Feb 29, 1993




Geneva 1 Feb Jan (Chakravarthi Raghavan) -- GATT Director-General Arthur Dunkel speaking at the Dados symposium of the World Economic Forum has been reported as ruling out prospects for concluding the negotiations by the 1 March deadline of the US fast-track authority.

But it was not clear whether Dunkel's remarks have been provoked by the US actions on steel and the prospects of heightened trade tensions or merely an acknowledgement of political realities.

With very few exceptions negotiators in Geneva, as well as many GATT officials, have been of this view since early December even when many of them did not want to say so publicly.

But this is the first time that the professionally optimistic Arthur Dunkel has publicly expressed such a view.

Earlier last week, some negotiators said that the US action this week imposing provisional duties on two billion dollars worth of steel imports from 19 countries, for alleged dumping, and reports of the Clinton administration's plans to bar EC enterprises from bidding on some US government telecommunication contracts, while they are directly issues on the Uruguay Round agenda, seem likely to raise trade tensions and make any immediate winding up of the Uruguay Round even more difficult.

On January 19, the Trade Negotiations Committee had met for a 'stock-taking' exercise and took a pause in the six-year old negotiations, while agreeing to remain 'on call' -- as most diplomats put it 'waiting for a clear signal and message' from the Clinton administration which was then due to take over in Washington the next day. Dunkel had told newsmen that the clear message out of the TNC from the 111 participants in the negotiations to President Clinton: "We are ready to conclude in the near future. Are you ready?".

Immediately thereafter, the EC Commissioner in charge of the GATT negotiations, Sir Leon Brittan had tried to force the pace in Washington by seeking an early appointment with the Clinton team. 

However, that was shrugged off, and he is now due to go to Washington next week.

Some GATT officials at that time said that the EC had kept everyone waiting for nearly a year (until it was able to agree on its own reforms of the Common Agricultural Policy) and a new administration could not be expected to be hustled and had to be given time to make its own assessments.

Last week, Brittan had come to Geneva where he met negotiators from other key participating countries, individually and groups. He had then tried to canvass the view that the Dunkel text (with the changes on agriculture agreed upon between the US and EC) should be accepted, lest pressing for other changes open the way to the US new demands and unravel the package, making conclusion of the Round more difficult. 

He however got only some mixed signals, with some key negotiators making clear that unless their concerns, were addressed it would be difficult to secure consensus on the Dunkel text. Most participants also said that the changes sought by the US (and on which the EC itself is privately sympathetic) on the anti-dumping rules would not be acceptable to the smaller trading nations.

Since then, the steel and telecommunications issues and threats and sanctions have come up.

Though the steel and telecommunication bidding problems that have now hit headlines arose during the Bush administration, and some of the actions now are a mandatory follow-up, nevertheless they could further complicate the efforts to conclude the Round.

Some negotiators caution against interpreting the Clinton administration's actions on steel imports or the threatened actions against EC enterprises on telecommunications bidding as "the signal or message" from the Clinton administration to negotiating partners in the Round, noting in this connection that irrespective of administrations, the US Congress and Commerce and Trade officials for quite some time have been using threat of unilateral sanctions to gain their point in the multilateral negotiating process.

The levy of provisional anti-dumping duties on Steel by the Clinton administration is the outcome of complaints by US steel producers (soon after the end of the earlier voluntary export restraint agreements that protected the market), under the US trade law anti-dumping processes and procedures. 

The administrative procedures and decisions, with built-in dynamics are heavily weighted against the importers. In the investigations and decisions by the US International Trade Commission and the US Commerce Department so far, the findings have been against importers in over 90 percent of cases.

The telecommunication quarrel between the US and EC relate to the Tokyo Round government procurement code and EC moves for single market and the single market directive requiring EC governments to give preference to EC sources in bidding. This too began during the Bush administration.

Trade policies, irrespective of change of administrations and governments have a continuing national bias and focus. The latest actions on steel or the warning over telecommunications, that the US Trade Representative Mickey Kantor reportedly discussed with Congressmen in a sense is a hangover.

But over time, the very large US domestic market to which everyone wants to export has made the US believe that through use of such 'leverages' it could gain its points. In the earlier stages of the Round, this was exercised to force changes in policies of other countries -- such as on intellectual property rights.

It was also successfully used to prod the EC to settle the oilseeds dispute on terms satisfactory to the US, and negotiate a deal of sorts on agriculture.

All these could also have led the new administration to show (to Congress and its domestic lobbies) that it is tough, would use 'trade sanctions' to gain in bilateral trade relations and 'persuade' others anxious to conclude the Round to yield to the US on various changes it is seeking in the draft agreements, including on such matters as rules (anti-dumping in particular), intellectual property, services etc. It could be part of the inevitable need for the new administration to get some extended fast-track authority to renew negotiations and conclude it.

If this is so, negotiations to conclude the Round could take quite some months, with unpredictable results.

But it might also make countries and major private actors to look for 'second best solutions'.

The unpredictability of the negotiations and its outcome would also be influenced by the continuing ills of the world economy owing their origins elsewhere, and the attempts of the international monetary and financial institutions, who have failed in their mandates and endeavors to bring some order into the international systems, but refuse to abandon their pet theories and ideologies and for sometime have been trying to shift the burden totally on to the trading system.

The strain on the trading system could be such that overburdened GATT system, already lacking in credibility, could 'collapse' like the Bretton Woods systems did in the 1970s, some observers fear.

In the face of these ills, and the unabashed espousal of neo- mercantilist policies by the majors, it would be difficult, these observers say, for smaller trading nations, who have much at stake in a functioning system and have been 'compromising' all along to preserve it, to stand up to the US in such a situation.

Only Japan or the EC or both standing up and refusing to negotiate under duress, and willing to give up their own neo- mercantilism, could safeguard the multilateral system and not reduce it to shambles.

But the EC and Japan too are straining the system. While both are howling against the US anti-dumping action on steel, they themselves have acted against steel imports: the EC against imports from eastern Europe and Japan against imports from China and Korea.

In one sense, the situation on trade policy front now is similar to what European governments and statesmen faced in the inter-war years on the political and security front -- when the more they tried to avoid a war and yield to the demands from Italy and Germany (under Mussolini and Hitler respectively), at the expense of third parties, the more they found the demands increasing.