Jul 8, 1986


GENEVA JULY 7 (IFDA-CHAKRAVARTHI RAGHAVAN) – Informal and formal consultations over the proposed new round of Multilateral Trade Negotiations (MTNS) are to resume here Tuesday in the GATT Preparatory Committee (PREPCOM), chaired by the GATT Director-General, Arthur Dunkel.

The Committee is to submit its recommendations by "mid-July" for the Ministerial Meeting to be held from September 15 at Punta del Este, Uruguay.

The negotiations over the future of the Multifibre Arrangements (MFA), and replacement of MFA-3 by an MFA-4, are due to resume on July 21.

Industrial Countries view the two as separate issues, while Third World Countries see a linkage between the two.

Most Third World nations feel that if the Industrial Countries, and particularly the U.S.A., stick to their present negative stand of no liberalisation of this trade in MFA-4, it would have an adverse impact on the work of the PREPCOM and the Ministerial Meeting too.

Colombia is reported to have made this point last week at the MFA negotiations, and warned of the consequences if one of the trading partners (a reference to the U.S.) did not budge from its position.

"We see the inter-linkages between the two processes (MFA negotiations and work in the PREPCOM) and its negative implications on the new round", the Colombian delegate, is reported to have warned.

The PREPCOM has before it a formal draft Ministerial Declaration, tabled by a group of ten Third World Countries, and an informal paper put forward by a group of nine Industrial Countries.

Though the latter has been presented as representing "a middle approach", their paper is known to have been drawn up in consultations with the U.S., EEC and Japan.

Last week, the nine are reported to have attempted to gather support of the "small and medium" Third World Trading Nations, who had not signed the paper of the ten.

Towards this end the nine are reported to have slightly revised their own paper and presented it at a meeting with some 25 Third World Countries.

However, most of the Third World Countries who spoke at this meeting reportedly said that even with the revisions, the paper of the nine did not meet the concerns and problems of the Third World, and that any effort to produce an acceptable compromise for the Punta del Este Meeting would have to take into account many of the proposals and points in the paper of the ten also.

The paper of the nine, it was reported by some of the participants at this meeting, had been slightly revised to include some reference to the special treatment for least developed countries (LDCS) and in one or two other places, but without changing the basic approach of the original paper of the nine.

Third World participants at last week’s meeting with the nine, reportedly underlined that the paper of the nine had nothing in the objectives about additional benefits for the Third World countries as in the Tokyo Round Declaration.

And while, the revision had now made some references to protectionism, and about tropical products, these did not go far enough.

In respect of rollback and special and differential treatment to the Third World, the revised paper was seen as no improvement on the original paper of the nine.

The proposals on agriculture (where the paper of the nine has alternative formulations in square brackets, meaning the sponsor themselves are not agreed) were also seen as unsatisfactory.

The Asian countries reportedly said the Ministerial Declaration and the new round should focus clearly on the traditional areas of GATT competence, namely trade in goods which was of importance to Third World countries.

The Asian had been agreeable to "look at new issues", but only if their concerns and problems in trade in goods were addressed, and this was not being done so far.

A number of participants also reportedly raised the question of parallel actions to liberalise the trade in textiles and clothing.

The nine however reportedly took the view that the immediate issues would have to be addressed through the current negotiations for an MFA-4, and only the future long-term issues of liberalisation of trade in textiles and clothing addressed in the new round.

This view did not apparently find favour with a large number of Third World Delegations, for whom exports in these products are the major manufactured exports.

In the negotiations over MFA-4, where a number of formal and informal consultations were held in GATT last week, participants said there had been no progress or even serious negotiations, particularly in view of the fact that the U.S. had not shown any flexibility and was sticking to its position for an MFA-4 which would include new fibres (remy, linen and silk), and with provisions "not less restrictive than in MFA-3".

Clearly, on either side, there is an effort to play a waiting game till the end, in the hope that the other side would yield.

Apart from the worries on all sides as to what would happen if MFA ended and the entire trade immediately came under GATT rules, the linkage between the MFA and PREPCOM work is also being used by some to secure better benefits in MFA-4.

India, which is trying with some others to secure a phase-out commitment and a "sunset clause" in the MFA-4, is reported to have said that without a recognition of the phase-out concept", "our participation in an MFA-4 is an open question".

Efforts of the GATT Director-General, who chairs the MFA negotiations also, to wrap up these negotiations by July 25 (the MFA-3 expires on July 31), in order to clear the ground for the PREPCOM recommendations and the Ministerial Meeting appear to have failed.

Even the EEC is reported to have agreed that no instrument to replace MFA-3 was likely to emerge until the very last.

The EEC has meanwhile succeeded in signing bilateral accords with Poland, Czechoslovakia, the five Asian countries and Sri Lanka, the U.S. has secured a bilateral accord with Hong Kong (including new fibres, and for freeze and even some cutbacks, but with marginal growth in others products), and is negotiating one with South Korea.