Jan 29, 1986


GENEVA, JANUARY 27 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Preparatory Committee for a new round of Multilateral Trade Negotiations (MTNS) in GATT began Monday its first round of meetings, and focussed on the question of a standstill prior to any launching of negotiations.

The Committee, with GATT Director-General Arthur Dunkel in the chair, was attended by some 70 of the 90 Contracting Parties of the general agreement, and three observers - Costa Rica, Morocco and Mexico, who are seeking to join the general agreement.

None of the other countries or international and intergovernmental organisations, who attend GATT meetings as ‘observers’, were present, according to a GATT spokesman.

The international monetary fund is known to have specifically sought the right to attend as 'observer'.

Third world participants said that the decision of the Contracting Parties (CPS) session, in November 1985, that constituted the Preparatory Committee, had only specified that the Committee would be open to any CP or country that has acceded provisionally to the GATT (Tunisia).

A chairman's clarification at the session had also said that it was his understanding that countries which were negotiating for accession to GATT might also attend the Committee as observers.

Third world participants said that in the private consultations that preceded Monday's meetings, several third world participants had voiced their opposition to any exception favouring the IMF.

In the discussions on the 'standstill' there was general support on the need for a standstill prior to and during the course of negotiations in a new round.

According to a GATT spokesman, discussions centered on the objective and purposes of a standstill commitment, and its coverage whether it should cover industrial goods, agriculture or also services.

Third world participants said that the idea of a standstill on services was a trial balloon floated by Canada (which is often seen in GATT as a stalking horse for the U.S.), but that several participants made clear that any standstill or rollback could only cover traditional areas of GATT activity.

India was reported to have made clear its position that the issue of 'services' was beyond GATT’s competence or jurisdiction and the question of a standstill in this area was totally unacceptable even for consideration.

The U.S. reportedly made no reference to the Canadian idea, but agreed that standstill was an essential element and corner stone for any new round.

The U.S. would also appear to have said there should be 'a fair and equitable mechanism' for standstill and for phasing out of measures inconsistent with GATT in one form or another.

The Preparatory Committee, Monday, agreed on some of the organisational issues relating to its work, before taking up discussion of the substantive issue of a 'standstill' on protectionism.

The question of a 'standstill' is one of the four subjects that the Contracting Parties at their November 1985 session, had identified as important subjects for the consideration of the Preparatory Committee.

The other three items are: rollback or ending protectionist measures that are in place in violation of GATT obligations or not specifically sanctioned by GATT (including voluntary export restraints and other 'grey area' measures), special treatment for third world countries, and safeguards.

In its organisational decisions, the Preparatory Committee agreed on a schedule of meetings in the first round - when there will be a discussion on individual subjects that could form part of a new round.

This phase of the Committee's work is expected to last till March and thereafter the Committee is to take up the work of drafting 'recommendations' on individual subjects for the consideration of a Ministerial meeting to be held in September.

All the discussions in the Preparatory Committee, and any 'draft recommendations' on individual subjects, it was agreed Monday, are to be ad referendum and without any commitment, in that none of the individual parts would commit anyone, excepting as part of the package of the Ministerial declaration.

The Preparatory Committee would also appear to have agreed Monday that the outcome of its work should result in a draft declaration of three to four pages for the consideration of their Ministers, with a summary record of the substantive points discussed.

The Director-General, and the U.S., are known to have favoured a report by the chairman of the Preparatory Committee on his own responsibility, rather than a report of the Preparatory Committee and/or summary records.

But this suggestion did not find favour with several of the participants, and especially the third world countries.

No decisions were taken Monday on the question of venue and dates for the Ministerial meeting in September.

Canada, the European Economic Community, South Korea and Uruguay are seeking to host the meeting.

After disposing off the organisational part of its work, the Preparatory Committee took up Monday discussion of the issue of standstill.

Traditionally in GATT, before any new round of MTNS is launched, the Contracting Parties concerned have always agreed on a standstill or a commitment not to increase their existing levels of protection, so that none of the negotiating parties has an advantage in the negotiations.

In the past the standstill commitments involved essentially tariffs.

But after the Tokyo round MTNS, tariffs have ceased to be a major element of protection, especially among industrial countries, even though tariff barriers are pretty high still in respect of exports of interest to third world.

Since the Tokyo round agreements, non-tariff measures. both official and 'voluntary', have become the major avenues of protection, and not easily monitorable.

The GATT CPS agreed on a standstill and rollback of protectionism at their 1982 GATT Ministerial meeting, and this was followed up in 1983, at UNCTAD-VI in Belgrade, with an even firmer commitment on standstill and rollback.

However, these commitments have largely remained unimplemented, and there has been an intensification of protectionism, mostly of a non-tariff nature, since then.

At Monday's meeting, the GATT Director-General, Arthur Dunkel would appear to have noted the 1982 commitment of GATT CPS on the standstill, and underlined that despite the unsatisfactory way in which it was implemented, it could provide a basis to build for the new round.

'Such a standstill commitment' Dunkel is reported to have underlined, "is an important step for restoration of confidence".

Discussion in the committee would appear to have centered on the objective and purposes of a standstill commitment, its coverage (industrial goods, agriculture or even services), who should give the commitment and to whom, the duration of such a standstill, and questions of notification, surveillance and monitoring and enforcement of such a standstill commitment.

There is little argument or opposition, in principle, to a standstill, though there are considerable differences on the nature of the commitment and how it should be enforced.

The third world countries are dissatisfied with the way the standstill commitments of the 1982 GATT Ministerial declaration and the 1983 UNCTAD-VI consensus decisions have been implemented.

They have called for specific commitments, at the level of heads of governments/states of all Contracting Parties, backed by legislative authority wherever it is required under domestic

legislation (as in the case of the U.S.), and to be notified to GATT, before the launching of any new round.

The U.S. has been somewhat equivocal on this. While the administration in principle supports a standstill, it is also pointing to its difficulties in the Congress.

The European Community, while supporting a standstill, views this as more of an 'undertaking' rather than as a 'contractual obligation'.

The third world countries want a specific and firm commitment not to introduce or increase the levels of protection, tariff or non-tariff, legal or quasi-legal, before any decision to launch a new round of MTNS.

In the current series of meetings and discussions in the Preparatory Committee, expected to go on till end of March, no conclusions or decisions are expected.

At this stage the participants are merely laying out their preliminary stance, and actual decisions or conclusions may not be reached until the meeting of the Ministers in September.