PROTAGONISTS EXPRESS SATISFACTION AT OUTCOME.

Nov 30, 1985

PROTAGONISTS EXPRESS SATISFACTION AT OUTCOME.

GENEVA, NOVEMBER 28 (IFDA) -- The major protagonist in the battle in GATT over a new round, and new issues like services, expressed satisfaction Thursday on the outcome, and agreed that they could live with the compromise decisions.-

The U.S. Deputy Trade Representative, Michael Smith, was "very pleased" with the outcome, which he saw as a signal to the international business community that governments were serious on embarking on trade liberalisation, that they were not satisfied with the status quo, that they recognised the system had problems and strains that had to be tackled.-

Prem Kumar, Indian Commerce Secretary, and Brazil's Amb. Paulo Nogueira Batista, continued to be sceptic over a new round, and saw the decision as one that preserved their position and legal and would enable the Third World to press with its priorities.-

Smith said that the U.S. would raise the services issue in the Preparatory Committee, but would also fully participate in the separate meetings organised by Jaramillo.-

Smith envisaged a decision on services being taken by the Ministers, when they meet in September 1986, with the Preparatory Committee fully discussing and making recommendations on the issue to the Ministers.-

Other participants in the negotiations - India, Brazil and the European Communities - gave a somewhat different picture.-

India and Brazil, took the position that the only way the services issue could be discussed in GATT was through the process set in motion by the 1982 and 1984 decisions, and that a forum had now been created that would not only exchange information but make recommendations to the Contracting Parties who alone could decide whether there should be a multilateral framework on services, and if so where.-

Indian delegate, Shrirang Shukla, and the Brazilian delegate, Paulo Nogueira Batista, said that the socalled Jaramillo track could come to a number of conclusions on appropriateness and desirability of multilateral action.-

It could decide yes, a qualified yes, no, or a qualified no, or postpone decisions.-

If the group decided "yes" on services, and in favour of GATT as the place to negotiate, this could then be remitted to the Ministers if they wanted to include it in a new round.-

Shukla said that the Preparatory Committee was to take account of the elements of the 1982 work programme, but not other issues or proposals, and the views expressed in the senior officials group.-

In this sense, "services" was one of the elements of the GATT work programme, and the views in the senior officials group was very divergent, including on GATT competence.-

But the only place where any further decision on services could be taken is at the next session of the GATT Contracting Parties.-

For the European Community, Tran Van Thinh, evoked some oriental imagery - of elephants and a China shop, of the Indian tree of life with various streams providing it sustenance - to explain the links between the Preparatory Committee and the services decision.-

The remarks of Tran suggested that in the Community view, anyone would be free to raise and discuss in the Preparatory Committee any of the elements of the GATT work programme.-

If the separate consideration on the services resulted in some recommendations, it could be fed into the Preparatory Committee and it could move forward on services.-

But he also envisaged the possibility of no agreement on services.-

Participants, he underlined, had not agreed on whether services was in or not, nor on the priority.-

The inclusion of services or its exclusion from GATT and in the new round would have to be decided by the Ministers at the end of the day.-

Tran implied that the entire thing was a delicate compromise, and if anyone pushed the services issue in the Preparatory Committee too hard, ahead of any decision in the services group, the whole thing could break up.-

Other participants privately hazarded a scenario where no one would be muffled in discussing services in the Preparatory Committee, so long as there was no effort to push for a decision.-

"If that happens, the Preparatory Committee could well end up without any recommendation, as had happened in the senior officials group", they said.-

These participants also said that the two decisions adopted would imply that in good faith, everyone would consider the services issue substantially only in the "Jaramillo track", and depending on the answer there decide their courses of action.-

And while the U.S. would perhaps be able to put the issue on the agenda of a Ministerial meeting in September, it need not mean that a decision would be taken.-

However the U.S. side might decide not to commit itself to a new round, unless it was able to get some decision in its favour on the services issue.-

They noted in this connection that since raising the issue in 1981, the U.S. itself has been changing its approach and position.-

In the beginning the U.S. had wanted full application of GATT principles, but now it has given up the application of most fundamental GATT principle, "the most-favoured-nation treatment", to any services framework.-

By the time all this exercise is over, they themselves may have different views, since not all service industries and sectors in the U.S. want an international frame.-

Smith envisaged the Ministerial meeting deciding to organise a Trade Negotiating Committee under GATT aegis, and for that Committee decides by the end of 1986 the organisational structure and other details for the negotiations, and the negotiations themselves beginning in 1987.-

Smith also expected the U.S. President seeking congressional authorisation to negotiate when the Congress Assembles next year.-

While the U.S. was yet to make up its mind, Smith did not think all the issues for negotiations would have to be agreed upon as a package and implemented as a package.-

The services issue itself, he said, would take time - involving first an agreement on an umbrella framework for application of some GATT principles (like transparency and national treatment), and sectoral agreements on each of the service sectors.-

But there were a number of issues perhaps ripe for immediate negotiations, and if there were four or five issues out of a basket of 20, that could be negotiated and would result in a balance that would enable countries to sell it to their constituencies, it could well be decided to implement them without waiting for the others.-

This, he thought, could be one of the things that the Ministers could decide.-

The priority items for negotiations for the U.S., Smith said, were trade in agriculture, services, counterfeit goods, intellectual property, and use of subsidies in GATT.-

The U.S., he said, was not seeking an assault on the European Community, and its Common Agricultural Policy (CAP), but so far as this cap had an impact on international trade it would have to be considered and negotiated, just as the U.S. waiver on agriculture.-

Tran for the EEC, said that the Community did not want to hold up negotiations on agriculture until it was able to settle its own policy on the CAP. Perhaps two things could go hand in hand, and each could contribute to the other.-

Third World participants noted that the chairman's remarks, after adoption of the decision on the Preparatory Committee, had spelt out the "important issues" for the Preparatory Committee, and agriculture was not one of these (presumable because of objections from the Community).-