POLITICALLY SINGLE, LEGALLY SEPARATE MTNS IN GOODS AND SERVICES.

Sep 24, 1986

POLITICALLY SINGLE, LEGALLY SEPARATE MTNS IN GOODS AND SERVICES.

PUNTA DEL ESTE, SEP. 22, BY CHAKRAVARTHI RAGHAVAN -- Trade Ministers of countries, members of GATT launched on Sep. 20, Multilateral Trade Negotiations, covering both goods and services, as one single political undertaking, but as the legally separate and distinct processes.

Of the 92 Contracting Parties of GATT, 74 were present at Punta del Este for the special session of the GATT CPS.

The compromise decision adopted by consensus, thus legally deli the negotiations on trade in goods and the negotiations on trade services, but provides a linkage, both in its origin in the Ministerial Declaration launching the MTNS, and at its conclusion when the Ministers would decide on the international implementation of the results of the two negotiations.

The compromise, achieved by some fudging of language and though procedural mechanisms in adopting and issuing the declaration, won enable the U.S. an its supporters to claim they have won their point while the opponents (on the new themes) like Brazil and India could also do the same.

To some extent, by de decisions at Punta del Este, the third world has merely bought more time in this fight, while the U.S. has perhaps widened the crack in the third world unity, in the pursuit of it main objective of using the GATT and its instruments of trade, to force third world countries to change their domestic economic policies and chosen development paths, in ways that would further interests of U.S. transnational corporations (TNCS), and thus the U.S. political and strategic interests and control over the world economy.

The compromise was put together, at protracted negotiations on Thursday and Friday, with almost 48 hours of continuous negotiations except for a short break on Thursday night, in a small negotiation group chaired by the Uruguayan Foreign Minister and Chairman of the meeting, Enrique Iglesias.

But the compromise is such that not only could it be interpreting protagonists choose immediately for their domestic consumption, capable of giving rise to disputes very soon, and during the course of the negotiations themselves.

While the compromise was being stuck on Sep. 19, one U.S. negotiation suggested to the others that over the next couple of weeks, every participant should ignore the media of the others and not reaction them - forgetting that the information and communication "service which the U.S. now wants to put into GATT and be governed by GATT principles, bring the U.S. media reports instantly to the third world and its public, and governments and policy-makers can't ignore it.

The compromise for launching the new round of MTNS, to be call the "Uruguay Round", involved the adoption of a declaration with chapeau and two separate parts - one on trade in goods and the second on trade in services - and their adoption by the Ministers or others representatives in different capacities.

At the Final Plenary, the Contracting Parties, meeting at Ministerial level, adopted de decision to enter into MTNS on trade in goods "within the framework and under the aegis of GATT".

Then, the Ministers decided, separately, to launch the negotiations on trade in services as part of the MTNS, setting out both the objectives and the parameters of such negotiations.

In a third step, the Ministers, "meeting on the occasion of the Special Session of the Contracting Parties at Punta del Este", adopted the declaration as a whole.

Both the negotiations on goods and that on services have the same time-frame on four years. The MTNS as a whole is to be carried out by a trade negotiations committee, which is to HOLD its first meeting not later than Oct. 31, and would meet as appropriate at Ministerial level.

The negotiations on trade in goods will be run a "group on negotiations on goods", which would have to elaborate detailed trade negotiating plans before the end of the year, designate the appropriate mechanisms for surveillance of the standstill and rollback commitments, establish negotiating groups, decide on the inclusion of additional subjects for negotiations, and coordinate the work of the various negotiating groups under it.

The negotiations on trade in services, is to be run by "the group on negotiations on services". GATT procedures and practices are to apply to these negotiations, which in effect means also that decisions would be by consensus.

Both the group on negotiations in goods, and the group on negotiations on services, would report to the trade negotiating committee, which would report to the Ministers on the final outcome of the MTNS.

When the results of the MTNS in all areas have been established, the declaration provides that "Ministers meeting also on the occasion of a Special Session of Contracting Parties shall decide regarding the international implementation of the respective results".

The group on negotiations on services shall aim "to establish a multilateral framework of principles and rules for trade in services", including elaboration of possible disciplines for individual sectors, with a view to expansion of such trade "under conditions of transparency and progressive liberalisation and as a means of promoting economic growth of all trading partners and the development of developing countries".

"Such framework", the decision on services stipulates, "shall respect the policy objectives of national laws and regulations applying to services and shall take into account the work of relevant international organisations".

This formulation, which the U.S. had to accept as part of the compromise, in effect would make any multilateral framework take a subservient position vis-a-vis national regulations and their policy objectives.

The GATT Secretariat is to provide secretariat support for the negotiations on trade in services, thus providing an umbilical cord to the GATT - whose articles themselves nowhere mention or provide for a Secretariat.

Technical support for the services negotiations is to be provided by other international organisations, as would be decided by the group on negotiations on services.

Participation in the two sets of negotiations would be open to the same countries or categories:

-- All Contracting parties,

-- Countries that have acceded provisionally to GATT,

-- Countries applying GATT on a de facto basis having announced, not later than April 30, 1987, their intention to negotiate the terms of their accession to GATT,

-- Countries that have already informed the GATT CPS, at a regular session of the GATT Council, of their intention to negotiate the terms of their accession to GATT,

-- Third world countries, who by April 30, 1987, initiate procedures for accession to GATT, whit the intention of negotiating the terms of their accession during the course of the negotiations.

The formula for participation in effect means that the Soviet request for participation has not been granted. It never came up formally before the CPS - though in the plenary, as well as in the private negotiating groups, a few had suggested the use of the Tokyo round formula and opening the MTNS to all countries.

Iglesias explained at a press conference, that there had been no consensus on this issue, and that the GATT Director-General is to keep other countries (no participating or ineligible to participate) informed about the progress of the negotiations and its details.

The U.S. effort to put other new themes on the Agenda of the new MTNS, create virtually a new international framework on investment and intellectual property rights in GATT, and use it to force other changes in third world, had only very partial success.

Though these figure on the Agenda of the MTNS, the U.S. had to accept watered-down formulations that in effect circumscribe any course of action in these areas to existing GATT provisions.

Both the issues are to be dealt with within the parameters of the trade in goods, and in terms of the relevant GATT articles.

In the area of "trade related investment measures", it calls for an examination of the GATT articles related to the trade restrictive and distorting effects of investment measures. The U.S. has in mind such regulations in countries that require domestic content of goods or technology, as a condition for permitting investments, and requirements about export performance, etc.

Following such an examination, the negotiations should elaborate, as appropriate, further provisions that might be necessary to avoid such adverse effects on trade.

In a dispute involving the U.S. and Canada, a GATT panel had found some of the Canadian domestic content requirements to be violative of the GATT articles requiring national treatment for imported and domestic goods.

But the panel said this ruling did not cover the cases of third world countries, where they acted on grounds of balance of payments considerations or other applicable articles for them. The panel had also found that any stipulation about export performance did not violate any GATT provisions.

As regards the intellectual property issue, in the Swiss-Colombian paper backed by it, the U.S. had made as an objective of the negotiations in this area, the promotion of "a more effective and generalized application of existing international standards in intellectual property matters", and among other things clarify and elaborate rules and disciplines with respect to these matters.

In its own presentation to the PREPCOM, the U.S. had said that provisions of the existing international conventions (like the Paris conventions on patents and trademarks, and the Berne convention on copyrights were "too weak" to prevent trade distortions, and sought to establish a code in GATT, or "an enforceable multilateral trade agreement" that would guarantee the minimum guarantees of the exiting conventions where adequate, or develop greater protection and dispute settlement procedures.

The U.S. found considerable opposition to this, with many countries arguing that the U.S. could not use GATT to get countries either accept international conventions to which they are not now parties or even higher obligations under the conventions.

As now agreed, this issue, also to be dealt with as part of the negotiations on trade I goods, "shall aim to clarify GATT provisions and elaborate as appropriate new rules and disciplines".

The negotiation is also to develop a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods, taking into account the work already undertaken in GATT.

The negotiations in this are also to be without prejudice to any ongoing work in the world intellectual property organisation (WIPO).

In effect the U.S. had to give up its effort to use GATT, and the instruments of trade and threat of trade retaliation, to force other countries, particularly third world countries, to undertake more obligations than they have accepted under the WIPO.

In the WIPO itself, despite the asymmetries in the conventions administered by it, the third world countries have greater autonomy in deciding which areas of activity should be granted patents and trade marks protection, whether it should be only to processes or also to products, the period of protection, etc.

In the WIPO, the U.S. has been resisting demands of the third world for other revisions in the Paris conventions, and has hence sought to use the GATT to revise them to its own advantage, while blocking those sought by the third world in WIPO. This effort has apparently failed here at Punta del Este.