Jul 18, 1987

COUNCIL ON THURSDAY AGAIN PUTS OFF ACTION ON NICARAGUAN ISSUE.

GENEVA, JULY 16 (IFDA/CHAKRAVARTHI RAGHAVAN) Ė The GATT Council put off till Friday consideration of its panel report on the U.S. trade measures against Nicaragua, in an effort to find a consensus decision.

The panel gave a ruling last October on the Nicaraguan complaint against the U.S. over the trade sanctions.

But since then the Council has been unable to act. The U.S. in effect has blocked all decisions or actions by the Council, except the one of taking note of the report.

After several rounds of consultations by the previous and present Council chairmen, Nicaragua gave notice of a resolution to be adopted by the contracting parties, at the meeting of the Council on July 15.

With many countries, industrialised as well as the Latin Americans involved in the Contadora process or supporting it, wishing to avoid a vote, there has been considerable behind the scene efforts to find an acceptable compromise.

But so far the U.S. has given little way. As one third world delegate put it, with everyone else anxious to avoid a vote, the U.S. is facing no pressure to find a compromise.

The panel, which adjudicated the dispute, found itself unable to act effectively or provide relief to Nicaragua, due to the terms of reference and current GATT practices. It however suggested obliquely that other contracting parties could take measures to help Nicaragua.

The panel noted the Nicaraguan request that the contracting parties should be given a general waiver to enable those wishing to do so to give special and more favourable treatment to Nicaraguan products, and thus compensate Nicaraguan products, and thus compensate Nicaragua for the effects of the embargo.

In its conclusions the panel had said that the embargo had "a severe impact on the economy" of Nicaragua, and that it had brought the trade between U.S. and Nicaragua to a standstill.

Embargoes of this type imposed for security reasons, the panel had said, created uncertainty in trade relations, and reduced the willingness of governments to engage in open trade policies and of enterprises to make trade-related investments.

The panel hence concluded that independent of whether or not the measures were justified under article XXI (security exceptions article of GATT), embargoes of the type imposed by the U.S. "ran counter to the basic aims of the GATT, namely to foster non-discriminatory and open trade policies and to further the development of less-developed contracting parties and to reduce uncertainty in trade relations".

The panel noted that general agreement protected the "essential security interests" of each CP, and GATTís purpose was not to make CPS forego their essential security interests.

"However, the panel considered that the GATT could not achieve its basic aims unless each contracting party, whenever it made use of its rights under article XXI, carefully weighed its security needs against the need to maintain stable trade relations".

The Council had been unable to act on the issue Wednesday, and had put off its consideration till Thursday.

When the Council met Thursday afternoon, with the U.S. not giving any ground in the consultations, Nicaragua formally introduced its draft resolution and sought a decision, stating that like others it too would welcome a consensus.

The Nicaragua draft apart from adopting the panelís report, recommended that the U.S. take into consideration the negative effects of the application of the embargo on the multilateral system and international trade relations, and "proceed to its early removal".

The draft also welcomed contracting parties wishing to do so, grant concessions to Nicaragua, including trade preferences in conformity with GATT provisions.

The U.S. made clear that it would not be a party to the decision and opposed it.

Mexico, on behalf of six Latin American countries (Argentina, Brazil, Colombia, Mexico, Peru and Uruguay) introduced a paper in the form of a statement to be made by the chairman of the Council after it adopts the report of the panel.

The statement proposed would have the chairman cite the points on which there was consensus in the Council.

These would include the fact that the embargo had virtually eliminated trade between U.S. and Nicaragua, and seriously upset the competititve relationship between embargoed products and other directly competitive products.

It would also cite the panelís conclusions about the general effects of such trade embargoes, and its effect on GATTís basic aims.

The chairmanís proposed statement would then go on to say that it was open to any contracting party wishing to do so "to act in accordance with GATT rules and obligations to grant trade concessions to Nicaragua, including under GATT provisions which provide for special and more favourable treatment".

Third world sources said that even this was not acceptable to the U.S., but the Council meeting was put off till Friday afternoon to enable the Council chairman to hold further consultations to find a consensus.