PREPCOM FACED WITH THREE DRAFTS, BUT NO CONSENSUS.

Aug 1, 1986

PREPCOM FACED WITH THREE DRAFTS, BUT NO CONSENSUS.

GENEVA JULY 30 (IFDA/CHAKRAVARTHI RAGHAVAN) – Switzerland and Colombia presented Wednesday in GATT a revised text of a draft Ministerial Declaration, purportedly commanding "broad support", but its "broadness" remained uncertain since France reportedly is blocking EEC’s endorsement.

Participants at a meeting of the GATT Preparatory Committee gave this assessment Wednesday evening, and said it was not clear what the PREPCOM could or would do.

It is due to meet again Thursday afternoon to complete its work.

The PREPCOM, which also has before it a draft from a group of ten third world nations, has so far not got down to try and evolve a single text, even with square brackets around formulations on which there is no agreement.

And the prospects are for the PREPCOM to take note of various texts before it, and forward two or three alternative drafts to the Ministerial Meeting, set for September 15 at Punta del Este.

Apart from the revised Swiss-Colombian draft, Argentina introduced Wednesday a separate draft of its own, with Amb. Leopoldo Tettamanti, presenting it as a political initiative of the government of Argentina to create "a bridge" between the text of the group of ten third world nations and the Swiss-Colombian text.

Argentina is a member of the group of ten.

The group of ten had tabled a draft of their own, confined to issues of trade in goods, and providing for decisions by the Contracting Parties (CPS) at their Punta del Este meeting to launch a new round of negotiations in goods, and taking decisions in some parallel or connected areas.

This paper makes no reference to any of the new themes sought to be brought into GATT by the U.S. and some other industrial countries.

This Swiss-Colombian text, on the other hand, has formulations within brackets on all these – services, investment and intellectual property rights.

The revised Swiss-Colombian text has cleaned up the brackets in other parts of its text, leaving bracketed formulations only on new themes and on the issue of formulating modalities for the integration into the general agreement of trade in textiles and clothing sector, now governed by the MFA which is a derogation from GATT.

The Argentine draft presented today follows substantially the same format as in the Swiss-Colombian text, but with stronger formulations, drawn from the text of the group of ten, in respect of standstill, rollback, safeguard and other traditional GATT themes.

It also has a text relating to services, taking as the starting point the 1984 and 1985 decisions of the GATT Contracting Parties for exchange of information on service issues, and for the group doing this to formulate recommendations to the CPS on whether multilateral action is desirable and appropriate.

In the draft presented, Argentina essentially has called for a decision for continuing the process of exchange of information on services, with a specific work programme aimed at clarifying several issues and doubts raised by third world countries in the exchange of information so far, and with the Secretariats of GATT and UNCTAD to service and provide technical support.

The Swiss-Colombian second revised draft, finalised Wednesday morning, includes formulations on issues for negotiations in agriculture, which had been carefully negotiated among a group of interested countries.

This group included representatives from the group of 20 third world countries led by Colombia and Uruguay, the group of nine industrials led by Switzerland, the three majors (USA, EEC and Japan), and Argentina which has otherwise been a party to an alternative draft put forward by a group of ten third world nations.

The compromise on agriculture in the new Swiss-Colombian text is itself a very weak text that would appear to rule out negotiations on the basic problems of agriculture trade – the domestic agricultural support policies of industrial countries, whether under the common agricultural policy of the EEC, or those of the U.S. and Switzerland through a waiver obtained from GATT.

It also does not mention the problem of subsidised exports in world trade, used by the EEC to dump its agricultural surpluses on the world market and depressing prices, and now being resorted it by the U.S. too, and suggest its phasing out as a negotiating issue.

On of the countries involved in the Swiss-Colombian exercise said the compromise over agriculture is "a face-saving" formula to enable EEC to support it, and thus secure wider endorsement of the others.

When the Swiss-Colombian text was finally revised Wednesday morning, for presentation to the GATT PREPCOM, it had been hoped by the sponsors that they could marshal a chorus of support, from a broad range of countries, and have the text remitted to the Punta del Este meeting.

However this process was said to be in jeopardy Wednesday evening, because of the French opposition inside the EEC, over the compromise on agriculture.

According to common market sources, the French objection is mainly to the fact that as formulated, the Swiss-Colombian text could still enable the issue of subsidised agricultural exports to be brought up and discussed in the group to deal with the general issue of subsidies.

The French insist that all the issues in agriculture should be tackled in one negotiating group, which would deal with all the problems on the basis of "the specificity of agriculture".

The Swiss-Colombian text in any event had not been expected to win the endorsement of the group of ten, who had been totally kept out of the consultation processes.

Within the PREPCOM, the efforts of the group of ten to have discussions and negotiations on the basis of their and Swiss-Colombian texts had been blocked, with the demand that the ten should give a prior commitment to "take on board" in the new round the new themes.

The ten have been objecting to the new themes being on the agenda of the new round, arguing that the only way these themes could be brought into GATT would be through the process of amending the general agreement.

The sponsors of the Swiss-Colombian exercise had been holding consultations outside to clean up their paper, leaving only a few key issues for political decision of Ministers.

They had hoped to get a quick endorsement of their paper from the "large majority" of the CPS in the PREPCOM, other than the ten, and either pressure the ten to withdraw their opposition or have the two papers remitted to the Punta del Este Meeting.

Switzerland and Colombia, in their forwarding letter to their latest revision, said they believed it had "broad support to be the basis for discussion by Ministers", and requested that their text should be forwarded to the Ministerial Meeting as "the basis" for the consideration of the Ministers.

GATT sources said Wednesday that the U.S. and Japan had supported the Swiss-Colombian draft, while the EEC promised to provide a response Thursday.

These sources projected the view that a number of other third world and industrial countries spoke providing support to the Swiss-Colombian draft, though with qualifications and reservations.

These sources also said that members of the group of ten however said that since they had not been consulted, they could not agree to the Swiss-Colombian draft alone being forwarded to the Punta del Este meeting.

Uruguay, which with Colombia had put together the group of 20 third world nations behind the Swiss-Colombian draft and has been involved in the intense consultations, is reported to have stressed its situation as a host country and chair of the Ministerial meeting, and hence not being able to endorse any particular text, when the meeting could be faced with more than one text.

Other participants at the PREPCOM said that ten countries, of whom only two were from the third world, had actually said they could cosponsor the Swiss-Colombian draft.

These reportedly were: Switzerland, Japan, Nordics (four), Canada, and Colombia and Chile.

Ten others – U.S., Hungary, New Zealand, Zaire, Hong Kong, South Korea, Turkey, Uruguay and Romania – reportedly gave support to the paper, while Israel did so with reservations over the formulation on safeguards (which omits reference to the MFN article in GATT).

About eleven (including Colombia, Zaire, Mexico, Chile and Romania) felt the Swiss-Colombian draft should be the sole basis for consideration at the ministerial meeting.

A number of countries opposed the endorsement. These included Brazil, Nigeria, Gabon, Nicaragua, India, Egypt, Tanzania, Zimbabwe, Cuba, Peru and Yugoslavia.

Apart from the EEC which has put off its comments till thursday, a number of countries reportedly remained silent.

These reportedly included the five Asian countries, Australia (which has reservations over the compromise n agriculture), Jamaica, Pakistan, Bangladesh, and Sri Lanka.

Brazil, supported by the members in the group of ten, reportedly stressed that they were faced with a revised text just 24 hours before the PREPCOM was to wind up, and were being asked to endorse something when they had not been consulted before.

While they had been willing to have full and transparent discussions inside the PREPCOM on the basis of their own and others’ papers, such discussions had been blocked.

The GATT Director-General, Brazil is reported to have said, should at least now initiate a process of discussion or negotiation to evolve some compromise and consensus.

While Switzerland and Colombia reportedly sought to counter the Brazilian complaint and spoke of the wide consultations they had held, Canada reportedly said that consensus was not the only way to take decisions in GATT, referring presumably to the provisions in GATT for majority voting and decisions by the GATT CPS.