Oct 28, 1982




Geneva, Oct 26 (IPS/by Chakravarthi Raghavan) -- The attempt of the United States to buttress its drive inside GATT on the 'services'

and 'investment' issues, by making it a north-south issue, seems to have misfired.-


This is the impression from the 'revised text' of the ministerial declaration for the November meeting, produced by the preparatory committee of GATT, and the draft minutes of the committee's meetings an October 20 and 22. The draft with more than 90 square brackets and several footnotes is now in the hands of the GATT council, which meets from Nov 2 in an effort to bring about agreement on a text that ministers could adopt.-


Ever since the GATT ministerial meeting was proposed last year, the US had proposed major new initiatives for GATT in the area of 'trade in services' and 'trade-related performance requirements' which it had originally called 'investment' policy issues.


From the outset the Third World countries have opposed this, questioning GATT's competence and jurisdiction in these areas. Though the other OECD countries were also cool to it, the US managed to garner their support for GATT 'studies' in these areas, even though many of them continued to question both the priorities for this and reserved their positions an the post-study actions.-


The Third World countries, in reiterating their strongly held view on GATT's jurisdictions and introduction of GATT 'free trade' concepts in these two areas, had got inserted in the preparatory document footnotes to the effect that 'a very large number of delegations' maintained that there should be no reference to these two items in the ministerial text an the ground of gatt's lack of jurisdiction.


In the earlier versions of the preparatory committee draft, this had appeared as the objection of 'some delegations', even though all the G77 members of the GATT had come out in opposition.


In GATT itself there is no G77 chapter, and the 'group of (informal) developing countries' there also include Israel, Turkey and Spain.-


After the declaration of the G77 foreign ministers in New York early in October, coming out collectively against GATT becoming involved in 'new normative tasks' in these areas, the G77 members in GATT had the footnote changed from 'some delegations' to a 'very large number of delegations'. This formulation, rather than 'the developing countries' was apparently suggested at that time in view of the positions of Spain, Israel and Turkey (who are not G77 members) and also because Spain atleast seemed to be supporting the general OECD position of support to 'study'.


To counter this, the US had proposed another footnote to the effect that 'a number of delegations whose countries account for the great part of world trade maintain GATT is competent to undertake this study and that it should be included in the ministerial text'.


The draft minutes of the meetings of the preparatory committee last week suggest that this attempt to make this a North-South issue, and one where the 'weight of world trade' should prevail appears to have misfired.


Almost every industrialized country which spoke, excepting for the USA, disassociated itself from the US footnote and the concept of 'trade weightage' sought to be introduced, even when some of them continued to support-the idea of studies.


At the preparatory committee meeting an Oct 20 (when the US suggestion was a proposal), Spain associated itself with the first footnote of 'a very large number of delegations'. Colombia, the spokesman for the 'developing country group' and Brazil noted with 'concern' the US efforts to introduce the 'new notion of weighted accounting of support for proposals which was contrary to GATT practice'.


New Zealand said its position was not covered by either footnote.


In a more formal reiteration of its views, New Zealand said at the present time it was not sure about GATT competence in the area, and its position on the inclusion of the two items was conditional on the outcome of negotiations on 'more substantive issues'.


Hungary and the EEC shared this view about 'priority for substantive issues', with the EEC adding that its position was not covered by either footnote.


At the subsequent meeting on Oct 22, when formal views were recorded of all delegations on every item, Sweden disassociated itself from the US suggested footnote. While it would not contest the right of any contracting party (cp) 'to think that it makes a difference if it accounts for a great part of world trade', the Swedish delegation 'strongly rejected the introduction of such a language' in a GATT document, since it was a new concept which, if maintained, would be detrimental to GATT work.


The EEC too went formally on record that its position was covered 'neither by the first nor the second footnote'.


Australia, Iceland, Switzerland, Austria, New Zealand (among the industrialized countries), Czechoslovakia and Hungary (among the socialists), and Trinidad and Tobago, Brazil, India, Sri Lanka and Singapore supported the Swedish position On the US footnote.


Argentina said the second footnote created 'a new category of CPs within GATT' and it was not even clear who figured in that category since those not associated with it also accounted for a large portion of world trade. Argentina wanted it to be made clear that the footnote reflected the position of 'only one delegation.


Colombia, Cuba and Spain associated themselves both with the Swedish and Argentine positions.


Israel, at this stage appears to have suggested combining the two footnotes merely to say 'some delegations' questioned the GATT competence while 'other delegations' were of an opposite view.


The USA wanted either the Israeli proposal to be accepted or all footnotes to be eliminated, with the records (in the minutes showing the position that 'some delegations' held on the inclusion of these items. The US also maintained that the reference to 'share in world trade' in its footnote was a factual position, and it was for other delegations who commented on it to draw 'any implications they wishes from this fact.'


Rejecting this approach, Brazil said that the question was not to change any other CP's footnote since it was recognized that every delegation had a legitimate right to express its view in this way. But the first footnote had been introduced to represent 'important negotiating positions' of the countries behind them. Merging the footnotes or deleting them would not facilitate progress in negotiations. While it was clear that the final document would contain no footnotes, at this stage no change could be introduced in the document and all views should be recorded in the minutes.


GATT sources, already concerned at the way the preparations for the ministerial meeting have shaped up, underlined the Brazilian position that the final document would contain no 'footnotes', though it was not at all clear at this point what the document would contain.


However, they felt the whole situation about 'services' and 'investment' issues had been mishandled and the priorities 'blown up' by the USA. In this view, it was felt, the US might find it difficult to even win an agreement for any limited studies, without commitments on what to do with them, unless it is able to make considerable substantial concessions all around in a number of areas.


Apart from the fact that the gap between the Third World and the industrialized countries has now widened, and the industrialized countries themselves are divided, the considerable emphasis on these two issues and the 'lobbying' have formally solidified positions, with an element of non-negotiability introduced.