May 17, 1985

N0 CONSENSUS ON HIGH LEVEL MEETING FOR NEW ROUND.

GENEVA, MAY 1.5 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The U.S. again failed this week in its efforts to persuade Third World countries to agree to a high level meeting in the GATT to prepare for a new round of multilateral trade negotiations.-

The U.S. efforts came at the two-day meeting of the GATT’s Consultative Group of 18 (CG-18), which ended Tuesday night, after formal and informal meetings and discussions.-

A new meeting of the CG-18 is expected to be set for early in July, but Third World delegates doubted any decision being taken at that time either.-

They note in this connection that Third World Trade Ministers would be meeting in New Delhi on July 24, and while the meeting was mainly for the Global System of Trade Preferences among themselves, the occasion was to be used for review of the international trading system and issues.-

Beyond statements that they would "reflect" on the proposal for a high level meeting to prepare for a new round, the Third World countries would appear to have stood united and firm against the launching of a new round without prior implementation of past commitments.-

Several of the Third World delegates at the CG-18, reportedly insisted that the basic issue was not implementation of GATT work programme vs. new round, and whether the two could be merged, but a question of the very credibility of GATT.-

This credibility could not be established without prior, implementation of past commitments, starting with the latest commitment in the 1982 Ministerial declaration for standstill and rollback of protectionist measures inconsistent with GATT.-

The Third World was neither against trade liberalisation nor against negotiations in GATT, but a simple issue of establishing the credibility of GATT as a system for both, by implementing the liberalisation measures negotiated and agreed upon in the past, before launching on any new round and its promises.-

There was little force in the argument that confidence in GATT could be established, and political will found to fight protection, only by launching a new round of negotiations.-

According to GATT sources, neither the new round nor the high level meeting proposal was formally on the agenda, which merely provided for a continuation of discussions at the March meeting.-

At that meeting, the GATT Director-General had posed three questions.-

These were: what the CPs expects as outcome of implementation of the work programme or the priorities, what contributions or concessions they would make in negotiations, and what could be done to give a sense of urgency and push to implementation.-

The last was an indirect effort to focus on the idea of a high level GATT meeting to launch a new round.-

Also before the CG-18, was the position paper of the informal group of Third World countries tabled in May 1984, but so far not formally discussed in any GATT body.-

According to GATT sources, Canada formally proposed at the Tuesday meeting, the convening of a high level meeting of GATT CPs in July to prepare for a new round.-

The Canadian proposal would appear to have received the support of Japan, the U.S.A. and some other industrial countries.-

Even before the formal proposal was made, at informal meetings the EEC would appear to have renewed its suggestion of november 1984, for a high level meeting to prepare for a new round.-

An agreement to hold such a meeting, the EEC was reported to have said, would not mean any commitment to the launching of a new round, though the effort would be to build up a consensus for this, by discussing and agreeing on the modalities, subject matters and timing of the new round.-

The U.S. would appear to have taken the view that a high level meeting should be set up, irrespective of whether it would result in a consensus or not for a new round it would also appear to have repeated its threats that in the event of failure to launch a new round, it would undertake bilateral or plurilateral negotiations on its own.-

"But so far we are neither enthused by the new promises nor unduly cowed down by the threats", one Third World delegate commented.-

The informal consultations would however appear to have shown a clear reluctance of many to call a high level meeting without the prospects of a consensus, since failure would be worse than not having a meeting at all.-

The EEC would appear to have taken the position that while it would like a new round, and would want the Third World to join, such a new round could not be launched excepting through consensus.-.

Only the EEC would also appear to have commented on the Third World joint position paper.-

While the U.S., supported by Canada and Japan, were also insistent on such a new round including "trade in services", the EEC took a somewhat middle position, seeing no harm in including it, putting its own position as one of "traders in services, and not crusaders".-

The Third World countries in their paper have made clear that they could not agree to inclusion of trade in services.-

The Community also showed appreciation of the Third World support for trade liberalisation, but argued that both Industrial and Third World countries would need to contribute to this process.-

India, speaking for the informal Third World group, would appear to have explained the rationale behind the Third World document - its diagnosis, analysis and prescriptions.-

In the Indian view, it was a canard, as being propagated in western media, that the Third World was against trade liberalisation or negotiations.-

The increasing levels of imports the Third World belied this charge. But no further liberalisation by the Third World was possible, without an increase in their import capacity, and the latter could be achieved only through trade liberalisation measures of Industrial countries to open up their markets for Third World exports.-

The Third World too viewed GATT as a negotiating forum, and in its own joint paper had envisaged "specific trade negotiations".-

But both logic and empirical experiences of past multilateral rounds had shown to the Third world countries that promises of priority or issues of Third World concern being dealt with were not credible.-

It was during the Tokyo round negotiations that the Third World was forced to accept the most illiberal Multifibre Arrangement.-

And the solemn Ministerial commitments to rollback, given in November 1982, had not only not been implemented, but further discriminatory protectionist actions had been taken against the Third World.-

There was hence a need to establish the credibility of GATT, and the Industrial countries must take the necessary steps by beginning to carry out their past commitments.-

To argue that confidence in GATT could be established, and political will found to fight protectionism, only by launching a new round was against logic and the empirical experience.-

As regards services it was not a mere quibbling when the Third World document spoke of new negotiations being confined to trade in goods.-

Even the national studies of Industrial countries showed that the issue was very complicated.-

The services question involved more issues than mere trade, and some of these were being discussed in other forums too.-

But many of the Third World countries could not agree that the general agreement covered the services area or that GATT had competence in this field.-

The Indian position would appear to have been supported by Brazil, Argentina, Yugoslavia, Egypt, Zaire, Malaysia (for ASEAN), Peru, Jamaica and South Korea.-

According to GATT sources, while there were some nuances among these on the issue of a high level meeting, all of them agreed on the need for establishing GATT’s credibility through actions of Industrial countries to rollback protection, as promised in 1982 Ministerial declaration.-

Only Israel, among the informal Third World group, would appear to have supported the U.S. stands.-

The Third World countries argued that while their own proposals not received any response or comment, excepting by the Community this time, they were now being asked to agree to a high level meeting and provide a consensus to a process to launch the new round.-

While as Contracting Parties they would always consider seriously all proposals and "reflect" on them, there was no prospect of any consensus being reached on the issue at present.-

As the Malaysian delegate reportedly put it on behalf of ASEAN, "we will consider and reflect on your proposal and come back in time. But our response will depend on what you do between now and then. The question of credibility is very important".-