COMPROMISE OVER HIGH LEVEL MEETING BEING SOUGHT.

Jul 18, 1985

COMPROMISE OVER HIGH LEVEL MEETING BEING SOUGHT.

GENEVA, JULY 18 (IFDA/CHAKRAVARTHI RAGHAVAN)— Efforts to find a compromise on the convening of high level meeting or meetings to consider possible new round of trade negotiations were due to resume in the GATT Council Thursday.-

The Council, which discussed Wednesday the issue under a broad agenda item "recent developments in international trade", found itself faced with a Brazilian proposal for two separate high level meetings, one on goods and the other on services, and a counter by the European Community for a single meeting firmly linking the two.-

The Brazilian proposals made clear the lack of GATT competence now in the new issues, and would merely enable the work now being carried on in GATT (within the limits of the 1982 Ministerial declaration and the 1984 agreed conclusions of the Contracting Parties).-

The EEC proposal for a single meeting with a wide open agenda, but with the understanding that participation by any country would be "without commitments and pre-conditions on the future course of action", was seen by several Third World countries as in effect prejudicing the 1982 and 1984 decisions that has left wide open the issue whether or not a multilateral framework on services is desirable and appropriate.-

The U.S., supported by Japan, EEC and other Industrial countries, has been pressing for a new round of Multilateral Trade Negotiations (MTNs) in GATT, and to include in it new themes like "trade in services", and to consider the agenda, modalities and other details for the launch of a new round.-

Though, the Industrial countries have been talking about this for more than a year outside GATT, only in the last few days they have formally put their ideas in the form of written submissions.-

For over a year now, the Third World countries have tabled a succession of papers, insisting on GATT negotiations in goods only, and for implementation of some prior commitments and undertakings.-

In their latest paper in June, some 25 of them formally spelt out the conditions under which a new round could be launched, and insisting on its being limited to trade in goods only.-

They have also been arguing that there should be discussion in the Council on the substance of the issues to see whether a consensus was possible, before procedures and events like a HLM could be agreed upon.-

On Wednesday the Brazilian proposals received support of India, Argentina, Egypt, Yugoslavia, Pakistan, Colombia, Nigeria, Zaire, Trinidad and Tobago and Peru, and of Venezuela, an observer in GATT.-

The EEC stand, for a single meeting with a wide open agenda, was supported by the Nordics, Japan, Switzerland and Australia, and among the Third World countries, by the ASEAN, South Korea, Hong Kong, Chile, Uruguay, and Ghana, though varying emphasis.-

The U.S. did not express itself in favour of either, but warned that failure by the Council at this session to set up a high level meeting would be a "prescription for disaster", in view of the rising protectionist tide in the U.S. Congress.-

At Stockholm in June, when Brazilian Foreign Minister had apparently mooted the idea of two separate meetings, it had apparently been welcomed by the U.S.-

At the GATT Consultative Group of 18, last week, the U.S. reportedly had hinted to Brazil that if Brazil did not put forward the proposal, the U.S. itself might do so.-

The EEC move, and insistence on a single meeting with goods and services linked, was seen by some Third World countries as an effort to ensure that all issues were discussed together.-

With services expected by everyone to take eight to ten years before any agreement could be reached, such a linkage would take pressure off from the EEC on agriculture or other liberalisation of goods, and similarly ease pressures on Japan.-

Without either of these two major trading blocs having to take positions in opposition to the U.S., the Third World stand on services would provide an obstacle.-

When the chairman of the GATT Council, Amb. Chiba of Japan adjourned further consideration of the issue Wednesday evening, the Brazilian and EEC proposals seemed irreconcilable, but efforts were on to find a compromise, according to GATT sources.-

Earlier at the Council, the EEC had announced that it was "determined" to obtain a decision on the high level meeting at this session.-

While some Third World participants saw in this nothing more than what they felt was "the normal pompous way" of the EEC statements on such matters, other Third World sources saw behind it a move to get a Council decision by voting.-

The Council normally takes decisions only by consensus, though its rules enable procedural issues to be decided by a majority vote.-

Third World sources noted that since the EEC proposals came after the Brazilian ones, the two Brazilian proposals would have to be voted before the EEC’s.-

Some of the Third World countries seem determined not to yield on the issue of lack of GATT jurisdiction on services, and seem prepared to face a vote, irrespective of the outcome.-

When the Council took up the issue Wednesday, Brazil tabled two draft decisions, one for senior officials meeting in September on trade in goods, and another for a separate senior officials meeting on the services issue, but within agreed parameters that would not prejudge or prejudice the questions of GATT competence.-

The European Community tabled a draft decision for one meeting of senior officials to consider all the issues and seek to broaden the consensus in favour of a new round of trade negotiations, and to report to the annual meeting of the Contracting Parties in November.-

The community spokesman, Tran Van-thin, rejected the Brazilian compromise for two separate high level meetings, and insisted on a single meeting where the senior officials could discuss and decide whatever they wanted, but with the understanding that the participation of any country in the HLM would be "without commitments and without pre-conditions on the future course of action".-

The EEC’s paper before the GATT Council, makes clear that the EEC wants the negotiations to involve both trade in goods and services, and have the final outcome as a package.-

When the U.S. began pushing for a new round, the EEC seemed to take a middle position, but has recently sought to project a picture of seeking to save GATT and mediating between the U.S. and the Third World.-

While the Community has been trying to present the position of India, Brazil and others opposed to GATT work on services as "unreasonable" in laying pre-conditions for negotiations, the Community itself has laid its own pre-conditions, namely that in the new round any negotiations in agriculture should no impact on the EEC’s Common Agricultural Policy (CAP), which protects agriculture and enables subsidised exports.-

The EEC' s insistence now on including services in the new round, and on keeping it on the agenda of any HLM, was seen by many Third World countries, as aimed at making the known opposition of the Third World to services a smokescreen to EEC objections to a trade round in goods which must involve agriculture.-

Before the Brazilian and EEC drafts were introduced, several Council members had spoken earlier, supporting the idea of a high level meeting, but reflecting the divisions between the Industrial and third World countries on the linkages or otherwise between trade in goods and services.-

Chile had said that while it could support a HLM, the fulfilment of existing 1982 Ministerial commitments on standstill and rollback should be first fulfilled. Chile also raised the problems of indebted countries in the face of increasing trade restrictions from industrial creditor countries.-

For Chile services was not an immediate priority, but if there was to be any discussions or negotiations on services in GATT, Chile did not believe Third World countries should be left out.-

Uruguay’s, Julio Lacarte Muro also complained of the problems of indebted countries and the trade restrictions by their creditors.-

Trade in goods should be the priority in any new round, and before any round took place, the suspicions of the Third World countries, arising out of failures in past rounds to address areas of Third World concern, would have to be dispelled.-

In putting forward Brazil's compromise ideas for two separate high level meetings, the Brazilian Amb. Paulo Nogueira Batista, said trade liberalisation measures should be in the context of the 1982 Ministerial declaration and work priorities for the 1980's.-

But the implementation of the work programme had been stalled by the insistence of some that there could be liberalisation of trade in goods only if services were brought into GATT.-

Progress in GATT' s recognised areas of competence were being blocked, creating serious problems for the GATT membership, and specially for heavily indebted countries like Brazil.-

This was also the reason why Brazil had been insisting on a clear link between possible trade negotiations on goods and the reform of the international monetary system.-

The Industrial countries had been talking "rather vaguely" about a new round for more than a year, and only now had brought the idea before GATT bodies.-

Many of the issues raised by Industrial countries was outside GATT competence, and the extent and breadth of their proposals made it difficult to accept the notion of convening a HLM "to broaden the consensus on a new round", and that discussions should be carried on at the HLM on the basis of submissions on goods and services.-

Discussion on a possible negotiations in goods was urgent, in the Brazilian view, and Brazil could accept this being dealt with in GATT bodies or even ad hoc high-level meetings.-

But Brazil could not accept discussion of new issues such as services, outside the specific confines adopted by the Contracting Parties at the Ministerial level in 1982 and reaffirmed by them in 1984.-

The Brazilian stand was supported by India's Amb. Shrirang P. Shukla, who specifically reiterated India’s important reservations over GATT competence on services.-

Shukla said that any HLM should follow discussion of the substance of various proposals, and not precede it.-

But India could support a HLM, subject to the concerns, sequences and priorities about a new round, expressed by India and 24 other Third World countries in their joint paper.-

From this viewpoint, India could support the Brazilian proposal India could support the Brazilian proposal for an HLM on trade in goods.-

India could also support the second Brazilian proposal on the issue of services, subject to formal Indian reservations on this issue.-

In India’s views GATT did not cover the services sector, and GATT and the Contracting Parties had competence only in the areas covered by the articles of the general agreement.-

Jurisdictional and legal questions, Shukla insisted on India's behalf, could not be altered merely because "some of the major trading nations hold a different view".-

"And, unless there is unanimity, neither the GATT Council nor the secretariat can embark upon areas not mandated by the Contracting Parties of GATT", Shukla further insisted.-

Egypt’s Mohammud A. Hamza seemed to echo this point when he insisted on the need for consensus on these issues.-

Western media have recently been talking of the "intransigence" of some Third World countries like India and Brazil, and of Industrial countries' determination to go ahead with or without their consent.-

In other remarks, Colombia’s Felipe Jaramillo expressed serious concern over lack of progress in implementing the 1982 work programme, and specially the commitments to standstill and rollback.-

Any new round must take account of part IV of GATT (special provisions for Third World). Colombia was prepared to participate in a HLM, but on the basis that participation would not involve any commitments or pre-conditions.-

On services, in the Colombian view, GATT was only for "goods", and it was difficult to deal with services beyond the agreed decisions of 1982 and 1984. In this view, the Brazilian proposals were "constructive" and deserved full attention.-

Argentina’s Osvaldo Lopez Noguerol supported the Brazilian proposals.-

Yugoslavia insisted that if there was to be any discussion on services, there should be no linkage between "goods" and "services".-

Without commenting on either of the proposals, Peter Murphy of the United States, spoke of the serious dangers facing GATT, and particularly the protectionist pressures in the U.S. Congress, including the new textiles bill which seemed likely to be enacted.-

In view of this, the U.S. felt a HLM should be convened to consider the issues of a new round.-