Jul 12, 1986


GENEVA JULY 10 (IFDA-CHAKRAVARTHI RAGHAVAN) – Leading third world nations charged Thursday that the major industrial countries had no interest in trade-liberalisation in-goods, but were trying to launch a new round mainly on new themes, " and that too by illegitimate means".

The charge was made by Brazil’s Amb. Paulo Nogueira Batista and his colleagues in the group of ten third world countries who have tabled a formal draft declaration for the September Ministerial meeting.

Batista and his colleagues were addressing a press conference to explain the present situation, and the revised draft they had now submitted, to take account of the comments of both industrial and third world countries.

Working against a "mid-July" deadline (that the Secretariat is extending into end July), the GATT Preparatory Committee for a new round ended Thursday this week’s meetings, but without any progress in drafting recommendations for the Ministerial meeting on September 15.

The positions of the major protagonists appeared so unbridgeable that some GATT observers were wondering what the September meeting could in fact do.

Is was clear that the U.S. was unwilling and unable to make any concessions to the third world nations either on textiles and clothing trade, or on issues of standstill and rollback, but take the administration on trust in launching a new round.

On top of it, the U.S. is also expecting the Third World Countries to agree to bring into GATT the new issues that would virtually enable the U.S. to rewrite the current rules of international economic relations, in favour of transnationalisation of world production of goods and services.

Despite this gloomy picture, a GATT spokesman tried to strike a note of cautious optimism, but without being able to indicate any area where the protagonists are nearing an agreement.

The spokesman told newsmen that the discussions in the PREPCOM on the important issues of standstill and rollback, and the statements of the U.S. and EEC on this as to what they could do, suggested that an acceptable compromise in this important area was possible and could be reached.

However other third world participants in the meetings said that the U.S. and EEC held out little hope of concrete actions, but was asking the third world countries to take them on trust.

Also, the participants said, the EEC position clearly ruled out any standstill or rollback in the agriculture sector, and the prospect of the EEC continuing to impose the level of its tariffs through its variable levy system or intensify its quotas.

The PREPCOM has now before it a Secretariat tabulation of various papers already presented by individual or groups of CPS, which is sought to be used to concentrate discussions in the format.

The group of ten third world countries who had already submitted a formal draft declaration for the Ministers, put in a revised version Thursday, taking account of some of the views of others expressed in the PREPCOM, as also filling in the gaps.

The major revision would appear to be in regard to standstill and rollback commitments, where the ten now envisage "protocols" to be signed by Ministers at Punta del Este – rather than the earlier suggestion of government commitments at highest level, backed by legislative authority, before the launch of the new round.

The revision also would place both the industrial and third world countries on a par over standstill and rollback commitments, though in practice the last would still apply only to the industrial countries, since they alone have a large number of protectionist measures either illegal under GATT or falling under the so-called "grey area".

The group of nine industrial nations also put in a revised version of their informal discussion paper.

The major difference between the two, namely the ten insisting on the new round dealing only with issues of trade in goods, which are within GATT competence, and the nine seeking to bring on the agenda of the new round the new themes of services, intellectual property rights, and investment issues, however remained.

Apart from these, the U.S. is reported to have put forward its ideas for bringing intellectual property issues into the GATT, which in effect would use GATT and the trading rights under it, to secure virtually changes in the Paris Union and conventions dealing with rights in the areas of patents and trade marks.

The U.S. paper made clear that the U.S. wanted the rights of countries under the Paris Union to compel working of patents on their territory, or restrict the period of validity of patents, to be curbed via GATT.

The EEC, for its part, introduced three separate papers dealing with services, investment, and intellectual property issues, seemingly taking a softer stance, but in effect bringing them within GATT discussions and negotiations, and ultimately a GATT framework.

Australia, Chile, Colombia, Hungary, Thailand and Uruguay, submitted a paper on agriculture, which appeared to be similar to the strong stand on this in the paper of the group of 10.

But the six were more specific in seeking a phase-out of agricultural export subsidies over a six-year period.

The paper would also in effect prevent the EEC from raising the existing levels of protection through its variable levies.

The EEC is reported to have reacted violently to this, making clear that if this was to be the basis for a new round, the EEC would not be involved.

Colombia and Sri Lanka, put forward a paper on tropical products, seeking specific negotiations on issues of market access and internal duties inhibiting consumption, and priority in the round for these negotiations and the early implementation of agreements ahead of others.

The U.S. is reported however to have ruled out any priority for tropical products in the new round.

The issue of tropical products and trade liberalisation’s measures has been pending in GATT since late 50’s.

At a press conference Thursday afternoon, Batista and his colleagues in the group of ten, made clear that they would not agree to any new issues or subjects not within GATT competence to be included in the new round.

Explaining the important changes in their revised paper, Batista said the revised draft gave a clear commitment for the launching of the new round, which would be open to all GATT Contracting Parties and other third world countries.

The Ministerial meeting would have to be a meeting of the GATT CPS to provide a basis for the decisions to be taken for the Ministers.

The entire process of negotiations would be under the control of the GATT CPS, from the beginning to the end, and for this purpose a negotiating committee would be set up, and it would report to the GATT CPS at the end.

On the issue of standstill and rollback, the group had now introduced some changes.

Originally they had envisaged government commitments at the highest level, backed by legislative authority wherever needed by constitutional requirements (as in the U.S.).

In view of questions posed by some about the possible difficulties and delays involved, the group had now proposed the commitments to be entered into through two protocols, to be signed by Ministers at Punta del Este, and ratified in the normal GATT way.

There was no change in the substance of the standstill commitments, but the rollback commitment had been revised to be include both the industrial and third world countries, rather than by the industrial countries in favour of the third world as before.

Batista however said in practical terms there would be no difference, since most of the third world countries had no restrictions contrary to GATT – only those permitted to them under GATT rules on account of balance-of-payments (BOP) or for infant-industry protection.

On safeguards, they had maintained their substantive demand for a comprehensive agreement, and had provided for it to be in the form of a protocol and to be an integral part of the GATT, reinforcing the existing disciplines to make them more precise and more difficult to resort except in exceptional circumstances.

At the same time, they were also making it abundantly clear that safeguards would be taken only on a non-discriminatory or most-favoured-nation principle, and thus were not entertaining the idea of some to permit "selective" safeguards.

There were also some linkages sought to be established between the trade liberalisation process in GATT and parallel actions on commodity stabilisation and between trade and money and finance issues.

On commodities, apart form the issues of market access to be tackled through the GATT round, they wanted the CPS to commit themselves to take urgent and adequate multilateral action in appropriate fora to implement measures to improve conditions of world commodity markets and to stabilise prices for commodities at equitable and remunerative levels, including the bringing into operation of the common fund and other measures agreed upon in the integrated programme for commodities in UNCTAD.

Similarly, the Ministers should undertake formal commitments for parallel actions in the appropriate forums to reform the international financial and monetary system, and to examine in depth in GATT all the effects of exchange rate fluctuations on international trade.

And while, the group of ten paper envisaged other third world countries, not now parties to GATT, to participate in the new round, they did not envisage any ad hoc meeting to launch the new round.

"It is not for those outside the GATT to take decisions or launch a process affecting the rights of GATT CPS, but once a decision is taken it should be open to all third world countries", Batista explained.

Asked about the new issues, Batista said the G-10 saw the major question before GATT to be the preservation and strengthening of the system, and this involved standstill and rollback measures.

Only after this, further liberalisation measures in trade in goods could be taken.

As for as new issues was concerned, Brazil did not recognise rights or obligations of any GATT CP beyond those in the general agreement.

"If any CP wishes to extent or expand the jurisdiction, they have to follow the procedures or article XXX, and they have a right to bring this before a meeting of GATT CPS".

"But this cannot be done in the context of a new round", Batista declared.

Argentina’s Leopoldo Tettamanti, in supporting this stand, said only issues within GATT jurisdiction could figure in the new round.

"As Brazil, we do not acknowledge rights or obligations other than those spelt out in the general agreement. If any CP wishes to extend these rights and obligations, they should follow the procedures for amendment, but not in the context of the new round".

Asked how "realistic" this stand was, and how they would be able to resist bringing the issues through the backdoor, Batista said: "if they do it illegitimately and in disregard of rules and provisions, it is a problem for which they will be responsible. But they cannot count on us to change GATT in this way".

Describing the situation as "awkward", Batista said in the PREPCOM it had been made clear by proponents of the new issues that they were not ready to accept any commitments on standstill, rollback or liberalisation in the area of trade in goods, but only in the new issues.

"On top of it they wan to do it by illegitimate means".

It would not be possible to launch a new round through such means.

"A misimpression", Batista said, "had also been created to the effect that the position of the G-10 on trade liberalisation in goods did not have much support".

"In fact on the substantive question of liberalisation of trade in goods, we have a lot of support even from other industrial countries. It is only the major ones who are not prepared to negotiate in goods, and some of them want to keep out agriculture too".

According to participants in the meeting, the U.S. and EEC reportedly refused to consider the G-10 paper as a basis, so long as it did not include the new themes, but seemed to back away when, in their turn, Brazil and others made clear that they could not discuss in the PREPCOM any issues outside GATT jurisdiction.