade in services".-

Though at one stage, the U.S. had favoured such an approach, it would appear that since then the U.S. has been insisting on a single exercise in GATT, dealing with both trade in goods and in services.-

The U.S. paper on services, presented informally to the July meeting of the GATT’s Consultative Committee of 18, showed that under the guise of "trade in services", the U.S. was in fact seeking far reaching changed in Third World economic policies, and seeking freedom of investment for foreign capital, and the so-called "right of establishment" for foreign enterprises in the Third World.-

Apart from the lack of support from the U.S. for informal consultations to evolve a consensus, within the EEC, France also appears to be insisting on the new round, and preparations for it, to cover both goods and services.-

The rigid new stands of the U.S., and of France within the EEC (though for different reasons), are interpreted by several Third World diplomats as principally aimed at using the Third World opposition to "services", to backtrack on the idea of a new MTN itself.-

Within the U.S., the Reagan administration, and its then Trade Representative, William Brock had proposed a new MTN in 1981, and since then the U.S. had been pushing for it.-

However, it is increasingly clear that the U.S. Congress is not in favour of any trade liberalisation, and is bent on taking protectionist measures, on a variety of imported goods.-

In the light of this latest U.S. Congressional politics, and with the major part of the U.S. administration and Congress, losing interest in any new round, the new U.S. Trade Representative, Clayton Yeutter, may be now seeking ways to disengage the U.S. from the earlier moves for a new round, and try bilateral approaches, Third World sources say.-

Within the EEC, France is opposed to any MTNs which mean negotiations on agriculture and would involve changes in the Community' s common agricultural policy protecting the EEC agricultural producers.-

It is hence insisting on a unified approach to trade in goods (which includes agriculture) and services, knowing that no such round could be launched in view of the Third World position on services, and thus negotiations on agriculture could be killed without openly opposing it.-