Nov 27, 1985
CONTROVERSIAL GATT CONTRACTING PARTIES SESSION OPENS.
GENEVA, NOVEMBER 25 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The 41st annual session of the GATT Contracting Parties, with controversial issues on its agenda, opened here Monday afternoon against the background of the latest GATT estimate of a slowing down of the growth in world trade.-The GATT secretariat, only in September, was forecasting a trade growth in 1985 of about four percent (compared to the eight percent in 1984).- In its latest estimate, the secretariat has now estimated that this year's trade volume will be less than three percent above that of 1984.- The major issue before this week session is the U.S. drive for a new round of Multilateral Trade Negotiations (MTNs), and for the setting up of a Preparatory Committee to enable the launching or the new round in 1986.- Connected with the U.S. move, but also a separate issue before the session, is the question of "services", where the Contracting Parties are to decide whether any multilateral action on services is "desirable and appropriate".- The U.S. wants to bring services into GATT, and include this issue in the new round. A number of Third World countries, including Brazil and India, are opposed to this.- Unlike in goods, where trade is a substitute for foreign investment, in the case of services, the trade in services is inextricably linked with foreign investment.- Foreign investments, whether they should de allowed and if so on what terms and conditions, has been traditionally seen as impinging on the socio-economic policies and ideologies of individual governments and countries, and thus their sovereignty, and not susceptible of a common international framework.- The U.S., under the guise of seeking liberalisation of "trade in services", in fact has been seeking to promote "freedom" for transnational corporations to invest in countries, and to circumscribe the ability of governments to control foreign investments and the activities of the TNCs.- The annual session is taking place at a time when in effect the U.S. has raised the level of confrontation, with the U.S. Trade Representative, Clayton Yeutter, threatening to convene a U.S. sponsored trade round outside of GATT in Washington, if the U.S. is unable to have its way at the GATT session this week.- Yeutter had also threatened that in such an eventuality, the U.S. would ignore its GATT obligations, have a new plurilateral accord with nations willing to negotiate and include in it new rules and principles governing trade in goods and in services, and deprive those Third World countries not joining this move, of various trade benefits including the benefits of the U.S. Generalised System of Preferences (GSP).- Though Yeutter has sought to present the situation as one involving the U.S. and more than 60 GATT members on one side, and five or six Third World countries on the other, the actual situation itself is more complicated, a GATT spokesman underlined Monday.- Cautioning western newsmen who saw the issue as one "between the U.S. and the gang of five", the GATT spokesman said the problem should not be "over-simplified" in those terms, and there were many nuances and differences.- While these five countries had their objections on the issue of services, there were also a range of issues and objections from others that had to be taken into account.- Apart from services, the spokesman said, there was the issue of "safeguards", the issue of standstill and rollback of protectionism in the context of the opening of a new round, and the issue of how the Third World countries would be treated in any such new round.- The U.S., and some of its supporters like Japan, have been talking or having the issue of a Preparatory Committee decided by a vote rather than seeking compromises for a traditional GATT consensus.- However the GATT spokesman said Monday that there have been intense consultations, and more would be taking place throughout this session, and GATT was looking for a consensus on the terms under which a Preparatory Committee may or many not be set up, and a consensus on the continuation of the various strands of the 1982 GATT work programme.- On the services issue, in 1982 the GATT Ministers agreed that the Contracting Parties at their 1984 session would take a decision on whether multilateral action was "desirable and appropriate".- This was put off in 1984 to the 1985 session.- The provisional agenda circulated for the meeting does not contain any specific item to this, but a GATT spokesman said the issue would be debated along with the report of the GATT Council.- The services issue has been handled outside the Council framework, through the so-called "Jaramillo track" - separate meetings organised by the chairman of the GATT Contracting Parties, Felipe Jaramillo, for exchange of information on national studies by interested countries on issues in the services sector.- On this issue of GATT decision on services, Brazil, India and a few others have been insisting that the question of whether GATT has competence in services and whether multilateral action should be taken in GATT on services, could not be decided by a majority vote of the Contracting Parties, but would require unanimity.- There have been some reports that the U.S., finding the Jaramillo track has not been to its advantage, might try to side-step the issue, and call only for the setting up of a Preparatory Committee for a new round, without specifying whether it would deal with trade in goods only or also trade in services, and then pursue the services issue in the Preparatory Committee.- The senior officials group, which was set up at the special session of the GATT Contracting Parties (september 30 - October 3), after several meetings devoted to an in-depth discussion of the issues, was unable to agree on a report.- The chairman, Felipe Jaramillo, is due to present his own report on the outcome of the senior officials group.- Apart from the services issue, in the senior officials group meetings, India, Brazil and several Third World countries, have called for a prior commitment on standstill - an undertaking by all Contracting Parties, not to introduce any new import restrictions, excepting in strict conformity with GATT norms, and for such an undertaking to be individually provided to the GATT secretariat at the highest levels of government, before any decision to set up a Preparatory Committee.- Apart from such a standstill commitment, the Third World countries are also insisting that during the Preparatory Committee, and before the launch of the actual new round, industrial countries must agree upon and undertake within a specified time-frame a rollback of the protectionist measures they have put in place in violation of GATT rules and norms.- Given the failure to carry out past commitments and promises, the Third World countries also say that such undertakings for standstill and rollback must be backed, wherever needed constitutionally (as in the U.S.A.), by legislation.- On the question of "safeguards", an issue pending resolution in GATT since launch of the Tokyo round in 1973, the Third World countries are saying that when the new round is launched, the highest priority should be given to negotiate a comprehensive understanding on safeguards and put this in place before undertaking other negotiations in the new round.- The whole objective is to prevent the industrial countries, and particularly the U.S. and the European Community, from raising their import restrictions against Third World goods, and then try to negotiate the removal of these illegal restrictions in return for Third World concessions to them on trade in goods and services.- The Third World countries also want to prevent any effort to trade off an agreement on safeguards (where the industrial countries have been misusing the GATT provisions, and acting outside GATT through enforced voluntary export restraint agreements on their weak partners, and seek to legitimise it), in return for any tariff and non-tariff concessions on goods in the new round.- The U.S., while projecting the Third World countries as resisting moves to "liberalise trade", has been among those refusing to provide any credible commitments on standstill or rollback, and seeking to make these part of the negotiations in the new round.-