Nov 7, 1988

HECTIC MEETINGS AND CONSULTATIONS TOWARDS MONTREAL.

GENEVA, NOVEMBER 4 (IFDA/CHAKRAVARTHI RAGHAVAN)—With the Montreal mid-term Ministerial review meeting of the Uruguay round Trade Negotiations Committee just four weeks away, the various negotiating groups have been holding hectic formal and informal meetings to agree upon reports and possible recommendations.

However, while there are efforts to put together a "package" of early agreements for Montreal, so far there has been no progress towards agreements for early accords in tropical products, the only area of negotiations specifically identified for such action by Ministers at Punta del Este.

The 14 negotiating groups in the GATT MTNS covering goods have to report their outcome to the Group of Negotiations on Goods (GNG), which is due to meet november 16-18.

The Group of Negotiations on Services is meeting this week, and will be reporting directly to the TNC.

Consultations, formal and informal, in all the groups are aimed at producing agreed texts that the chairmen of the negotiating groups could present, containing a factual survey in part one and recommendations for future orientations of work in a part two on which Ministers could agree upon.

After an informal meeting of a select group of Trade Ministers in Islamabad in October, it was reported here that there was a general view that Ministers at the Montreal meeting should help maintain the momentum of negotiations.

The Islamabad meeting was unable to reach any understanding on any of the negotiating areas or on priorities, but there would appear to have been a widely shared view at Islamabad that there should be no forced consensus at Montreal.

According to third world participants, judged by the attempts of individual chairmen of some of the negotiating groups (who have been producing informal texts, mostly with the help of the secretariat) and of negotiators for leading industrial nations, efforts to force a consensus are becoming visible.

Last week, for example, the chairman of the negotiating group on the Functioning Of the GATT System (FOGS), Mr Julius Katz of the U.S.A., reportedly made such an effort to push through a viewpoint favoured by the united states and the secretariat.

However, he met with so much resistance from a broad spectrum of third world nations, that ultimately he had to agree to put forward a text, on his owns authority, but negotiated informally, including within square brackets all the opposing viewpoints.

One third world participant noted that with more than three or four formal and informal meetings and consultations every day, and with few third world delegations having more than two bodies to field, all their attention and energies are forced to be concentrated on "damage control" rather than "positive achievements".

Another participant said that while the industrial nations are coordinating their strategies and tactics, third world nations appear even afraid to meet among themselves, either here in Geneva at level of diplomats, or in some third world capital, as the south commission recently suggested at Mexico.

This participant noted that in the months before Punta del Este, when the U.S. and others had managed to split the third world countries, a group of ten or 12, led by Brazil and India, used to meet regularly and coordinate their strategies and tactics, in confronting the U.S. and others.

To counter this, and avoid confrontation, a number of third world and industrial nations joined hands to propose compromises more acceptable to the U.S.

But now, the participant said, the only "group" is the one put together by Canada, to put forward texts for Montreal, reflecting U.S. viewpoints and needs, and identified only as "on behalf of a number of countries".

Another participant noted that in some negotiating groups even part one of the report, which is intended to be factual and non-controversial, is proving to be difficult with blatant attempts to reflect the views of the U.S. and other leading industrial nations and omission or distortion of the views of the third world countries who disagree with such views.

In tropical products group, for example, while the views of industrial countries about "burden sharing" and "reciprocity" had been reflected in an informal draft, the uniform views of third world countries that the "offers" for liberalisation by the industrial countries were "inadequate" and would not enable convergence of views had not been reflected.

Similarly in the group on GATT articles, the viewpoints of the U.S. and other industrial nations on the need to review and revise the special provisions relating to third world countries and their balance of payments problems had been highlighted while ignoring totally views of third world countries opposed to such negotiations.

But more substantively, the overall strategy of the industrial nations, and particularly the majors, is now becoming clearer, according to participants.

While they have serious differences among themselves - such as over agriculture as between the U.S. and EEC, or Japan’s import policies and disputes with U.S. and EEC - all of them appear to have a common front against the third world participants.

This common front, one participant said, would appear to involve efforts to focus the attention of the Montreal meeting an a few items of interest to them, and get some substantive results, while pushing under the rug controversial issues in other areas, including those considered by the third world countries to be of vital priority to them.

Thus, apart from lack of actions on tropical products, there are also attempts to avoid any substantive discussions at Montreal on a fundamental issue to increase GATT credibility, namely a comprehensive safeguards agreement, or negotiate an end to the managed trade in textiles and clothing by bringing it under GATT disciplines.

"There is also an apparent ‘international division of labour’ amongst the four (Canada, EEC, Japan and the U.S.), with each picking up one or two subjects to push the pace in individual negotiating groups, and with the other three providing support", another third world participant commented.

Thus the U.S. is pushing for some concrete achievements at Montreal on services, and the EEC on TRIPS. In both cases the effort is to reinterpret the mandate and commit ministers to a line of negotiations and agreement.

In the area of services it is to agree on an overall multilateral framework providing for "national treatment" and "right of establishment" for foreign service enterprises, but without defining what "services" would be covered or what "trade" in them would be.

In TRIPS, the EEC is pushing for "understanding" at Montreal that TRIPS negotiations would cover establishing substantial norms in GATT on intellectual property rights, and for GATT enforcement procedures to settle disputes in this area, traditionally seen as one within jurisdiction of states and their courts for settling civil litigation and disputes.

In the area of FOGS, all of them want to set up a trade policy review mechanism, with wide powers for the mechanism and for the GATT secretariat, going beyond the GATT obligations, as also a GATT-IMF-World Bank coordination to exercise greater "conditionally" on third world countries.

All these are being sought to be pushed on the ground that the U.S. economy will slow down, if not go into a recession next year, and that whoever wins the white house next tuesday, the new congress will be more protectionist, and that these tendencies could be countered only through demonstration of progress at Montreal and increasing the credibility of GATT as a trade policy institution.

Some third world participants note that before Punta del Este too, the protectionist outlook of congress and slowing down of the world economy as well rising tide of protectionism was used to push for the launching of a new round.

The argument was that governments would resist protectionist pressures, and undertake other macroeconomic policies that impact on trade (monetary and financial imbalances and exchange rate variations etc and find solutions to the debt crisis).

Two years after the launching of the round, protectionism has only increased, macro-economic policy coordination is so fragile as to be non-existent in a substantive way, while the third world peoples continue to be squeezed in the name of "adjustment" to service their debt.