SUTHERLAND HAS GATT IN THE BAG, BUT WHAT GATT?

5:33 AM Jun 8, 1993

SUTHERLAND HAS GATT IN THE BAG, BUT WHAT GATT?
Geneva 7 June (TWN) -- After a informal meeting of heads of delegations of the GATT CPs Monday evening, many leading delegations were confident that the selection of Peter Sutherland as Director-General of GATT would be completed by consensus by Wednesday.

The Chairman of the CONTRACTING PARTIES, Balkrishna Zutshi of India, said after the meeting that he would still be conducting bilateral and plurilateral consultations on the issue, but that everyone at the meeting appeared agreed and confident that a choice could be made by consensus on Wednesday.

(According to an AP-Dow Jones report from Stockholm, Sutherland, Chairman of Allied irish Banks PLC, who was attending an 'International Monetary Conference' at Stockholm. said he was optimistic he will be named Wednesday as GATT D.G. though he wont's be in Geneva for the CPs meeting but in Dublin instead)

A Special Session of the CPs has been convened for Wednesday afternoon for this purpose, with another heads of delegations meeting expected to precede it on Wednesday morning.

At the meeting Monday, El Salvador, acting as the coordinator of the Group of Latin American and Caribbean countries (GRULA) said the group was now presenting a single candidate, Uruguay's Julio Lacarte-Muro.

Earlier in the morning, at the meeting of the Grula group, Colombia announced that it was withdrawing the candidature of Luis Fernando Jaramillo, leaving only Lacarte in the field.

Several delegations who reportedly spoke at the informal heads of delegations meet praised the qualities of both Sutherland and Lacarte and hoped a decision could be reached by consensus. Japan, so far a hold-out, is reported to have said that while it was yet to make a decision, it was inclined in the direction of Sutherland.

No one outside of the Grula specifically supported the choice of Lacarte, and none had indicated privately even to Zutshi that they would support him, one Third World participant said.

While some among the Europeans and their supporters in the GATT secretariat were saying Tuesday that "the Latins have made their point, but that it is time for them to withdraw and allow us to get on with the business", others say the problem is how to enable Lacarte to withdraw gracefully and whether a way could be found to give him a status or position.

Many delegations including from the Latin region privately agreed that if there were a vote Sutherland would win, but that no one wanted a vote, but the GATT's consensus process to work.

While no decision on the choice of a successor was reached, discussions on other related questions seemed to point towards a decision by consensus.

While the 1986 decision on selection of a DG called for a initial four-year term to be extended by another four years, the present view is to appoint Sutherland as the new DG for a two-year term and, depending on the outcome of the Uruguay Round and the institutional arrangements, name the person for an additional six years.

The salary and allowances of the post would also be increased -- from the present incumbent's 181000 and odd dollars to 190000, and the representation allowance of Sf 65000 to be increased to US dollars 65,000.

"But this will all be personal, and no question of equating the salary and post to that of the heads of the IMF and the World Bank, or opting out of the UN system and thus increasing the emoluments of the entire staff," one Third World diplomat said, voicing the concerns of many that any such decision would increase the GATT budget (and their own contributions) by 9-10 percent.

The CPs, as part of the deal for appointing Sutherland, are now expected to decide to have three top management posts (three Deputy Directors-General) instead of the present two, and with one deputy's post for a person from an industrialized country and the other two from the developing world.

The candidates for the post of three deputies have to be proposed by the Director-General (after consultations) and approved by the GATT Council (also be consensus).

The Latin Americans want to garner one of these posts, and a number of names from the Grula countries that have been active in this election process has been mentioned in the corridors.

Japan too has been reported as having an eye on one post for its national and its holdout so far on Sutherland is said to be related to this.

However, the US-EC "deal" in picking on Sutherland also appears to involve appointment of Warren Lavorel, till now the chief US official negotiator, to that post to succeed Charles Carlyle, another US national.

And developing countries say there is no way they would agree that three of the four top posts could be occupied by nationals from the three major entities.

In indicating it was leaning towards Sutherland, Japan is reported to have spoken at the informal meeting Monday on the need for geographic representation and balance of interests being reflected in the top management.

Privately, Japanese sources have been complaining, and sharing their concerns with many developing countries, as to what kind of a orientation would be provided to the future GATT -- with an EC national and former EC Commissioner as GATT D.G. and an American who has been involved in pushing American views and interests in the GATT and Uruguay Round negotiations over the last several years as a deputy.

Several developing country delegations who sympathise with this view however say that this was a battle to be fought between Japan and the US as to whether the US has a "right" to the second job or should give way to a Japanese.

Last week, Sutherland met a number of Third World diplomats at the EC Commission office. Latin American diplomats, who had stayed away from this, were however invited to meet him and did meet him at the residence of Irish ambassador.

Sutherland reportedly stressed at the meeting that he was a politician and was not interested in technical details, and as a politician from a "poor" European country was interested in change and development.

Several of the Latin diplomats said later they had been favourably impressed, but wondered about the implications of his being not too interested in technical details, and wondered who in the secretariat would then deal with these.

The Japanese concerns over 'balance of interests', and the near certainty of Warren Lavorel taking the second post, would become relevant in this connection, particularly if the 'technical details' were to be delegated to Lavorel, one of them noted.

Other Latin American diplomats said that one of the major concerns of developing countries, and not merely theirs or from the Grula region, was that just as they chose Sutherland and were pushing it through the GATT's "consensus process", the two majors who are now negotiating bilaterally on the Uruguay Round and plan to rope in Canada and Japan and then come to Geneva for bringing in other participants, should not face the developing world with a fait accompli and use Sutherland to push it through the formal GATT processes.

Others said this really depended on the Third World negotiators and their willingness to say 'no'.

Several Third World delegations privately said that as in other matters in GATT, the consultations and consultations within consultations were all about "cutting a deal", but the deals were not very clear.

A diplomat from an industrialized country noted that the "problem" faced was partly due to Sutherland, who first agreed (when the US and EC picked him for the job) and then withdrew, forcing Zutshi to seek other nominations and the Latin Americans "in good faith" putting forward some candidatures.

But suggestions in the corridors that he could be "accommodated" by naming him to head the TNC or play a major role in the concluding phase of the Uruguay Round negotiations seems likely to run into opposition. And few think that any new DG should be shackled at start by asking him to divide his responsibilities this way.

And while the GATT diplomats, individually and from regions, were raising these questions of geographical distribution and balance of interests, no one appears to be asking some fundamental questions such as what basic orientations Sutherland would bring to the job.

As head of the Allied Irish Banks PLC (and a director on several European TNCs), he could be expected to feel like chief executives of other private banks who often seen demands and regulations of central banks and of monetary and financial authorities of countries as restricting businesses and their profitability.

In the Uruguay Round where services is an issue, and within it financial services and the dividing line between prudential regulations and market access, where would his philosophical leanings be and in which direction would he exercise pressures as GATT D.G. and Chairman of the Trade Negotiations Committee in seeking to conclude the Round, say as between the US and EC which want the major Third World economies (South Korea, Asean, India, Brazil etc) to make "substantial initial commitments" of access to their financial service markets.

GATT functions on the basis that what is good for business is good for consumers and the economy, wrapping all these up under the slogan of 'free trade'. And GATT diplomats look at issues and negotiate from the perspective of how to increase the market access of the business and enterprises of their countries and enable them to export and earn more. But the neo-classical theories that it would in the long run benefit everyone has not worked for over three decades in developing countries nor for the last decade in the industrialized world.

But with the US openly talking of 'managed trade' and even the OECD Secretary-General talking of protectionism to deal with social problems of unemployment, and in the post-Uruguay Round era when international trade is no longer crossing of frontiers by 'goods' but would mean freedom of movement for capital and technology, but not labour. such issues and orientations are coming increasingly to the fore.

At a recent private consultations in Geneva, Dwain Epps of the World Council of Churches spoke of the new genre of non-government organizations springing up in the South, those finding the system oppressive and not benefiting their communities and organizing to resist it and joining hands with like groups elsewhere, and the problem of global governance being how to bring them in and influence and be influenced by them.

"The post-Uruguay Round GATT (by whatever name it is called) will be as much a target of the civic society in the Third World as the Fund and the World Bank now are because of their structural adjustment programmes and what approach the leadership will have and how the public will see it is one missing link in this process," one Third World diplomat admitted.