GATT PREPARATORY COMMITTEE TO MEET MONDAY.

Jan 25, 1986

GATT PREPARATORY COMMITTEE TO MEET MONDAY.

GENEVA, JANUARY 23 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Preparatory Committee for a new trade round in the General Agreement on Tariffs and Trade is due to hold a two-day first meeting here next week.

The meeting on January 27 and 28, chaired by the Director-General of GATT, Arthur Dunkel, is expected to decide on the programme of work and other administrative and procedural aspects, before taking up substantive issues at this meeting itself or at the next meeting on February 4-5.

Among the substantive issues, the Committee is expected to focus first on standstill and rollback of protectionism.

The Committee is expected to hold 3-4 day meetings at intervals of 2-3 weeks, with each meeting concentrating on a few specified subjects agreed upon earlier.

This would enable officials from capitals to participate in in the meetings, and with some adequate preparation.

The Committee, set up at the November 1985 meeting of the GATT Contracting Parties (CPS) has been asked to 'determine the objectives, subject matter, modalities for and participation in the Multilateral Trade Negotiations (MTNS)', taking into account the elements of the 1982 Ministerial work programme and the views expressed in the group of senior officials.

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

At an informal meeting of the Preparatory Committee Wednesday, Dunkel would appear to have indicated how he wants to run the Preparatory Committee.

A GATT spokesman suggested Thursday that 'most of the ideas (put forward by the Director-General) were acceptable to most delegations', but that the formal decisions would have to be taken at the Committee meeting itself.

However, some of the participants at Wednesday's meeting said that some of the ideas, and especially the secretariat efforts to list some 30 subjects to be discussed by the Committee, had run into trouble.

The effort to list, and get a Committee agreement, would have inevitably reopened the whole fight over the U.S. efforts to include 'services' and 'investment' as subjects of a new round, and would have destroyed the delicate balance in the compromise at the last session of the GATT CPS, which enabled the establishment of the Preparatory Committee, they said.

The GATT session had set up the Preparatory Committee, without a specific decision on whether 'services' and 'investment' came within its mandate or not.

At the same time the CPS continued a separate GATT exercise for exchange of information on services and to prepare recommendations for the consideration of the CPS at their next session.

The GATT CPS are yet to take a decision on whether any multilateral action on services is 'desirable and appropriate'.

Any attempt to put issues like 'services' and 'investment' on the agenda of the Preparatory Committee at this stage would upset the balance agreed at the November session, and would create controversies that would stymie the work of the Preparatory Committee from the start, one-third world delegate later commented.

For it would force the U.S. and its supporters to insist that the subject should be discussed, while several of the third world countries were bound to object to it on the ground of lack of GATT jurisdiction.

This will prevent even the areas of priority for the Committee, agreed at the CPS session, from being discussed, the delegate commented.

Questions of standstill and rollback of protectionism, treatment of third world countries, and safeguards have been identified as 'important issues' for the work of the Preparatory Committee.

A GATT spokesman however said that there was no need for any formal agreement of the Preparatory Committee over the list, which was merely an indicative one drawn up with reference to the work of the senior officials group, which had met in October-November 1985, on the new round issues.

The GATT spokesman said that the intention was to have a first discussion in the Preparatory Committee on all the subjects by the end of March, and then for the Committee to begin to look at draft recommendations for the Ministers on all these issues.

The secretariat envisaged a four or five page draft declaration for the Ministers, to be supplemented, by a draft report 'to explain the genesis of the draft declaration, and spell out some of the thinking of the Committee in general, and of individual delegations on some subjects', the spokesman said.

At Wednesday's meeting, the suggestion of the Director-General that he could present a chairman's report, on his own responsibility, on the work of the Preparatory Committee, would appear to have met with disfavour from a number of third world delegations.

Several of them also called for summary records of the Preparatory Committee to be maintained.

The U.S. is however opposed to any 'summary records' of the Preparatory Committee, and wants a report to be made by the chairman of the Committee (Dunkel), rather than a negotiated document of the Committee on the report, according to some delegations.

This is presumably because of the U.S. 'experience' in the senior officials group.

The senior officials group had been unable to agree on a report. Two drafts prepared by the secretariat were jettisoned and the November session of the CPS had only a small procedural oral report from the chairman of the group, supplemented by the summary records of the meetings of the group.

These showed that the objection to services and investment issues was more widespread within the third world than the U.S. had been trying to make out through the media, and that even several of the industrial countries gave a low priority to these issues.

At an early stage of its work, the Preparatory Committee would also have to decide on the venue and dates of the September Ministerial meeting.

The European Community, South Korea, Uruguay and Canada have each offered to host the meeting.

South Korea is however unlikely to be-chosen, since any meeting in Seoul would have to be in the first half of September so as not to clash with the holding of the Asian games.

The GATT secretariat itself is known to favour Uruguay, and the U.S. is expected to favour either Montevideo or Montreal.

The choice of Uruguay as a venue has also the support of a number of Latin American delegations, though some others within Latin America and elsewhere have-some reservations.

The Ministerial meeting, and the efforts to launch a new trade round, they note, is unlike previous Ministerial meetings.

The portrayal of the proposed new round in the western media, as similar to earlier seven GATT trade rounds, is seen as misleading.

The U.S., it is noted, wants to bring 'services' and 'investment' issues for negotiations in a new round, and has been insisting that it would not agree to a new round without these issues.

A new GATT round with 'services' and 'investment' issues would enable the U.S. to hijack the north-south dialogue on several of these issues from various UN forums to GATT, and enable the rewriting of much of the present rules and principles of international economic relations, according to some of the third world countries opposed to the U.S. move.

The net effect of the U.S. effort, if successful, would be to benefit the transnational corporations, at the cost of sovereignty of countries in regulating foreign investment and establishment of foreign enterprises on their territory.

In such a situation, the advantages of a third world Minister presiding over the Ministerial Session have to be weighed against the disadvantages of the third world country being a host to the Ministerial meeting.

In such events, they privately say, the host country concerned acquires an interest in showing 'success', and pressures to effect a compromise and show 'success' would be on other third world countries.

And this could mean pressures on the third world countries to yield on services and investment issues, which to some third world countries are very fundamental issues where it is difficult to compromise.

For several of the African countries, both Montevideo and Montreal would pose problems, since they have no diplomatic missions in those places, and would have to send not only delegates to the meeting, but a large supporting staff to help the delegation.

Some of them hence prefer to have the meeting in Geneva itself, with Brussels as a second choice.