Sep 28, 1985
UNCERTAINTY OVER GATT CPS SPECIAL SESSION.
GENEVA, SEPTEMBER 26 (IFDA/CHAKRAVARTHI RAGHAVAN)— On the eve of the special session of the GATT Contracting Parties (CPs) due to begin on September 30, there is considerable uncertainty among delegations about everything connected with the session.-As of Thursday evening, after an informal meeting of heads of delegations, GATT sources said there was no consensus or agreement on the agenda for the special session, nor on a possible outcome of the three-day meeting.- The meeting has been convened at us instance to discuss a new round of Multilateral Trade Negotiations (MTNs) in GATT, and include within it new themes like trade in services, counterfeit goods, etc.- The inclusion of such new themes and subjects is opposed by several leading Third World countries who consider them to be outside the competence of the general agreement.- "The only thing certain at the moment is that the special session will convene on the afternoon of Monday, September 30", one delegate commented Thursday evening. - This is the fourth time that a special session of the GATT Contracting Parties will be meeting, but the first convened at the instance of one CP and concurred to by a majority vote of the CPs.- Though the issue of a new round has been talked about elsewhere for sometime, the idea of a new round and preparations for it through a high level meeting of officials, was formally brought on the GATT agenda only at the july meeting of the GATT Council.- The Council however was deadlocked on the issue of services.- Brazil had proposed that there should be a meeting of senior officials to consider the new round in areas within GATT competence (trade in goods), and a separate meeting to deal with the issue of services within the framework of the decisions at the 1982 Ministerial declaration and the 1984 session of the CPs.- The 1982 declaration agreed that countries interested could undertake national studies, and exchange information among themselves on the outcome of such studies.- In 1984, it was agreed that meetings for such exchange of information should be convened by the chairman of the GATT CPs, and that the 1985 regular session of the CPs would decide whether any multilateral action on services was "appropriate and desirable".- The Brazilian paper also insisted that there could be no linkage between trade in goods and services.- The EEC, supported by U.S., Japan, and other OECD countries, wanted a single meeting to address both the trade in goods and services issues.- When the council was deadlocked and unable to reach a consensus, the session was suspended, and the U.S. had recourse to a procedure never before used, and sought a special session of the CPs.- The U.S. request was acceded to by 65 CPs - though there is some dispute whether the 65 agreed to the convening of the session only, or also agreed to the proposed agenda.- The actual replies from the 65 were never published by the GATT secretariat, though the GATT director-general in private consultations early in september apparently told delegates that of the 65, only a few had specifically supported the us proposals for an agenda, while the large majority had merely concurred with the holding of a meeting.- Some delegates privately question whether all the 65 voted "yes" to the meeting, or several merely said they had "no objection" and this was construed by the GATT secretariat as an "yes" vote.- The tensions over the convening and holding of the special session, and the positions that various countries have been forced to take under U.S. pressures, have become such that, according to some GATT delegates, no one - among the CPs or GATT officials or its secretariat - appears to be in a position to play a mediatory role among the major protagonists.- After the U.S. requisitioned a session of the CPs, there was an effort by the European Community to promote informal consultations for a consensus, but these were spurned by the U.S.- The U.S. also took a similar stand when informal consultations were held on a draft agenda.- The chairman of the CPs, Felipe Jaramillo of Colombia, ultimately proposed on his own responsibility a provisional agenda "examination of the subject matter and modalities of a proposed new round of multilateral trade negotiations".- This was almost similar to the one proposed by the U.S., excepting for the addition of "proposed" - which to some of the opponents by implication would mean the U.S. and Japanese proposals for new themes.- Jaramillo also drew attention to the proposals before the Council and the discussions there in July.- With no agreement on the agenda, and every indication that the session might be embroiled in procedural wrangles and disputes over agenda, there have been attempts to persuade the opponents not to raise disputes over the agenda, but agree to discussion of substance.- However, these countries have refused to indicate what position they would take at the CPs session.- The U.S. and its supporters have sought to make it out that the opposition is confined to a handful of Third World countries, and principally by India, Brazil, Egypt, Argentina, and Yugoslavia.- However, according to some Third World sources, at a meeting of the informal Third World group on Wednesday, when Argentina indicated its intention to amend the agenda, it apparently got support from many of the countries there.- Argentina wants to qualify the agenda so that any discussions on new round of MTNs would be "within the framework of the GATT work programme and the priorities for the 1980’s contained in the Ministerial declaration of november 1982".- The U.S. and its allies are opposing this on various grounds.- The U.S. itself was talking tough on Thursday, with the U.S. representative to GATT, Peter Murphy, speaking of us readiness, if necessary, to have the agenda approved by a vote, and for the CPs session initiate a process leading to the launch of a new round, also by vote if necessary.- Murphy said that the U.S. would like decisions by consensus, and did not want a vote since it would create a precedent, but was prepared for a vote in order to get a decision.- Murphy was referring thursday also to the 65 affirmative votes to the convening of the session, as indicating the support of the 65 for the agenda of the session as proposed by the U.S., and thus for the launch of a new round of MTNs, though he conceded there was still considerable differences on the issues and modalities.- He charged that opposition to the new round was not from the Third World group as such, but only from the five countries Argentina, Brazil, Egypt, India and Yugoslavia - and that they were blocking others from going ahead.- Unwillingness of some participate in MTNs, he said, was nothing new, and in previous rounds too not all had participated.- But what was new and disturbing this time, Murphy said, was the efforts of the five to block others from negotiating.- However, India, Brazil and others have said that their opposition was not to any MTNs as such, but to the efforts to bring alien subjects within GATT.- Murphy called the five pejoratively as "the group of five", and referred in this connection to the "gang of four" in China during the Cultural Revolution.- Murphy also tried to imply that Indian opposition to services and GATT disciplines was because it did not want any competition in the Gulf region where it has a profitable trade in services and that Brazil wants to retain its "regional dominance" within Latin America.- Indian sources note that their services "trade" in the gulf was "labour services" (which the U.S. wants to exclude from the GATT negotiations) and some consultancy. But in any event they note GATT disciplines there were irrelevant, since the Gulf countries were not members of GATT.- Both in the case of India and Brazil, the U.S. effort they note is directed to their internal markets, and force them to open it up to the U.S., by cross-linkage with the trade in goods.- They note in this connection the U.S. moves, at present illegal in GATT, to punish South Korea for not opening up its insurance market to the U.S., by threatening to restrict South Korean export of goods.-However, the opposition of Third World countries including India and Brazil is more fundamental, namely that they already have a very large deficit on their services account, and any liberalisation or opening up their markets would worsen their balance-of-payments.- According to UNCTAD studies, based on IMF data, the Third World had a deficit on services account of 12 billion dollars in 1970. This shot up to 80 billion in 1980, to 115 billions in 1982, and came down to 95 in 1983 (when most of the Third World countries undertook "adjustment" by cutting imports of goods, and thus of connected services).- India, Brazil and others also argue that "liberalisation", of their service imports would not only destroy their fledgling services sectors, but frustrate their efforts at autonomous development.- Some of the Third World countries challenging the inclusion of new themes in GATT do not appear to be unduly perturbed by the U.S. tough talk, and say that while they are for a compromise, they will not be afraid of a vote, even if they are in a minority, since the issues are fundamental.- Inclusion of the new issues in GATT, in their view, in any event can only be through unanimity.- Though Murphy was talking tough about recourse to voting, and the dangers of U.S. recourse to bilateral measures, his remarks at a press conference also indicated that the U.S. was now lowering its sights.-Murphy said that the U.S. was now pressing, not for its original idea of setting up of a Preparatory Committee on the new round, but for a decision on "a process", namely, convening of meeting or meetings of senior officials to discuss informally the new round issues, and modalities.- Such a process, he hopes, could be completed in time for a decision to be taken the next meeting of the CPs in November.-