8:21 AM Jul 28, 1993

NEGOTIATIONS RECESS AMIDST PUBLIC HYPE, PRIVATE DOUBTS

Geneva 28 July (Chakravarthi Raghavan) -- Uruguay Round negotiators, after a stock-taking exercise at the Trade Negotiations Committee, and much public hype (not matched in private comments of delegates) about the progress in the renewed multilateral process, adjourned Wednesday for the summer after agreeing on a schedule of work to complete the negotiations by early December.

Beyond setting a time schedule from August to mid-October in the market access negotiations in goods and services, and some consultation process, envisaged but not spelt out, by the TNC Chairman and GATT Director-General Peter Sutherland for dealing with some of the substantive questions relating to the Draft Final Act text that are yet to be resolved, no clear picture of the way ahead was available even to many of the delegates who streamed out of the TNC meeting.

With Sutherland having given up the traditional GATT consultation processes, like the 'Green Room' consultations or the more restricted ones that his predecessor Arthur Dunkel held in 1992, and not having spelt out or outlined what 'process' he planned to adopt, most delegations, even from key countries who are normally privy to such matters, said after the TNC meeting they were unclear on the process and shared concerns that it could be even less democratic or transparent than before.

Developing countries, cutting across various regional groups and interests, were clear that while they welcomed the resumption of the multilateral process, and while they saw that the major trading entities with nearly 80 percent of trade accounted by mutual trade relations were bound to focus on this trade in their Quad Tokyo accord, the market access openings that developing countries were looking forward to had not been addressed, either in Tokyo or in the bilaterals here since then.

Without such market access openings for export products of interest to the developing countries, and without certainty in the rules area (on anti-dumping, safeguards, dispute settlement etc), and generally a rule-based and transparent multilateral system, it would be difficult to conclude the Round.

As one of them put it, "we are all anxious to conclude the Round, but not at any cost and any price."

The TNC meeting, and other meetings this week of the GNG and the GNS heard some old and new cliches -- setting the milestones ahead for the final goal, progress but not breakthrough and other phrases, including a Japanese one of the engine yet to warm up (implying that the Tokyo accord has not provided the Japanese technology for warming up). But these did not help any clarity.

As one observer put it, given all the talk of 'transparency', compared to the current GATT process, that under Arthur Dunkel was perhaps 'glassnost'.

Most delegations from the developing world, while expressing caution and somewhat chary on how Sutherland planned to proceed, also felt that he would need time to learn GATT realities, but that time was running short and any false step by him would make things more difficult.

The Quad, and US and EC within them, have reached some accords, but have many differences on others and each is trying to manoeuvre and gather support from outside and the end-game is yet to be played out.

Another noted that the US Trade Representative, Mickey Kantor, and his boss Bill Clinton, have the reputation of not wanting to decide or disclose their decision until the very last moment, and as of now do not seem ready to buy everything on the table (in the Dunkel text). They basically want a smaller package (with the contents of that being defined by them to include their own demands, while resisting that of others). With everyone anxious to sell in the US, the largest market in the world, they have a bargaining chip which they will play to the end.

US Uruguay Round coordinator, John Schmidt appeared to confirm this when he told journalists that the US position had not changed on the proposals in the Dunkel text over a Multilateral Trade Organization (MTO) or the anti-dumping and other areas and these would have to be dealt with to enable conclusion of the Round, but that the US hoped in the process ahead it would be able to convince the others of its viewpoint and a consensus would emerge.

At the TNC, Sutherland emphasized the need for self-restraint and discipline by all participants in seeking changes to the DFA (the Dunkel text on the table since December 1991) and of his intention to hold bilateral consultations on these matters, mentioning as an example the large amount of technical and substantive work that remained to be done on the institutional questions and dispute settlement procedures.

While some delegates interpreted this to mean that he would be holding consultations with individual delegations on how to proceed further, and understand the concerns or views of those who wanted changes in the text to obtain their consensus, others came away with the impression that what the GATT chief was planning seemed to be to hold consultations with individual delegations on substance, and then bring up before the TNC the changes he believes commands consensus.

After the TNC several of the delegations said their concerns over the text and/or changes in them sought by the US (such as on anti-dumping) remained.

Some of them noted that while formally the EC was opposed to such changes, privately, the EC was planning its own 301 and its anti-dumping investigations were even less transparent and hence more difficult to challenge. The two may agree, but it will be difficult for Sutherland to establish a consensus on this basis even in individual consultations.

Some others interpreted Sutherland's comments to mean that he now recognized that the texts on textiles and agriculture would need to be taken up and considered along with market access, but clearly did not want to consider other texts or have them opened up at least until all other issues are settled. But whether this would succeed also remains to be seen.

Meetings earlier this week of the Group of Negotiations on Services (GNS) and the Market Access group, under Germain Denis, of the Group of Negotiations on Goods (GNG/MA), dealing with the market access negotiations, had drawn up a schedule of work which was confirmed at the TNC.

In market access in goods, the programme envisages bilateral negotiations on agricultural market access issues from 30 August to 17 September, further plurilateral consultations in the week of 13 September on all elements of the market access package and exploring the potential for 'conditionality' approach, a GNG/MA meeting on 17 September for taking stock, continued bilateral negotiations on agricultural and non-agricultural products from mid-September to mid-October, a substantive stocktaking meeting of the negotiating group on 15 October, and intense consultations by the Chairman of the group to complete the market access package, leading to submission by delegations of draft schedules of their concessions by 15 November.

At the market access group meeting Tuesday, Germain Denis asked delegations to keep him and the secretariat informed of their progress in bilaterals and difficulties. Side by side, he is to hold bilateral talks on the DFA issues relating to market access, presumably the agriculture text.

By early December, this process is set to be completed and the GNG is to carry out the evaluation of the results, in terms of the objectives and general principles of the negotiations and the effective implementation of the differential and more favourable treatment to developing countries promised in the Punta del Este Declaration, and any necessary adjustments are to be carried out.

In the area of services, all participants have been asked to submit outstanding initial offers and revised offers by 1 September, while the GNS will meet to finalize all outstanding textual issues in the framework of the agreement and annexes in the week of 13-17 September. Two bilateral negotiating processes, each of two weeks, beginning 20 September and 18 October are also envisaged for finalising the bilateral negotiations, with 26 November as the target deadline for all participants to submit their final schedules of initial commitments in services.

The programme also envisages meetings of the GNS to review thee matters, settle all outstanding textual issues in the GATS text and annexes, scope of MFN exemptions, plurilateral consultations on basic telecoms and maritime services and finalising the modalities for continuing negotiations on basic telecoms after the conclusion of the negotiations.

Sutherland told the TNC that in his view the work done, since resumption of the multilateral process after the Tokyo G7 summit and the Quad accords, had been useful, and that a large number of delegations had participated in the bilateral and other negotiating sessions. Each of the Quad countries (Canada, EC, Japan and the US) have had bilateral meetings with some 30 delegations, and overall the atmosphere had remained positive and constructive and governments were ready to engage in negotiations quickly and substantively.

Outlining some of his concerns, Sutherland said it was still necessary to see a sufficient sense of urgency. Leaving problems till the 'eleventh hour' was a recipe for failure and if they were to succeed in December, the eleventh hour was now and it was necessary to move forward on that basis.

Sutherland conceded that despite the optimism created by the re-engagement of work in Geneva, a number of delegations had yet to provide more complete information on concessions in areas of market access and services and, at a general level, there had been delay in exchange of detailed sectoral information.

The GATT head said he was aware that many delegations saw linkages between the market access negotiations, particularly in areas of textiles and agriculture and certain related issues in the DFA, but felt this should not prevent delegations from putting forward their offers, and doing it now, if necessary conditional upon a satisfactory package and resolution of normative issues.

Otherwise, he said, these linkages would directly affect the ability to make the breakthroughs needed to move the process forward.

His third area of concern, Sutherland said, pertained to the vast amount of technical work and substantive negotiations confronting them in other areas of the DFA.

"Substantial and wide-spread changes in the DFA are unlikely to be conducive to the success of the Round and consensus on such an altered package would surely be more, not less, difficult to get," Sutherland said, adding: "And given the fact that even the purely technical work ahead of us needs time and meticulous attention, all participants will simply have to exercise maximum self-restraint and discipline in this area".

"On certain other complex areas of the DFA -- for example on institutional issues (a reference presumably to the establishment of a Multilateral Trade Organization, MTO) -- I propose to start immediate consultations on the organization of work and future planning," Sutherland added.

Later questions from several delegations to Sutherland, participants said, did not elicit much clarification on the changes in the DFA text on which he would hold consultations and how. The GATT head merely said that he had some ideas and would consultations with delegations.

Sutherland noted that in the Punta del Este Declaration, the GATT CONTRACTING PARTIES had also agreed that the principle of differential and more favourable treatment to developing countries applied to the Uruguay Round and he would consult widely with delegations on how this could be achieved and the appropriate action the Secretariat could take to assist the process.

In various comments, developing countries made clear that while the Tokyo Quad agreement on market access had helped the restart of the negotiating process in Geneva, the package did not cover products of interest to the developing countries.

Thailand, speaking for the Asean group, noted in this regard that products in electronics, fisheries and textile sectors had been left out of the package.

Colombia, Morocco and some others stressed that there was no recognition so far of the principle of special and differential treatment.

Egypt referred to the Quad countries' call on developing countries to make 'matching contributions' and said the contributions by developing countries would have to be consistent with their trade, development and financing needs.

China also said it was looking forward to offers from the majors on products of export interest to the developing world in the market access package.

India stressed the linkages between market access package and the draft final act texts on textiles and agriculture and said a resolution of these questions would have to be reached to enable market access negotiations themselves to go forward. India had problems with the draft textiles text, particularly on its economic package and programme of dismantling the Multifibre Agreement, India said.

Bangladesh focused on the needs of the Least Developed Countries and said their problems had not been addressed so far.

In other comments, the EC dealt with essentially procedural issues and suggested that the proposed August 31 meeting of the TNC should be a substantive one.

Sutherland responded to this by saying that this would depend on capitals and delegations engaging in substantive market access negotiations.

The US welcomed the programme as realistic and useful. On the complaint of the developing countries that the Quad package had not addressed market access concerns of the developing countries, the US delegate said the Tokyo package was only the foundation to build upon and not the package itself. The US hoped to have further sectors for zero-tariff.

Japan said the Tokyo accord had helped to restart the Geneva process, but the engine still had not warmed up. The changes in the DFA text, he said, should be absolutely to the minimum and should be fair and balanced.

Korea endorsed the work programme, but stressed that many issues across the board needed to be resolved and these should be properly addressed. Market access was important but other issues were equally important, and there was a need to work on the linkages between market access and the related issues in the DFA, the Korean delegate added.

In summing up, Sutherland said his intention on the DFA was not to open up the text in a substantial way but hold consultations at the end of August on how to deal with a number of technical issues that remained outstanding including institutional issues and dispute settlement procedures.

In a separate decision, the TNC agreed to allow countries and territories now seeking accession to the GATT, and not covered by the Punta del Este Declaration's criteria for participants (GATT CPs and others who were negotiating access at that point of time in September 1986) to be invited to be present, without participation in the deliberations, of the TNC and its official bodies. They will not be however entitled to table offers or other documentation for circulation, but will have access to reports and minutes of meetings they will be present and official documents of the TNC, GNG, the Market Access group in the GNG, the GNS and the Surveillance body.

Russia, Saudi Arabia and a few others seeking accession including Taiwan are expected to benefit from this decision. China, which started the accession process before Punta del Este, is already a full participant in the Uruguay Round.