Apr 11, 1989


GENEVA, APRIL 10, BY CHAKRAVARTHI RAGHAVAN. The package of accords reached here in the four areas of deadlock at Montreal suggest that third world countries may perhaps have gained something in relation to commitments for long-term reform in agriculture, but have given way in the other three areas.

In the area of TRIPS, the compromises they have agreed to may have some serious implications in terms of long-term development goals and objectives.

In textiles and safeguards, the decisions are essentially procedural, without specific directions on substantive issues that have bedevilled negotiations so far.

In textiles, the accord provides for beginning "substantive negotiations" (which was to have begun in 1988 under the negotiating plan) in April 1989 in order to reach agreement within the time-frame of the Uruguay round on modalities for integration of this sector into GATT.

A minor gain perhaps has been the omission of the word "eventual" before "integration".

The modalities inter alia should cover "the phasing out" of restrictions under the MFA and other restrictions on textiles and clothing not consistent with GATT rules and disciplines and the time span for such a process. The progressive character of this process should commence following conclusion of the negotiations in 1990.

While this does not meet the third world demand for commitment to phase-out the MFA, starting from the expiry of MFA-4 in July 1991, and within a timeframe to be agreed upon the accord does mention that the modalities should cover the phasing out of the MFA, but weakens it by use of "inter alia", which could leave the door open for other proposals.

The U.S. Trade Representative, Mrs. Carla Hills is on record as having told congress that the U.S. wants the present "global system" of trade in this sector, presumably meaning the MFA. to be incorporated into GATT. Then EEC Commissioner, Willy Declercq told the European Parliament, after Montreal, that the EEC envisaged MFA-4 to be replaced by an MFA-5.

The third world did not also get a provision for "freeze" on new restrictions to their exports. The U.S. flatly refused this, citing a presidential guarantee to congress to enforce the MFA vigorously, the EEC went one better and reformulated it to say that "all participants shall endeavour to improve the trade situation paving the way for integration of the textiles and clothing sector into GATT".

In agriculture, the text commits participants to negotiate principles and rules to achieve the long-term objective of "substantial progressive reductions" in agricultural support and protection sustained over an agreed period of time. The goal is to be achieved through agreed policies and measures and commitments to be negotiated an on aggregate measurement of support (AMS) or a combination of them.

These strengthened GATT rules and disciplines are to apply to all Contracting Parties, and encompass all measures directly or indirectly affecting import access and export competition.

The measures under import access will include those maintained under waivers (as that of the U.S.), protocols of accession (as of Switzerland) and other derogations and exceptions (as claimed by EEC for its common agricultural policy as a part of the Rome treaty).

Other areas to be covered are subsidies and export competition, and export prohibitions and restrictions. On all but the last the specific issues to be negotiated are also spelt out. Measures maintained under agricultural policies due to "factors other than trade policy", such as food security, are to be taken into account.

However there is agreement that special and differential treatment to third world countries is an integral element of the negotiations, that government measures an assistance in third world countries, to encourage agricultural and rural development are an "integral part of the development programmes of these countries", and that ways should be developed to take account of possible negative effects of reform process on net food importing third world countries.

The modalities for all these are to be developed over the next 20 months of negotiations as part of the work programme of the negotiating group.

The implementation of the first tranche of agreed commitments on long-term reform programme are to take place in 1991. Not later than end of 1990, participants are to agree on the long-term reform programme and the time-period far its implementation.

The short-term measures in effect call for a standstill in the area of agricultural protection. It is to commence from April 8 (when the decision was adopted) and will continue till formal completion of the negotiations in December 1990.

Participants have undertaken "to ensure" that current domestic and export support and protection levels in the agricultural sector are not exceeded, and that tariff and non-tariff market access barriers in force at the time of adoption of the decision are not subsequently intensified in relation to imports of agricultural products nor extended to additional products, including processed products.

Support prices to producers, expressed in national currencies, are also not to be raised above the level prevailing at the date of the decision. Actions are also not to be otherwise taken that would increase the current levels of support for the commodity concerned.

The issues of export subsidies and the U.S. set-aside programmes have been omitted. As worded, it could mean that while the EEC for example, cannot raise its overall levels of budgetary outlay and support for export subsidies or domestic support, it could reduce it for some commodities and increase it for others, as the EEC claims it could do, and intends to in respect of Soya. But some Cairns members already have challenged this interpretation.

There will also be a work programme to develop harmonisation of sanitary and phytosanitary regulations and measures, and for strengthening article of GATT (the general exception article including on health grounds) so that measures taken are consistent with sound scientific evidence and use suitable principles of equivalence.

This last has been an issue in the U.S.-EEC dispute over hormone treated beef imports from the U.S.

On safeguards, the agreement is mainly procedural and, operationally. provides for the chairman of the negotiating group to draw up a draft text of a comprehensive safeguard agreement as a basis for negotiations and for negotiations to begin on this basis by June 1989 at the latest.

None of the basic problems that have blocked such an agreement in the Tokyo round, and subsequently, have been tackled and guidelines given to negotiators. The major issue is the question of non-discriminatory safeguard actions. The accord merely reiterates the Punta mandate about the agreement being based on the "basic principles" of GATT, and that it should "aim" at re-establishing multilateral control over safeguards "inter alia by eliminating measures which escape such control".

Both the use of "aim" rather than a direction to "re-establish" and the use of "inter alia" leaves the door open for legitimising "grey area" measures.

In TRIPS, the text

--Recognises the importance of successful conclusion of the MTNS in TRIPS.

--Recalls the objectives in the Punta mandate about strengthening the role of GATT and bringing about a wider coverage of world trade under multilateral disciplines as well as the provisions about special and differential treatment in the general principles governing negotiations, and

--Agrees that the outcome of negotiations is not prejudged, and that these negotiations are without prejudice to the views of participants concerning the institutional aspects of the international implementation of the results of the negotiations in this area. which is to be decided by ministers meeting on the occasion of a special session of the GATT contracting parties at the conclusion of the round.

The text then provides that the negotiations in the Uruguay round "shall continue and shall encompass".

--The applicability of basic principles of GATT and of relevant international intellectual property agreements or conventions,

--Provision of "adequate" standards and principles concerning the availability, scope and use of TRIPS,

--Provision of effective and appropriate means for enforcement of TRIPS, taking into account differences in national legal systems,

--Provision of effective and expeditious procedures for multilateral protection and settlement of disputes between governments. including applicability of GATT procedures, and

--Transitional arrangements aiming at fullest participation in the results of negotiations.

Taken together, these are intended to enable the U.S. to raise as a GATT dispute the "adequacy" of patents and other rights provided by third world countries and enable the U.S. to undertake cross-retaliation. In effect this would internationalise and multilateralise its section 701 powers.

But the formulations are in language that could also create new controversies as to what they mean. They probably will when policy-makers in third world capitals, and involving more substantive ministries and domestic industries. realise what their negotiators have done.

There is also agreement that "consideration will be given" in the negotiations to concerns expressed by participants relating to underlying public policy objectives of their national systems for protection of intellectual property, including developmental and technological objectives. But this is weaker than the formulation about the issues to be negotiated.

The importance of reducing tensions in this area by reaching strengthened commitments to resolve disputes on TRIPS issues through multilateral procedures is also emphasised.

Other provisions call for negotiations to develop multilateral framework of principles and rules to deal with international trade in counterfeit goods.

There is a final provision that the TRIPS negotiations should be conducive to a mutually supportive relationship between GATT and WIPO as well as other relevant international organisations.

The failure of the third world countries to join together and black this rewriting of the Punta del Este mandate, with senior officials over-riding the decision of their ministers taken at a session of the contracting parties, puts a greater burden on their negotiators to safeguard national interests.

Much would hence depend on whether third world countries would at least now concert and stand together to make sure that their own concerns are fully reflected and provided for (including for example compulsory licensing in public interest and right to decide whether processes or products or none should be protected in any particular area).