8:50 AM May 6, 1993


Geneva May 6 (Chakravarthi Raghavan) -- While the European media have all but sown up the appointment of a new head for the secretariat of the General Agreement on Tariffs and Trade, and the Irish Press is full of comments and reports as if Peter Sutherland is already elected, GATT contracting parties say consultations are still continuing -- with three official candidates in the field.

The consultations are under a decision taken by the GATT CONTRACTING PARTIES at their annual session in 1986 which was intended to ensure that the process is transparent and fully democratic involving all the contracting parties.

That decision also stipulated that the consultations would begin atleast six months before the post has to be filled. This was so that capitals could be kept fully in the picture and enable a wide choice of candidates, and the subject not handled as in the past of a few handling the process in secret and deciding things.

So far the names of three candidates have been formally put forward and the Chairman of the GATT CPs, Ambassador Balkrishna Zutshi of India is conducting consultations on that basis, with individual delegations and groups of countries.

The three are: Peter Sutherland of Ireland (whose candidacy was first informally put forward by the EC, after getting the agreement of the US, then withdrawn and again fielded), Ambassador Luis Fernando Jaramillo of Colombia (a former trade minister of his country and now the permanent representative in New York and Chairman of the Group of 77) and Julio Lacarte of Uruguay, formerly his country's delegate to GATT here and currently a special advisory to the President of Uruguay on the trade negotiations.

At a meeting Thursday of the Group of Latin American and Caribbean countries (GRULA) at the GATT, it was reportedly decided that the group would maintain its two candidates.

Contributing to that decision perhaps are reports among GATT diplomats about the 'conditions' under which Sutherland would be willing to join, as well as the manner in which the 'majors' are handling the issue.

Zutshi has said that he has not been officially or formally informed of any conditions.

Before Sutherland first withdrew his candidacy, before now agreeing to reinstate it, there were reports that he had made it conditional on the conclusion of the Uruguay Round by the end of the year and the establishment of the Multilateral Trade Organization (MTO), and presumably his being named to head it and that if things did not work out, he would leave the post and go back to his private business.

He heads a major Irish bank and is connected with a number of other important private companies, including British Petroleum, Peat aviation etc, and is reported to be earning about a million dollars.

But even after the candidacy has been reinstated, reports are that the new candidate would be given a one year contract which (under standard GATT/UN common system rules) would be terminable at six months notice on either side, to enable Sutherland to quit and go back to his business if the Round is not concluded and MTO set up. There are also reports that he wants also to bring in his own team of management, whereas normally such appointees at best get a high-level special advisor or so.

It was these reports of conditionalities that in the first instance induced the GRULA to offer a panel of candidates filling the qualities the cps agreed were needed: knowledge of GATT and sufficient stature.

According to reports Wednesday among diplomats, Sutherland has sought, and has been given private assurances on it by the EC and the US, that he would be on a par with the heads of the IMF and the World Bank in terms of salaries and status.

The US which in other UN organizations insists on a zero growth budget and against staff emoluments being increased beyond the cost-of-living allowances and compensations, but have always had a double standard when it came to the IMF and the World Bank.

Now, reportedly the US is agreeable to put the GATT too in these matters on the same level as the IMF and the World Bank. The proposed MTO has provisions about relations with the IMF and the World Bank but is vague about the UN and its systems.

In 1990, Dr. Michael Irwin, a US national who joined the World Bank as a Director of Health Services Department and for a while was acting Vice-President of Personnel before quitting, in a speech to NGOs had complained of the salaries and emoluments about 25 percent more than equivalent jobs in the UN system, and most professionals and others doing less work. (Third World Economics, No 40, pp 17-20)

This was before the decision in mid-1991, when the heads of the IMF and the Bank were given increases of a little more than 20 percent (more than the cost-of-living increases) -- a decision made to match the status and salary of the IMF head with his fellow Frenchman, Attali who was appointed to the London-headquartered European Bank for Reconstruction and Development (for assisting east Europe) which was very much in the news recently for extravagance and waste.

Along with the increases to their heads, the staff too reportedly got similar increases, but it is not clear whether the executive directors (named or elected by countries and groups, but paid by the institutions) who made the decision, also got similar increases.

The GATT staff have already been looking to their being detached from the UN system rules and being brought on a par with the IMF and the World Bank through the MTO process.

Currently, the GATT in staff emoluments and conditions are dealt with as part of the UN common system. If the GATT head were to be put on the same level as the IMF and the World Bank, it would mean a salary level and other conditions of service of 20-25 percent more than any equivalent post governed by the UN common system, and also higher pension, travel and other benefits.

The IMF and the Bank earn money through their lending (to developing countries and now to east Europe too) and the staff expenses come out of these -- and thus don't figure in national budgets through assessed contributions as for UN organizations. But the GATT or the MTO would still have its budget met through assessed contributions, and thus to national public scrutiny.

Several GATT diplomats said the real issue is not the level of salary etc, important though it would be, given that the responsibilities of a head of a secretariat of an outfit like the GATT is not any more onerous or more responsible than that of other UN specialized agencies.

The real issue, they said, was the view being propagated in this regard that the GATT Director-General or of the MTO if it comes into being, would be some kind of a head of a major private enterprise (like the bank and other operations Sutherland is heading) or that he has to plan a policy and projects.

In GATT, even more than in other organizations, it is the contracting parties, who are sovereign countries to consider and settle it and not the head of the secretariat a "contracted party", one diplomat commented

Even in an MTO, the responsibilities of a head of the secretariat are quite limited, he said. As the head of an organization involving contractual obligations and rights of countries impinging on their commercial and wider economic interests, the head of the secretariat can only be that of an honest, independent broker.

There is no scope for any high-flying personality to undertake shuttle diplomacy ala Kissinger between capitals and countries to conclude the Uruguay Round or promote new policies.

Negotiators all know where thing stand in the Round in each area and what needs to be done and what compromises have to be made to reach a settlement.

If a Latin American or any other Third World national is to be spurned because their countries have strong views on agriculture or other issues (the remarks being made visavis a Columbian or Uruguay national), the diplomats suggest that this would be even more applicable to a European or an American or any of the Quad members (US, Canada, Japan and the EC).

Another question that would arise, since this would be the first time that the head of an intergovernmental organization would be coming to it from a major private sector position, would be how the conflicts of interests would be avoided and seen, by the public, to be avoided.

So far, there are cases of international civil servants on retirement moving to hold positions in the private sector -- though there have been some comments about even this -- but this will be a reverse case.

Banking, ancillary aviation services and other service sectors would be beneficiaries of the agreements and moves under the Uruguay Round. So would decisions relating to future competition policies -- whether it should be genuine policies to hit restrictive business practices or the neo-classicial ones being promoted now, namely, that in the global market place oligopolistic competition among a few benefit consumers.

Other observers said that the way these issues were being handled, and the view that these institutions are the preserve of the leading industrialized countries, would fuel the controversies and campaigns against them among the wider non-governmental groups on environment and development who have been opposing the MTO, using it as a symbol of everything that they consider wrong with the GATT trading system and the new ones in the Uruguay Round (Trips, Trims and Services) to further the interests of TNCs.