9:10 AM Mar 15, 1995

SUTHERLAND TO CONTINUE AT WTO TILL END APRIL

Geneva 15 Mar (Chakravarthi Raghavan) -- With the election of a Director-General of the World Trade Organization, still in deadlock, but expected to move to a conclusion over the next couple of weeks, the WTO's head, Peter Sutherland, whose term is expiring Wednesday, is expected to be asked to continue in office till April end.

Sutherland is reported to have been approached and his agreement obtained.

The Chairman of the WTO General Council is expected to propose and get the approval of the informal heads of delegations meeting for this interim arrangement.

But in what outsiders -- those outside the close, incestuous circle, of trade diplomats and bureaucrats -- see as a farcical and undignified process, as of noon Wednesday the European Union was yet to give its formal consent to Sutherland's continuance till end April.

As of Wednesday lunch time, the EU was saying that it was still to get the okay from its members -- but it was clear to others that the agreement would come in the afternoon meeting of heads of delegations, with the EU making it appear to be a big concession by it.

Before the Wednesday morning consultations, Sutherland had been asked (by the EU and by WTO General Council Chairman, Amb. Kesavapani of Singapore) and had agreed to this arrangement, other trade diplomats said. But despite it, the EU held out on giving its okay at the informal consultations.

After the Wednesday morning consultations, US ambassador Bruce Gardner said Washington needed some more days to take a decision on the successor to Sutherland and while nothing was ruled out -- choice between the two remaining candidates or even an outsider -- the process was "trending" to a consensus.

Gardner also said that everyone agreed that Sutherland should be requested to continue till end of April, and that the EU was to convey its position by the afternoon heads of delegations meeting.

According to other trade diplomats, Washington and Brussels were discussing the question (of Ruggiero's consensus election) but it was tied up with other questions including the future process for filling the post.

The EU for some time had been telling Mexico and Korea (who had fielded their own candidates, arguing that it was time, after 40 days, for the trade system to have a non-European, and from the developing world) that they would not insist after a 3-year term for Ruggiero on another European.

While the EU has been saying this in private, or to media, they have not taken a formal position on this. In any event, as one trade diplomat said, there was nothing to prevent the non-EU Europeans to field another candidate at that time.

In decrying the impasse and public wrangling, trade diplomats, including many from the developing world who seem to have a short memory, have been talking about need for a different process.

Many Third World diplomats saying this seem to have forgotten that it was at their initiative, and in an effort to make the organization more transparent and democratic (rather than allow the US and the EU to broker private deals and thrust it upon others, as was done in the case of the election and re-elections of Sutherland's predecessor Arthur Dunkel).

It was this, and the way that Dunkel seemed to side with the US and Europe and against Third World interests and encouraging manoeuvres before the launch of the Uruguay Round (including the virtual break-up of the developing country group) that Brazil (as part of the deal for Dunkel being continued for another three years in 1986) proposed for the future a more open and democratic process of selection of the GATT's head and his two deputies.

It was also put into practice in the election of Sutherland who, though proposed by the EU and the US, was nominated and had to run against Uruguay Amb. Lacarte, but chosen finally in consultations conducted by the then chairman of the CPs, Amb. B.K. Zutshi of India.

On choosing Sutherland's successor, with the US reportedly saying it may need "ten days" to make up its minds on the two remaining candidates (Italian Renato Ruggiero and Korean Kim Chul-Su), the two prolonged meetings of a key group of delegations, Tuesday night and Wednesday morning, argued back and forth on interim arrangements -- asking Sutherland to continue, and for how long.

Tuesday night when it became clear that the US had not made up its mind, and would not for some days, non-EU delegates suggested that Sutherland should be requested to stay on till 30 June (as per his original contract when named as GATT Director-General in 1993) or until a new candidate is chosen by consensus, whichever is earlier.

The EU would not agree and suggested Sutherland's continuance for "30 days".

The EU is explaining to others that without such deadlines (and the prospect of leaving the WTO without a head), the US would prolong the process again and no decision would be reached.

The EU believes that the US now has no other option except to agree to the election of the EU candidate Ruggiero and that when it does, Korea would withdraw its candidate to enable a consensus.

But the EU's "faith" that deadlines produce decisions is contrary to experience in the former GATT and now the WTO. Successive deadlines were set and missed in the GATT before and after the launch of the Uruguay Round at Punta del Este in September 1986; not even the target of establishing before end of 1986 a Trade Negotiations Committee to run the negotiations could be achieved. Deadlines were also missed for more substantive agreements.

On the selection of a WTO head, the original deadline was the meeting of the GATT Contracting Parties in December 1994 -- so that as envisaged in the WTO agreement the GATT D.G. would become also the head of the WTO until the first Ministerial meeting.

Ultimately, Sutherland (who had repeatedly said he did not want the WTO job) had to be requested to continue -- after an unseemly haggling between the EU and others about his term. A 15 Feb. deadline for choosing the successor was set, and when this was missed an end of February and then 15 March (the date for Sutherland to lay down office) was set.

Everytime, the EU got a deadline, the US just allowed deadlines to go by.

As one trade observer put it, the EU is unable to prevail over the US, and is trying to prevail on other contracting parties and Sutherland (in weekly and fortnightly temporary extensions), and telling media that the EU cannot agree to Sutherland's continuance.

The entire episode has shown that the two majors have no intention of respecting the rule-based system or setting healthy precedents when it comes to their own interests and even 'face'.

Trade officials of other countries, having a stake in a functioning rule-based system, expressed their concern that the two majors were continuing to act in total disregard of the rules and of the standards that ought to be set -- not merely over this wrangle over the head of the WTO and the interim arrangements until a consensus election, but in other institution arrangements of the WTO, citing as examples the double standards being displayed, for example, in the functioning of the Textile Monitoring Body and the Dispute Settlement Body.

For the latter they want to provide for full disclosure of information (such on investments or holdings and other interests likely to create conflict of interests) from panellists, members of the appellate body and secretariat officials staffing such bodies. None of these are required under the WTO agreement or its rules, but are to be adopted as codes of conduct.

But for the Textile Monitoring Body (TMB) set up to monitor and administer the Agreement on Textiles and Clothing (ATC) and settle disputes, the EU and US are trying to bend the rules requirements about members of the TMB acting in their ad personum (personal) capacities and functioning without taking instructions from their governments or their textiles and clothing lobbies and trading interests.

Learning from the experience of the Textiles Surveillance Body (TSB) of the Multifibre Agreement (where the industrialized country members acted in concert with their industry interests) the ad personum requirement was put into the ATC. Now the EU and its supporters are asking the developing countries to be "realistic".

While speaking about need for 'transparency' and 'credibility' of the DSU system, the same countries argue that the TMB's "effectiveness" should not be sacrificed for "transparency", nor should the TMB have time limitations for reaching consensus decisions.