Oct 24, 1990


GENEVA, OCTOBER 23 (BY CHAKRAVARTHI RAGHAVAN) - The United States and the European Community proposals for winding up the Uruguay Round talks will force Third World countries either to accept a new trading system and Organisation incorporating all the agreements and enhanced disciplines in old and new areas or withdraw from the GATT.

The last would depend on whether the U.S. and EEC can line up an overwhelming majority, or at least two-thirds majority, of the by now 100 GATT Contracting Parties to accept and incorporate into the General Agreement as amendments all the accords and "invite" those not accepting to withdraw.

They are also holding out the threat, if they fail to secure such support, of their own withdrawal from GATT and setting up a new organisation.

The very large number of Third World countries, partly at the instance of the major ICs and their disinformation and partly due to the desire, on political considerations, not to antagonise the major ICs have taken a low profile or not participated at all in negotiations in most of the new areas as well as rule-making ones.

Privately, some of their diplomats have tried to explain it all away saying their countries had no interest and that at the end of the round they would just not sign these accords.

These countries, unless they bestir themselves now to prevent accords in individual areas which they could not accept, will now be faced with a choice of having to accept accords with very adverse consequences for the sake of some meagre short-term market access concessions.

The U.S., EEC plans have become clear through some "non-papers" floated by them on how to give effect to the wide range of issues being negotiated in the Uruguay Round, both those falling strictly within the GATT jurisdiction of trade in goods and those in new areas like services, intellectual property and investment.

They are trying to use the concept of a "single undertaking" to put the entire range of accords - from tariff concessions and clarifications of rules of origin through new rules on subsidies and antidumping, safeguards, textiles and clothing trade, the modified Tokyo Round codes, agreements on TRIPs, TRIMs and Services and dispute settlement covering all areas and enabling cross-retaliation - into a single protocol which would make acceptance of one conditional on acceptance of all, and use it effectively to replace the existing GATT.

Though the U.S., in the run-up to the Punta del Este meeting, had sought to link all the negotiations, in goods and services and new areas, it was ultimately possible to launch the Uruguay Round only when it accepted a compromise evolved by the EEC, Brazil and India, separating the goods and services negotiations, with the Ministers merely committing themselves to decide at the end of the Round on the international implementation of the accords.

The concept of "single undertaking" has been used only in Part I of the Punta del Este Declaration relating to the multilateral negotiations for trade in goods, through it has been used by the EC and others in the political sense of what they term "globality" of the entire Uruguay Round negotiations.

The Community originally flagged the "globality", issue in February 1987, but made clear it was using it in the goods negotiations and to insist on parallel progress in all sectors and ruling out an "early harvest" approach in agriculture, sought by the U.S.

A year later, when the Community expanded the concept to encompass both the goods and services negotiations, India intervened to put on record (without challenge from the EEC) the actual understanding reached by it with the EEC on the relationship between the two negotiations.

The Uruguay Round being a "single global undertaking", India had then said, was only intended to deal with the fact that the goods and services negotiations were launched at the same place and time at Punta del Este, that a Trade Negotiations Committee (as a political body) was set up to oversee and run both the negotiations, that the two distinct processes of negotiations began and would end at the same time, and that the decision on implementation of the respective results would be taken at a Ministerial meeting patterned like that at Punta del Este.

No other linkage - legal, procedural or otherwise - had been envisaged or accepted, India made clear.

In its non-paper, the U.S. has now suggested that the results of the Uruguay Round should be integrated with the existing General Agreement in a successor agreement, "the Integrated Trade Accord".

In this approach of the U.S., the GATT would be fully preserved wherever its provisions have not been the subject of Uruguay Round negotiations and agreements, but in others where new rules and disciplines might emerge the existing GATT provisions would be replaced by the new agreements or supplemented by new agreements where there are now no provisions.

Art. XXV of the General Agreement enables Contracting Parties, acting jointly, to further the objectives of the Agreement where there are no provisions. This authority, normally exercised by consensus but in theory through a simple majority decision (except waivers from GATT obligations requiring two-thirds majority), could merely help in clarifying existing provisions. They cannot create new obligations or bind CPs by new interpretations.

Article XXX enables amendments to the General Agreement by two-thirds majority of CPs accepting a particular amendment, excepting in respect of the most-favoured-nation principle in Art. I where unanimous consent is needed for any change.

As in other international treaties, amendments would bind only those who accept it. However, there is a provision in Art XXX under which, where an amendment is viewed by those who have accepted it as fundamentally changing the balance of rights and obligations, they could "invite" those not accepting it to withdraw from the General Agreement.

The General Agreement has provisions for withdrawal by individual contracting parties, and for consequences of such withdrawal, but none for the Agreement to be wound up or for parties to suspend or terminate its application among themselves.

This means that, under the applicable Vienna Law of Treaties, replacement of GATT with a new instrument and the abrogation of the present GATT, as a body of rights and obligations, would need agreement of all and/or their being a party to a later treaty whose provisions have the clear intent of terminating GATT.

The EEC, for the present, has sought to avoid the approach suggested by the U.S. arguing that an attempt at this stage to establish a new single comprehensive agreement on international trade involving withdrawal from GATT would be unwise even if from a legal point of view it would avoid some complications.

But such an approach at this stage, the EEC has argued, would distract attention from substantive issues and integrating the agreements into the GATT would involve a lengthy and complicated additional process of negotiations that cannot be completed before the Brussels meeting.

The EC has instead suggested two approaches for the present to give effect to the Uruguay Round accords.

The EEC would have the Special Session of the Contracting Parties at Brussels, wherever possible, to give effect to the results of the negotiations in the form of a decision on the basis of Art. XXV.

It would have the other results to be incorporated into a single protocol of acceptance, making acceptance of any part conditional upon acceptance of all the results, envisaging as an exception to this only the agreement on government procurement.

In this EEC scheme, any accords in the Round in areas covered by the Tokyo Round codes, several of which are full treaties unlike GATT which is only provisional, should entail withdrawal from existing codes.

All separate legal instruments - except for the government procurement code and possibly the transitional "replacement agreement" on textiles and clothing and the one on services - should have provisions that would have the effect of incorporating them into GATT as an amendment whenever they secure the requisite number of acceptances.

Common dispute settlement procedures should be established for all the accords through a decision of the GATT Contracting Parties.

While the dispute settlement under each of the separate legal instruments would be according to its rules and in its context, each of them could however explicitly provide for cross-retaliation.

The EC's own proposal for a common institutional framework, through a Multilateral Trade Organisation (MTO) would be maintained, with work beginning from now on its details.

"At a given tine in the future, and in the event of an unsatisfactory level of acceptances of the Uruguay Round results", the EEC says in its paper, "the idea of withdrawing from GATT and concluding a new GATT among those countries which have accepted the results of the Round could be reconsidered and used as a leverage to achieve a desirable balance of rights and obligations within the renewed multilateral trading system".