Apr 19, 1986

NEW ROUND DECISIONS ONLY AT FORMAL GATT SESSION - BRAZIL.

GENEVE, APRIL 18 (IFDA/CHAKRAVARTHI RAGHAVAN) Any decision to launch a new round of Multilateral Trade Negotiations (MTNS) should be taken "only in the context of a formal meeting of the GATT Contracting Parties (CPS)", Brazil has suggested.

This, in the Brazilian view, is essential in order to ensure that negotiations in the new round be conducts "exclusively in a GATT context".

The Brazilian views were presented this week, at the closed-door meetings of the GATT Preparatory Committee, by Amb. Paulo Nogueira Batista. But a copy of the speech was made available to the press by the Brazilian delegation.

The emphasis on a formal meeting of GATT CPS to decide on the new round, rather than a meeting of Ministers outside the GATT framework as happened in the case of the Tokyo round, would appear to be aimed at preventing the U.S. and a few other industrial countries bringing into GATT by the backdoor, new subjects like services and investments.

In his speech, Batista viewed as "quite disturbing" two main feature that had emerged in the discussions over a new round within the Preparatory Committee.

On the one hand there was "the reluctance to say the least" of major trading nations to address themselves to questions of fundamental importance to the survival of GATT: issues of standstill, rollback and safeguards.

On the other hand, some of the same major trading partners were attempting to expand the jurisdiction of GATT and "to apply to new areas of a completely different nature rules and regulations on trade in goods which are not being respected and observed".

This contradiction came out clearly in the area of textiles and clothing, Batista noted.

The regime governing trade in this sector represented a major departure from the GATT and its basic rules, and had been applied for two decades now, giving ample time for any structural adjustment to take place in the importing countries.

Yet, third world exporting countries were being told in the separate track looking at the future of the trade in textiles and clothing that they had to prepare themselves "for a further prolongation of the exception regime with probably more restrictive clauses than in the existing ones".

How could third world countries believe, Batista asked, that the preservation of GATT and further liberalisation of trade could be an objective of the proposed new round of MTNS when, on top of a reluctance to discuss general questions of standstill and rollback, they saw a specific area of such interest to them (as textiles and clothing) treated in line with clear objectives of protectionism?

This same lack of credibility also emerged from the extreme reluctance of major trading partners to another issue of importance, both for third world countries and many industrial ones, namely bringing agriculture under the disciplines of GATT.

Batista added: "Indeed, we are faced with so many contradictions that one cannot entirely escape the strange feeling that in fact for some CPS a complete destabilisation of the multilateral trading system could be an acceptable or perhaps, not an undesirable outcome, allowing greater freedom in bilateral and restrictive dealings".

The preservation of GATT and return to application of GATT rules required clear and firm commitments to standstill and rollback, Batista emphasised.

Both standstill and rollback would have to be reinforced by a safeguard agreement, and all three should have a priority before any new effort to further liberalise trade through exchange of concessions in a new round.

The three issues would also test the credibility of proposals to place structural adjustment as a unifying theme for the proposed new round.

On new themes, Batista insisted that these issues affecting GATT jurisdiction could not be resolved by the straight inclusion of the new themes in a possible round of trade negotiations.

Acceptance of such a notion would jeopardise the integrity of GATT, and delay much needed action in traditional areas of GATT competence, like agriculture and textiles.

Under a tradition based on long-term interests of GATT, decision-making required consensus on any matter of substance relating to issues already within GATT jurisdiction.

A decision by consensus should all the more be the rule when dealing with issues alien to GATT.

To proceed otherwise would mean that the GATT could be amended "in an informal manner, by collateral agreements", and to admit that rights and obligations acquired under GATT could be changed by the will of a part of the membership and "not even necessarily by a majority of the CPS".

As a result of "distortions" introduced in the GATT system through the Tokyo round, there were instances of collateral agreements dealing with interpretation or complementing specific GATT provisions which had been adhered to solely by a minority of the CPS and which raised serious questions of compatibility with the general agreement in letter and in actual implementation.

In the Brazilian view, a new round could only, and should only, be authorised by the CPS "to deal with negotiations on liberalisation of trade restrictions or distortions in areas already pertaining to the competence of GATT".

"One cannot assume", Batista added, "that the advisability of international regulation of matters outside the GATT is an accepted fact and proceed automatically to include it in a new round, making the exchange of concessions, or worse still the observance of existing obligations as relates to trade in goods, dependent on concessions in such new areas".

The procedures for amending GATT were the only legal way to enlarge the GATT system, and amendments of the rules themselves as well as part one of the general agreement required acceptance by all CPS to become effective, Batista underlined.

"If it is true that no provision in GATT obliges individual CPS to participate in GATT-sponsored negotiations, it is no less true that any individual CP cannot be expected to remain indifferent to illegal actions and that it has the inalienable right to oppose the launching of a new round if it feels that the proposed negotiations violate the integrity of the GATT affecting our rights under the general agreement", Batista declared.

"It would be politically unwise", Batista warned, "to pretend to overcome such problems by departing from the tradition of decisions by consensus for in the end the matter would have to be faced squarely at the moment of a probable attempt to incorporate the results of the proposed new round in the institutional and legal framework of the GATT".

This was a reference to the view propagated by the U.S. and some of its supporters, including the GATT Secretariat, that the question of launching a new round or new themes to be included could be decided by a majority vote of the GATT CPS, purporting to act under Article XXV.

Proposals to include new issues in a possible GATT round represented a side-tracking of essential GATT rules and a great danger to the integrity and stability of the GATT system, notwithstanding "possible positive intentions" of those advancing such proposals, the Brazilian delegate said.

In view of these, and the negative implications of negotiations held in a framework similar to that of the Tokyo round, the Brazilian delegation would at this stage be prepared "to favour that the decision to launch the proposed new round could be taken only in the context of a formal meeting of the CPS to ensure that negotiations be conducted exclusively in a GATT context".

In the Preparatory Committee itself, while there could be informal contacts to bridge differences in perception, "formal sessions are indispensable for discussion of proposals put forward by CPS, individually or in association", in order to ensure transparency, the Brazilian delegate stressed.

In what was seen as a veiled warning to the Secretariat, Batista added: "the assistance of the Secretariat is of course to be counted upon, for instance, in terms of background papers".

"Actual proposals can come from the Secretariat solely when so required by the Preparatory Committee, at a later stage, to give shape to possible emerging consensus on the substance of matters being formally discussed".

This was seen as a reference to the behind the scenes efforts of the major trading nations to get the GATT Director-General, who chairs the Preparatory Committee, and the Secretariat to put forward in shape of draft texts the viewpoints of the major trading nations on new round agenda issues.