Nov 30, 1985

FUDGED LANGUAGE, AND PROCEDURAL COMPROMISES POSTPONE FIGHT.

BY CHAKRAVARTHI RAGHAVAN. AN IFDA SPECIAL FEATURE. GENEVA, NOVEMBER 28 (IFDA)— The Contracting Parties to GATT adopted Thursday two essentially procedural decisions that avoided a bruising confrontation between the United States and several Third World nations, putting off the real fight over a new round, and on services, to a Ministerial meeting in September 1986.-

Whether the September meeting would be a special session of the Contracting Parties at Ministerial level, or a meeting of Ministers outside this framework, which would mean that their recommendations would have to be formally adopted by a CPs session, are issues yet to be settled.-

The Contracting Parties adopted by consensus two decisions: one relating to the continuation of further work on services through the so-called Jaramillo track, and the other for the setting up of a Preparatory Committee on a new round of multilateral trade negotiations.-

The two decisions, in carefully crafted language, with an element of ambiguity that enabled various protagonists to interpret it according to their own stands, essentially postponed the fight over services, to a Ministerial meeting in September 1986.-

Explanations and clarifications offered by the major protagonists left little doubt that on the basic issues there is so far little meeting grounds but all sides have agreed to continue to talk.-

In the decisions adopted Thursday the Contracting Parties decided to establish the Preparatory Committee to determine the "objectives, subject matter, modalities and participation" in the Multilateral Trade Negotiations (MTNs), taking into account "the elements of the 1982 work programme and the views expressed in the group of senior officials".-

The Preparatory Committee is to prepare by mid-July 1986, its recommendations for the programme of negotiations for adoption at a Ministerial meeting to be held in September 1984.-

On services, the Contracting Parties in a separate decision adopted earlier, invited the CPs to continue the exchange of information on issues in the services sector, as provided for in the 1982 Ministerial declaration and the 1984 agreed conclusions.-

This is the reference to the separate meetings for exchange of information, organised by the chairman of the CPs, Felipe Jaramillo of Colombia, or the so-called Jaramillo track.-

This group has also been called upon "to prepare recommendations for consideration by the Contracting Parties at their next session" on the issue of appropriateness and desirability of multilateral action in the area of services.-

In an agreed remark after the adoption on the Preparatory Committee, the chairman said that "questions of standstill and rollback, treatment of developing countries and safeguards, should constitute important issues for the work of the Preparatory Committee".-

The Preparatory Committee itself would be open to all GATT Contracting Parties, Tunisia which has provisionally acceded to GATT, and countries like Mexico who have now sought accession.-

While the U.S. appeared to have gained its point of establishing a Preparatory Committee for a new round, it was unable to get an implicit or explicit decision to enable the services issue to be an issue in the new round.-

This fight has clearly been put off till at least next September, and for continuation of the separate consideration of the services issue through meetings of interested Contracting Parties organised by the chairman, Felipe Jaramillo of Colombia, or the so-called Jaramillo track.-

This, and the implicit recognition of the legal stand of Brazil, India and others, that only the Contracting Parties at their formal session, could decide whether any multilateral action was desirable, and that without such a decision, the Preparatory Committee could not include the issue in a new MTN, was a plus for these countries.-

The setting up of the Jaramillo track itself in 1984 had been at U.S. instance, but after it was in operation this year, it was quickly clear to the U.S. that this might not really be to its advantage.-

The report of the group itself brought out the difficulties of even defining the term "services" or "trade in services" and distinguishing " trade" from " investment", and the absence of not only adequate data but even an internally agreed basis for collection and collation, without which no negotiations would be possible.-

It was because of this that in the intricate negotiations here over last ten days, the U.S. had wanted to end this process, and ensure merely the setting up of a Preparatory Committee with an open agenda, where the services issue could be tackled.-

Ultimately, the U.S. had to give in and agree for the continuance of the Jaramillo track, and for it to make the recommendations.-

The U.S. Deputy Trade Representative, Michael Smith, told newsmen that the U.S. would raise the services issue in the Preparatory Committee, but would also participate fully in the Jaramillo track, and that the ultimate decision would be for the Ministers.-

The Indian delegate, Shrirang Shukla, said that only if the consideration of the issue in the Jaramillo track came up with a recommendation by consensus that multilateral action on services was desirable and that this should take place in GATT, could the Preparatory Committee make any recommendation on this to the Ministers.-

Third World countries gave way on their insistence on "standstill" as a precondition to the establishment of a Preparatory Committee, when the U.S. made clear it would be unable to give any new commitment, given the protectionist tide in the U.S. Congress.-

Shukla said that they had yielded on this in an effort at compromise.-

However, standstill and rollback, as also the safeguards and special treatment to the Third World participants, have been identified as "important issues", that the Preparatory Committee would have to tackle.-