7:09 AM Apr 22, 1993


Geneva 22 Apr (Chakravarthi Raghavan) -- The Chairman of the GATT Contracting Parties, Amb. Balkrishna Zutshi of India, is reported to have told the group of Latin American and Caribbean countries (GRULA) in the GATT that so far no one has officially given any names as candidates for the post of GATT Director-General.

The term of office of incumbent Arthur Dunkel ends in June, and Zutshi officially started consultations with the contracting parties, as required under the procedures, for choice of a successor to Dunkel. In February, Zutshi had advised all cps to give him any nominees so that he could start consultations on that basis, and gave end of March as a deadline.

But so far he has received no names officially, Zutshi reportedly told the Grula group. He is similarly meeting the informal group of developing countries in the GATT Friday to convey the same message.

Some sources at the Grula meeting, said that if no name came up or no consensus around that name was possible, Dunkel himself would be asked to continue in office for another year or so.

However, it is said that the Americans and possible the Europeans too, are opposed to it.

For the Americans, it is now particularly embarrassing to reopen negotiations on several parts of the Dunkel text of the Draft Final Act. The then US ambassador to GATT, Rufus Yerxa who is now the deputy USTR in Washington participated in many of the informal discussions within a small group that led to the formulation and tabling of the DFA.

And while it is a text that the US has not officially accepted, and even in January 1992 had raised some questions, in some of the areas that the US now wants to reopen, GATT sources said that the US had agreed to the texts ad referendum.

The Grula group is to meet again Friday to discuss the Dunkel succession issue.

But sources within the group said, after the Thursday meeting, that though no official names have been suggested, both the US and the European Community, at the level of US Trade Representative Micky Kantor and the EC Commissioner, Leon Brittan, are informally pushing the candidacy of former EC Commissioner, Peter Sutherland of Ireland, currently heading a private sector airplane leasing company.

Sutherland, according to these sources, has said he would take up the post of GATT Director-General for the successful conclusion of the Uruguay Round, with the implication that his continuance would depend on the acceptance of the proposed Multilateral Trade Organization and its coming into being.

The US has opposed the MTO and any organizational structure for the post-Uruguay Round institutional arrangements, and has proposed a socalled GATT-II. Apart from the name and implications of choosing one for the other -- in terms of the public at large -- there are some questions about the binding nature of the agreement and how far the US would give up its national decision-making, both of substance and procedure in the area of trade policy.

But whether an MTO or a GATT-II, the secretariat would be common and from the secretariat empire-building, neither would make a real difference.

The US and EC, according to these sources, are backing the view that Sutherland should be appointed for the 6-9 month period for concluding successfully the Round.

Several Grula members though have taken a critical view of such ideas.

A few of them even suggest that the US and EC, whatever their public postures, if the US might even want to end the negotiations without an agreement, and immediately launch a new Round with their own agenda which would include environment, but also labour and social standards.

Also, while President Clinton is seeking extension or rather new fast-track authority, there is every indication that Congress would attach other conditions: re-enact a "Super 301", purportedly to be used against Japan but once enacted could be used against any others, and more easily the developing world, and commitment that the conclusion of the Uruguay Round would involve commitment to a new round on environment and social issues.

The President of the EC Commission Jacque Delors and President Clinton have both spoken of this.

Such a development, whether the Uruguay Round is formally concluded or not, would make a complete hash of claims of developing country negotiators (here and in capitals) who are pushing the Uruguay Round agreements and the MTO on the basis that it would establish a rule-based system and prevent unilateralism.

Some of Grula members in taking a negative view of the idea of appointing Sutherland or anyone else for a short period to conclude the negotiations, note that whether the Round is successfully concluded or not, GATT would still need a person to head the secretariat and, from this perspective, any candidate should be chosen and agree to a two-year contract renewable after two years.

While nothing would prevent a candidate coming in for two years and resigning if the Round is not concluded at the end of the year or if it is concluded without the MTO, it would be lacking in good faith if a candidate is chosen knowing his position, and he comes in and takes up a two-year contract on the basis of quitting at the end of the year.

But with so far the developing countries having no other alternative candidate behind whom all could unite, the US and EC appear to have a free hand in continuing their manipulation of GATT for their ends.

In the meanwhile, the US and the EC appear to have agreed to limit their bilateral dispute over government procurement, but whether this would be sufficient to bridge their differences and re-start and conclude the Uruguay Round is not clear.

The issue of 'government procurement' and the government procurement code, a plurilateral agreement under the Tokyo Round, is not actually on the agenda of the Uruguay Round, though the negotiations on this have gone on among its small number of signatories on the sidelines.

Also the US, under the Bush administration, had repeatedly said that a successful conclusion of this issue had to be parallel with the conclusion of the Uruguay Round.

The current dispute between the US and the EC over the EC single-market directive in this area, providing for a preference by all EC states to EC companies in government procurement, is essentially a dispute over the current code.

The US has a more protectionist 'Buy America' law, and has actually blocked in the Tokyo Round Government Procurement Code committee the adoption of a ruling against it on an EC complaint. But it has been trying to block the EC Commission directive which, the EC views as less protectionist than the 'Buy America' law.

In terms of the future, while the EC has been trying to bring under any procurement rules (and any of the agreements in the Uruguay Round) actions by the various States, and wants any US-EC agreement to throw open government procurement to each other's enterprises to embrace actions by the US States, the US wants to equate the obligations of its States with those of local authorities in the EC.

In the effort to avoid a 'trade war' -- which, despite the media reports, many observers think is less likely here than in other areas -- the two have now reached agreement to open each other's markets in government procurement to services and electrical sector, but not the telecommunications.

On this last, the telecommunication sectors whether state-owned as in Europe or in private hands as in the United States (and British Telecom falling probably in between), are virtual national monopolies and the distinction between the behaviour of the state and private actors is a phony one.

The unresolved dispute on the telecommunications sector and government procurement though would have some effects on the Uruguay Round and the telecommunication sector where the issue of 'market access' through initial liberalization commitments have to be solved once the Uruguay Round resumes.

It is apparent that both sides would try to keep their differences under control, but keep up trade tensions to gain advantage, teetering on the brink but not actually going over it and plunge into a trade war.

While the two constantly speak about the dangers of a trade war (with the media playing up the issues), and try to stare each other down and make the other blink, in fact a trade war and the Great Depression ala the thirties, on which economic historians are still disputing which is the cause and which the effect) is not seen as very realistic.

This is because the high level of investment/production penetration by the TNCs, the TNC dominated intra-industry trade and the oligopolistic competition and neo-mercantilism of the major Industrial Countries which has replaced the Adam Smith-Ricardian views of the market and free trade and competition.

In this perspective, both have problems with each other, want to prevail over the other, try to seek alliances of sorts against each other within the developing world but having no compunction about sacrificing the interests of their alliances and in the final analysis, joining hands against the developing world and to some extent against Japan which is still trying to straddle both sides of this economic/trade equation.