QUESTION MARK OVER NEW TRADE ROUND IN GATT.

Jun 28, 1986

QUESTION MARK OVER NEW TRADE ROUND IN GATT.
GENEVA, JUNE 26 (IFDA/CHAKRAVARTHI RAGHAVAN) – In its annual review of activities in 1985, published on June 25, the GATT Secretariat gave the pride of place to a section on the preparations for launching a new trade round, and titled it "strengthening the trading system – towards a new trade round?".

When the GATT Preparatory Committee for a new trade round, chaired by GATT Director-General Arthur Dunkel, ended another round of formal and informal meetings Thursday afternoon, little had been settled, and there were question marks on almost everything connected with the September GATT Ministerial Meeting.

The PREPCOM, set up by a decision of the GATT Contracting Parties last November, has been asked "to determine the objectives, subject matter, modalities for and participation in the Multilateral Trade Negotiations (MTNS)", and prepare "by mid-July 1986 recommendations for the programme of negotiations for adoption at a Ministerial meeting to be held in September 1986".

Excepting for a decision to hold the meeting at Punta del Este, Uruguay, from September 15, and for the Foreign Minister of Uruguay, Enrique Iglesias, to preside over the meeting, the PREPCOM, during the six months of its work so far, has been unable to make any progress, procedurally or substantially.

It has not even been able to decide whether the Punta del Este meeting will be of GATT Contracting Parties (CPS), as the November 1985 decision implies, or an ad hoc meeting of Trade Ministers.

The PREPCOM is due to meet again on July 7, and already there is talk that "mid-July" does not mean July 125, but could be fourth week of July.

The GATT spokesman claimed Thursday morning that the PREPCOM, meeting formally and informally this week, had shown "a sense of urgency lacking previously", that there were "signs of movement" and that "complete texts" for a draft declaration were being examined, and that the committee had now two texts, one by a group of nine industrial nations, and the second by a group of ten third world countries.

But late Thursday afternoon, Brazilian delegate, Paulo Nogueira Batista, flanked by his colleagues from the group of ten, underlined that so far there had been no agreement even on the nature of the meeting at Punta del Este, and without this "we can’t even issue invitations for the meeting".

Besides Brazil, the group of ten comprises Argentina, Cuba, Egypt, India, Nicaragua, Nigeria, Peru, Tanzania, and Yugoslavia.

"There is a very high probability of the meeting, and of its being a Ministerial Meeting of the GATT Contracting Parties (CPS) as implied by the 1985 decision", Batista said.

"But as to its launching a new round, there is a high probability "if it is on goods and we have firm commitments on standstill and rollback", he declared.

The U.S. and its supporters, who have been pushing for the Ministerial meeting and for its launching a new GATT trade round, are unable to make up their minds on the nature of the September meeting, and want to be assured by the leading third world nations that they would agree to "take on board" at Punta del Este the new themes (services, investment rights, and intellectual property issues), and include them on the agenda of a new round.

The leading third world nations opposing these new themes inside GATT have so far given no sign of their abating their objections.

Some west European sources say that because of this the U.S. and its supporters are thinking of an ad hoc meeting at Punta del Este, where the OECD countries and those of the third world supporting them, could issue a declaration and launch negotiations, including on services.

But as a recent SELA high level meeting noted one of the basic objectives of the industrial countries is to expand their access to third world markets "which are the markets with the greatest growth potential".

This means that unless the major third world nations with very large domestic markets join, the objectives of the industrial countries could not be achieved, and any efforts by them to create an "GATT-plus" with "additional rights and obligations in goods and services for its participants" would also mean end of GATT and with it the payments system.

GATT sources Thursday sought to give the papers of the G-9 and G-10 to some status, and to project the paper of the nine as a "middle of the road approach" between the extremes of the two arguments over a new round.

But Batista noted at his press conference that the paper of the G-10 was a formal GATT document, while that of the nine was an informal one, incomplete and with some square brackets (showing the sponsors were not agreed on them), and it was not clear even whether these would be tabled formally.

In the informal consultations, Batista said, several delegations had commented on the two papers, no one had said that the position of the G-10 was "extreme", but some countries had wanted "a middle road" between the G-9 and the G-10.

GATT sources had earlier said that the "common reaction" in the informal consultations was that the Secretariat should produce a text, but later clarified that only one or two third world countries had suggested this, and none from the Group of 10.

According to some third world participants, the industrial countries and one or two third world countries had been asking the Secretariat to present its own paper, but the Secretariat had been hesitant since the leading third world protagonists have been cool to any Secretariat initiative.

According to GATT sources, the paper of the ten was "biased towards the interests of the developing countries", and that in the informal consultations there was considerable criticism of the paper of the nine for its "looseness" on agriculture and its failure to deal with the interests of third world countries.

The Community was reported by these GATT sources as showing willingness to take the paper of the nine, and not of the ten, as a basis for discussion, while the U.S. in addition saw the G-10 paper as "imbalance".

The U.S. was also reported as being willing to see some issues (safeguards, dispute settlement, and counterfeit goods trade) being settled in the new round ahead of others, but rejecting any partial launch of a new round as unacceptable.

In their formal paper, the group of ten have listed a number of issues in trade in goods where preparations have advanced to enable approval by Ministers of "a programme of negotiations", while other areas of trade in goods would require further preparation before launching negotiations.

The spokesmen for the Asian and South Korea, GATT sources said, had made detailed comments on the paper of the nine, implying that the G-10 paper had no support.

Asked about the attitude of other third world countries to the paper of the G-10, S. P. Shukla of India had told the press conference that at the informal session there had been "favourable comments" on its various elements from a number of third world delegations.

The major objective of the new round being formulated as "preservation of the GATT", and the view that the launching of a new round was not an end in itself, had received wide support of the third world countries, Shukla said.

Other third world participants in the three-days of informal talks this week said that Brazil Thursday had made some detailed comments on the paper of the nine, and had said that "a lack of balance pervaded the entire paper".

The paper of the nine, Brazilian delegate Batista is reported to have said, took into account "mainly and exclusively" the interests of the industrial countries and the major trading nations among them, and gave more weight to non-GATT issues than to the real issues before GATT.

The G-9 paper was "extremely timid" on the real issues before GATT, and the wording of the declaration in the G-9 paper was "vaguer than at any previous GATT declaration launching a new round, vaguer even than the 1982 GATT Ministerial Declaration which had merely set the GATT work programme".

The paper of the nine had also been vague on the nature of the meeting, leaving the implication that its sponsors wanted and ad hoc meeting that would facilitate "bypassing the rules and regulations of the GATT"

"In the future", Batista was reported by some as having said, "we should avoid taking decisions to convene "grey area" meetings not foreseen in GATT rules. We have enough problems dealing with ‘grey area’ trade measures, without having to deal with grey area meetings"; Batista is reported to have emphasised.

In their comments earlier, Philippines for the Asian was reported to have spoken favourably of the G-10 paper, excepting for its provision on rollback and phase-out of the MFA regime within three years, while Chile had supported the G-10 formulation on MFA and textiles and clothing trade.

Batista and his colleagues told newsmen that form the third world viewpoint of preserving the GATT system, even if the Punta del Este meeting merely succeeded in standstill and rollback commitments and negotiating a safeguard agreement, it would be a tremendous success for GATT.

But the G-10 had taken a positive approach and had made clear they were prepared to negotiate on other GATT problems in the area of trade in goods, if these questions were adequately dealt with, and provided there were prior commitments on standstill and rollback, reinforced by a safeguards system in GATT.

"The main problems before GATT are the GATT problems in the area of trade in goods, and it is not correct to say that the only trading issues are in non-GATT areas, and ask U.S. to deal with them at Punta del Este", Batista declared.

The GATT CPS in 1985 had taken a decision on services, separate from that on preparations for a new round, namely, for continuing the process of exchange of information within the Jaramillo group, and only when that process was finished and the GATT CPS decided that it was appropriate to have multilateral action on services, the question of where and what should be negotiated could arise, Shukla added.

The Jaramillo Group had not even been able to formulate a definition of services, "and we cannot be asked to agree to negotiations without knowing what ‘services’ are and what was to be negotiated", Batista declared.