Wednesday 24 March 1993

DUNKEL SUPPORT FOR SOME US, EC DEMANDS FOR DFA CHANGES

Geneva 23 March (Chakravarthi Raghavan) -- GATT Director-General Arthur Dunkel appeared Monday to be suggesting changes in the Draft Final Act text tabled by him in December 1991 in areas of concern to the US, and perhaps to the European Community.

Dunkel was addressing an informal and closed meeting of UNCTAD's Trade and Development Board on developments and issues in the Uruguay Round. According to participants, he mentioned only draft texts on anti-dumping, subsidies and dispute settlement.

While he mentioned these areas only as those needing further work, several delegates had the impression that in fact Dunkel was suggesting changes in the texts to win the agreement of the US and the Community.

The DFA, more popularly known among its critics as the Dunkel Draft Text (DDT), incorporated in it texts wherever the negotiators, often in small closed groups, had reached agreements.

But in areas of disagreement, Dunkel had formulated compromises of his own. Though the latter is a small proportion of the bulky 800-odd page DFA, they are crucial.

Since the formal tabling of the DFA by Dunkel, in his capacity as the TNC Chairman, and after a prolonged period of impasse and suspension of negotiations, the US and the EC, in their Blair House accord of November 1992, have agreed on changes to the text on agriculture.

But since the Clinton administration came to power, and the French election outcome where the Right has been more vocal than the Socialists in the criticism of both the accord as well as the changes in the EC Common Agriculture Policy, there is now some doubt whether the Blair House accord can stick.

Since the US-EC agreements on agriculture, in some further informal consultations conducted by Dunkel among an even smaller group than in the regular 'green room consultations', the US has come up with proposals for changes in the texts in a number of areas including on anti-dumping and changes to the dispute settlement mechanism. The European Community has also put forward changes in the subsidy disciplines which might be now favoured by the Clinton administration with its new ideology of an 'industrial policy' (to support US industry in a variety of ways beginning from R & D to production and exports).

The US proposals for changes in the dispute settlement mechanism in effect would also ensure that failure to carry out the various procedures would not be subject to challenge -- thus perhaps also ensuring the US right to pursue unilateral/bilateral measures and sanctions against trading partners favoured by the new administration and its US Trade Representative.

Interestingly, at the UNCTAD Board informal, Dunkel did not mention the other proposals for changes in the texts that came up in his consultations in December and January.

These include proposals by the US and EC (in other areas) and by India, Brazil, Mexico, Egypt, Jamaica and Sri Lanka -- apart from the Japanese and Korean positions on the agricultural text where they oppose full tariffication.

The changes which were not mentioned cover among others the areas of TRIPs where changes have been sought by the US (for further increasing global monopoly rights of its corporations), by Egypt and India for some autonomy to the developing countries in some of the areas of global monopoly protection and by India to permit countries to deny monopoly rights over naturally occurring genes.

There are also proposals for changes in the GATS (General Agreement on Trade in Services) by the United States to virtually exempt several of its less competitive sectors. In Textiles and Clothing India has called for changes to front load the integration process and make the promise of 10-year phase-out more credible while Jamaica and Sri Lanka (also favoured by US industry) have asked for a 15-year transition (against ten in the DFA). On subsidies there are also proposals for changes by Mexico and Brazil and on technical barriers to trade and sanitary and phyto-sanitary rules by the US.

There is also the US opposition now to the institutional proposals in the form of a Multilateral Trade Organization (MTO) and favouring what it calls a GATT-II -- to force all participants to sign all agreements, but ensure there is no international disciplines on US trade policy legislation or administration.

Dunkel, according to participants, did not specifically call for changes in the texts, having taken the position in the GATT and the TNC that any changes in the texts he had put forward could only be consensus.

However participants said that without actually saying so, Dunkel did imply that changes in texts in the three areas might be needed for concluding the Round and appeared to favour informal discussions and consultations -- sought by the US.

Dunkel also suggested that the mandate and objectives of the Punta del Este Declaration, launching the Round remained valid despite the many changes that had taken place in the world and world economy.

The GATT head would also appear to have noted the new US administration's announcement it would be seeking fast-track extension and went on then to make the point that he was disappointed no negotiations had been started or resumed on market access issues. He also reportedly underscored the responsibility of the major partners and appeared to imply that Japan was not pulling its weight.

But the Brazilian Ambassador, Celso Amorim, would appear to have made the point that even as it was the Dunkel text and the rules and disciplines of the trading system that would emerge were imbalanced and weighted against the Third World. But if the changes in some of the areas mentioned by Dunkel were made, it would make the text even more imbalanced.

As for Dunkel's complaint that no one seemed willing to resume market access negotiations without waiting for US fast track authority, Amorim also reportedly mentioned that other trading partners could not be expected to pay the US a double price, once for winning Congressional fast track authority and another for concluding the negotiations and the Round.

At the Dunkel 'green room consultations' at the GATT in the first week of March -- soon after it was announced in Washington that President Clinton would seek extension of fast-track authority from the Congress -- US official negotiator Warren Lavorel would appear to have said that the new administration was ready to conclude the negotiations if its concerns were met.

In effect Lavorel had suggested that US trading partners should indicate their willingness to meet US concerns over the Draft Final Act (DFA) and thus enable the administration to go before Congress and win the fast track authority for concluding the Round.

The same views were repeated a few days later by the US deputy trade representative, Rufus Yerxa, at a dinner by Dunkel. Yerxa in effect implied that assurances that US concerns would be met would help in winning Congressional fast track authority.

At the dinner Dunkel would appear to have pressed on the others to restart the negotiations and focusing on the changes in the texts called for by the US and also start the market access negotiations to ensure a 'big package' which in the US view was also necessary to get Congressional approval. 

However, other participants in the consultations rejected this, with several making clear they were not prepared to engage in negotiating and paying the US a price twice: once for the administration to win Congressional authority and the second for concluding the Round.

At the informal UNCTAD Board meeting Monday, Dunkel also suggested that he would not dramatise the differences between the US and the EC and others over the institutional questions, even though he himself favoured the MTO.

In other interventions at the Board, Argentina suggested that it was difficult to enter into negotiations on the DFA and concluding the Round on the basis that 40 percent of the trade rules would be subject to international law while the balance would be subject to domestic law.

The Argentine delegate also noted Dunkel's references to the validity of the Punta declaration but not mentioning his own DFA as such and asked whether difficulties in concluding the negotiations was essentially a problem of reaching general consensus or whether there was a more fundamental problem.

Dunkel did not apparently respond to this in his reply later, though he said he was disappointed no specific questions had been put to him.

Colombia's Amb. Eduardo Mestere commented that while the developing countries appeared to be committed to concluding the negotiations on the basis of the Dunkel text, the industrial countries were voicing more and more reservations.

The Uruguay Round negotiations began in one environment, namely, neo-liberal economic policies. But now there was a major change with the Industrial Countries favouring a Keynesian and active State interventionist policies in economics. Mestere reportedly wondered whether it was not akin to a problem of biology where an animal born and bred in one environment is faced with survival in a totally different environment. What was needed, the Colombian delegate is reported to have said, was "not political will but political inspiration" to face the new situation.

The Colombian also blasted the European Community over its banana regime which was trade-restrictive and yet being presented as a trade liberalisation measure.

In a reference to Dunkel's remark about the continued validity ofthe Punta del Este Declaration and its objectives, Uruguay cited the mandate to make the point that from this view point the negotiators had failed since n one of the objectives had been respected.

Tanzania's Amb. Amir Jamal reportedly took issue with Dunkel's views on the Punta del Este mandate and noted that the MTO was not a part of the Punta del Este mandate. He also referred to the reiteration in that mandate of the special and differential treatment to the developing countries and noted that the DFA only provided for slightly longer time-periods for the developing countries, including the least developed, to comply with the obligations.

A mere time dimension was not realistic, Jamal underlined. Jamal also reportedly questioned the new pleas for equal status for developing countries and those in transition.