May 8, 1985

BONN SUMMIT A MAJOR SETBACK FOR U.S. ON NEW ROUND.

GENEVA, MAY 6 (IFDA/CHAKRAVARTHI RAGHAVAN)— The U.S. failure to get an endorsement from the Bonn western summit for the launch of new round of trade negotiations in the general agreement, is seen here as a major setback to the U.S. drive.-

This is the third time this year that the U.S. moves appear to have been blocked.-

The U.S. has been seeking to launch a new GATT round, and include "trade in services" within it, since 1981, when U.S. trade representative Bill Brock first mentioned it and spoke of a "Reagan Round".-

The U.S. efforts were then focussed on the GATT Ministerial meeting, where leading Third World countries blocked the move, and insisted on implementation of prior commitments in past GATT rounds.-

The Ministerial declaration ultimately called for standstill and rollback of protectionism, and particularly of measures either contrary to GATT or not sanctioned by it.-

The Ministerial declaration also adopted a work programme, covering the various areas of GATT activity.-

Three years afterwards, the work programme has not advanced very much.-

However, for the last two years, the U.S. and the GATT secretariat have been trying to promote the view, that consideration of individual points of the GATT work programme in various GATT bodies had gone as far they could, and any further progress or negotiations was possible only by subsuming them in a new round.-

But this has met with resistance from the Third World countries, who argue that they could not be expected to make any concessions reduce their legal barriers to trade in return for removal of the illegal barriers against their exports, erected over the last three decades by the Industrial countries.-

Against this background, President Reagan proposed after his inauguration for a second term, the launching of a new round in GATT in 1986.-

Japan, which has been supporting the U.S. move, put forward at the 1984 meeting of the GATT Contracting Parties, the idea of a new round and the convening of a high level meeting of senior officials of the Contracting Parties for this purpose.-

But the idea got nowhere, since the Third World countries did not agree.-

Since then, while the issue of a new round, and the high level meeting of the Contracting Parties, was never formally brought before GATT, the U.S. has been trying to promote it through discussions at various informal meetings and non-GATT bodies.-

At the Paris OECD Ministerial council meeting on April 11-12, the U.S. again sought endorsement for the launching of a new round in 1986, but was unable to get such an endorsement.-

The Ministers only agreed that "such a round of negotiations should begin as soon as possible", and then added within brackets that "some felt this should be in early 1986".-

The Ministers however agreed to propose to the Contracting Parties that "a preparatory meeting of senior officials should take place in GATT before the end of summer to reach a broad consensus on subject matter and modalities for such negotiations".-

Thereafter, the U.S. tried to get an endorsement of the new round, and the 1986 target date for its launching, at the meeting of the IMF/World Bank's Development Committee.-

However, strenuous opposition of the Third World countries at the Development Committee blocked any endorsement of the new round, or the 1986 target date.-

In its communique, the Committee endorsed the view of the Third World Ministers in the Group of 24, and called on all countries "to promptly implement their undertakings to lift any measures inconsistent with GATT or not based on specific GATT disciplines".-

This was the commitment given by the industrial countries at the 1982 GATT Ministerial meeting, but which was not implemented.-

The Development Committee also called on governments "to resist protectionism and, to the extent feasible, roll back existing barriers to trade", and endorsed the idea of engaging "as matters of priority in serious efforts to carry forward the unfinished business from the 1982 GATT work programme".-

This, the Development Committee said, could lay the basis "for a general participation of all countries in the trade negotiation round on which, it was noted, a number of countries have decided to embark under the auspices of GATT".-

Given the fact that the Development Committee, in September 1984 had given a general welcome to the idea of a new round, the communique of the Committee in April, was a step back.-

After the Washington meeting, the U.S. spoke of the OECD countries deciding to go ahead with a new round, whether the Third World countries joined or not.-

It also spread the view that the development committee had in effect endorsed the idea of a new round, and that the major Third World countries had not rejected this.-

However several Third World countries at the meeting of the GATT Council on April 30 made clear that their stand had not changed.-

In the light of this, the U.S. had sought to get out of the Bonn summit a definite endorsement of the new round and its being launched in 1986, but was blocked by the strong stand of France.-

Though it has been made to appear, in some of the press reportage out of Bonn, that the French intransigence was a new position for domestic political reasons, in fact all the conditions that President Mitterand insisted upon, as a pre-condition for the launching of a new round, were the conditions also laid out in the position adopted by the EEC Ministers in March this year.-

The EEC at that time had linked the launching of the new round to parallel progress on international monetary reforms, on Japan taking actions to open up its markets for manufactured imports from the Community, and on securing wide participation of the Third World countries in any such new round, and that the EEC’s common agricultural policy should not be called into question.-

But in a clearly tactical move, the EEC had said that a Preparatory Committee could be set up in GATT to prepare for the new round, (where all its conditions would have been brought up).-

The Third World position on prior implementation of past commitments, including the rollback of protectionist measures contrary to GATT or not specifically sanctioned by GATT, was reiterated by the Third World group at the meeting of the GATT Council on April 30.-

At that meeting, at the instance of Austria, it was decided to inscribe on the agenda of the next GATT Council, scheduled for June, a specific item to discuss a general item relating to the recent development in international trading system and implementation of the 1982 GATT work programme.-

Such a specific agenda item, the Austrian delegate had said, would enable GATT to address both the Third World position paper on international trading issues (pending in GATT since May 1984), as well other ideas (about a new round), which were being discussed everywhere else excepting in GATT.-

The issue may also figure at the meeting of the GATT Consultative Group of 18 (CG-18), scheduled for May 13-15, but the CG-18 itself takes no decisions.-

At the CG-187 and the subsequent June meeting of the GATT Council, the U.S. and Japan are expected to bring up their idea of a senior official level meeting of the GATT Contracting Parties, as a preparatory meeting to reach a broad consensus on the new round and modalities for such negotiations.-

However, the Third World informal group, and the major trading nations among them, so far have not shown any inclination to change their stands against a new round, or setting in motions preparations for it, without prior implementation of past commitments.-

Some of them say they may not be averse to a senior official level meeting of the Contracting Parties to discuss the implementation of the GATT work programme and of past commitments, but would have difficulty to agreeing to such a meeting, whose purpose is decided in advance to be the launch of a new round and making preparations for it.-

The U.S. however has been trying to apply pressures at capitals to persuade Third World countries to agree both to the preparatory meeting and to a new round.-

And while some of the smaller Third World countries, particularly those with military and political links with the U.S., are showing some signs of yielding to the U.S. pressures, the major Third World countries have not so far yielded.-

Both before and after Bonn, senior U.S. officials have been saying that it would enter into bilateral or plurilateral negotiations with whoever was willing.-

GATT being an agreement laying down the principles and rules of international trade, as well as a forum for negotiations, any group of countries could negotiate trade liberalisation measures among themselves.-

But the countries involved have to abide by the GATT rules, which includes the fundamental most-favoured-nation clause, under which any such liberalisation would have to be extended to all GATT members.-

The GATT Director-General Arthur Dunkel, in a press interview for a U.S. media just before Bonn, has however underlined that a multilateral trade negotiating round in GATT would need participation of the Third World countries and consensus of GATT membership.-

High level U.S. delegations are due to visit the capitals of some of the major Third World trading nations over the next few weeks in an effort to persuade them to accept the U.S. view.-

But apart from the substantive issues, the U.S. efforts to get a high level meeting "before the end of summer" (which in GATT, means before end of July, since August is normally a vacation month), now appears to be unlikely in view of the various events already scheduled.-

The U.S. Treasury Secretary, James Baker, at the time of the Washington Development Committee meeting, had circulated a note suggesting July as the date for the high level meeting.-

The July 22 date has also since been suggested by Japan, but it clashes with other scheduled events.-

Trade Ministers of some 70 third world countries, participating in negotiations to establish a Global System of Trade Preferences (GSTP) among themselves, in order to expand south-south trade, are due to meet now in New Delhi on July and this is to be preceded by three days of senior officials meetings.-

The meeting originally intended for the first week of July, was rescheduled in view of some OAU meetings in the first half of July.-