Jul 18, 1986


GENEVA, JULY 17 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The GATT Preparatory Committee (PREPCOM) for a new round of Multilateral Trade Negotiations (MTNS), moved into an informal drafting group Thursday, in an effort to draft consensus recommendations for the Ministerial Meeting at Punta del Este.

GATT sources said that the European Community did not see any purpose in the exercise, since in its view no consensus was possible, and the PREPCOM should therefore proceed on the basis of two separate alternative drafts for the Ministerial Meeting.

The PREPCOM has before it a formal draft on behalf of a group of ten third world countries, and an informal discussion paper on behalf of a group of nine industrial countries.

At a formal meeting of the PREPCOM Wednesday, chaired by the GATT Director-General Arthur Dunkel, a number of third world countries including Malaysia, Nigeria and Argentina, reportedly said that the possibilities of reaching a consensus had not been exhausted, and the PREPCOM should persevere in its efforts.

On this basis, on Dunkel’s suggestion, the informal drafting group was to meet Thursday.

According to third world sources, parallel efforts to have compromise drafts, between a group of 20 third world countries (led by Uruguay and Colombia) and a group of nine industrial countries are also continuing.

According to some reports the three major trading blocs (U.S.A., EEC, and Japan) who were involved in this effort have withdrawn, though it was not clear whether this was merely a tactical move or due to basic difficulties in reconciling positions.

Apart from the issues of new themes where the differences between the group of ten and industrial countries are fundamental, there are also differences within the group of 20, and between them and the group of industrial countries on issues of agriculture, treatment in new round to priority issues of concerns to the third world like tropical products, and the standstill and rollback commitments and their implementation.

The EEC, for example, is reported to be resisting efforts to bring in the so-called "grey area" measures (voluntary export restraints, orderly marketing arrangements, etc.) under the standstill and rollback commitments.

According to third world sources, efforts of temperate zone agricultural producers (EEC, U.S.A., Australia, New Zealand, Argentina and Uruguay) to agree on the negotiating issues, and the standstill and rollback commitments, in this area have not been successful, in view of the EEC position.

At Wednesday’s meeting of the PREPCOM, Brazil on behalf of the group of ten third world countries introduced its revised formal paper for a draft declaration.

In doing so, the Brazilian delegate, Amb. Paulo Nogueira Batista, is reported to have clarified that while the work of the PREPCOM could only relate to areas of GATT jurisdiction, namely trade in goods, the group of ten would be willing to deal with the issue of services at Punta del Este, on the basis it will a meeting of the GATT Contracting Parties (CPS), and any decisions would be in the light of earlier decisions of the CPS in 1982, 1984 and 1985.

At the 1982 GATT Ministerial Meeting, it was agreed that interested CPS should carry out national studies on services and exchange information, and in the light of these for the GATT CPS to take a decision on "whether or not any multilateral action is appropriate and desirable".

This exercise of exchange of information, in a parallel track under the chairmanship of Felipe Jaramillo of Colombia, has been taking place since 1985, and the Jaramillo group has been asked to recommend on the appropriateness and desirability of multilateral action to the next meeting of the CPS.

Batista reportedly told the PREPCOM Wednesday that the exchange of information exercise "clearly demonstrates" that data provided so far has been "insufficient and unbalanced", that "basic definitions are lacking", and that "important issues raised by developing countries have not been addressed".

It was therefore not possible at this stage to take up the question of desirability and appropriateness of multilateral actions, and "impossible to visualise negotiations in the context of a multilateral trade round in GATT or in a GATT framework".

But on the assumption that the Punta del Este meeting would be a meeting of GATT CPS, "the group of ten would be ready to deal with the issue of services, not here in the PREPCOM, but in the agreed context of the action which is to be expected from the CPS in light of decisions adopted by them in 1982, 1984, and 1985", Batista is reported to have declared.

On other new issues, Batista reportedly stressed that like services the issues of investment, intellectual property rights and workers’ rights, were completely outside the GATT jurisdiction.

In these new areas there had been no consensus decision of CPS "even for a preliminary exchange of information, as in the case of services".

"The invocation of a possible need to update GATT cannot and should not be so interpreted as to give any individual Contracting Party the right to propose changes to the general agreement which would alter it beyond recognition and that too without observance of GATT rules and procedures on how to amend it and furthermore in disregard of its basic objectives and scope".

"The heart of the matter", Batista is reported to have underlined, "is that GATT cannot be amended by collateral agreements or arrangements negotiated among a few and put into effect by a minority, as new international standards of trade regulation".

"The sad experience" of the Tokyo Round could not be allowed to be repeated.

In the Tokyo Round, the integrity of GATT was "seriously impaired" by the ad hoc nature of that round, which gave a few developed Contracting Parties "a free-hand to go ahead in a non-transparent way with the elaboration of a number of codes which, under the guise of interpreting GATT provisions, have in fact modified them".

The "conditional application of the MFN rule" arising out of the operation of most of these codes was indeed "a most blatant deviation" from the fundamental rule of the general agreement.

Under the general agreement, the only rights that could be "legitimately invoked" were those contained in the agreement.

"And this is the reason why we cannot acknowledge the claim of some developed CPS, important as they may be in their share of world trade, to an absolute right to make any proposals without regard to GATT jurisdiction or without observing the corresponding GATT procedures for amendment of GATT provisions".

Attempts to "bypass" GATT rules for amendment could not but face the strong objection of CPS, who because they were perhaps less important as trading partners, valued greatly the preservation and integrity of the general agreement.

Batista hoped that the CPS, in their collective wisdom, would prepare the Punta del Este deliberations "in a manner consistent with the common aims of preserving and strengthening the multilateral trading system in GATT".

A new round of MTNS could only be justified and accepted if it met those requirements.

This was the reason why the Punta del Este meeting could not but be a GATT CPS meeting, and any MTNS that might eventually launched "has to be a GATT round under the authority of the CPS".