Jan 14, 1992

HOW TO OPEN THE PACKAGE WITHOUT SEEMING TO DO SO.

GENEVA, JANUARY 12 (CHAKRAVARTHI RAGHAVAN) Uruguay Round participants, however reluctantly and with reservations, are expected Monday to go along with the latest Dunkel strategy of four-track negotiations: on market access and initial commitments in services, cleaning up the text and "fine-tuning" it - an euphemism to introduce changes of substance.

The Uruguay Round Trade Negotiations Committee (TNC) is due to meet on Monday to consider the Dunkel compromise global package which he had technically tabled on 20 December at the TNC (though it became available to delegations only several hours later), before promptly adjourning it.

While the original intention, though not so specifically stated by Dunkel when he formally tabled his text on 20 December and adjourned the TNC to enable political-level consideration of the package in capitals, was for the 108-participants to come back on 13 January for their comments and tentative approval or otherwise of the global package.

When he told an informal TNC on December 11 that he would present a consolidated document of the best possible approximation of the final package of results - stopping short of calling it a take-it-or-leave-it text, and left the door open for the text to be "clarified, amplified, or given more precision" - the clear idea was to bring the interminable negotiations to a halt and present the major participants with a choice to accept or reject a package.

The GATT spokesman had told newsmen that "any government choosing to open up in a substantive way what is in it will face the risk of seeing the whole package unravel".

However, the EC opposition to his agriculture package, as well as the U.S. views on other parts of the package, have in effect forced a retreat - however much it could be denied by resort to semantics - from the pre-Xmas approach that the package has to be considered "globally" and that any efforts to open up the package would unravel the whole thing.

It is perhaps an irony that it was the EC and U.S. negotiators, the latter though always with some reservations, that had been encouraging Dunkel over the second half of 1991 to put forward his own compromise text, and now find themselves in a quandary.

EC Trade and Agriculture ministers over the weekend at Brussels have made clear that the present agricultural package is unacceptable to them, without changes to put their domestic support measures (which are part of the CAP reform) into the green box as well as other changes (which would clearly include some "rebalancing" though couched or provided for otherwise).

The U.S. too is seeking changes in textiles, intellectual property, etc.

Though the two are far apart on these and other issues, both are in fact searching for a way to changes parts of the package, while consolidating those parts favouring them.

There is some suspicion that the two are agreed on "processes" that would enable the package to be modified in areas that suit them, but preventing others, including developing countries, from changing things and that the "fourth track" idea floated by Dunkel is part of the procedural understanding reached perhaps by the U.S. and EC in Washington in the Andriessen-Carla Hills talks last week.

As one Third World participant put it, for the two it is a case of "how to reopen the package without seeming to do so", and for this the Dunkel "fourth-track non-transparent process would help, as it would other major players including Japan and South Korea who might subtly join hands with the EC over agriculture.

Japan, which continues to be ambivalent, is looking for the U.S. and EC to settle their "agricultural quarrel" before taking up a position of its own. But it is clear that it would favour some informal process to get substantive changes to suit itself and other major traders, but without reopening the package.

At the meeting of the informal group of developing countries on Friday two clear ideas came out: one was by the leading developing countries who found considerable problems with the package, but nevertheless did not want it to be reopened lest they are worse off and want to conclude the negotiations.

They were thus against the Dunkel "fourth-track" approach of "fine-tuning", even if they did not say that so specifically, contenting themselves with warnings and concerns about the "non-transparencies" and risks involved in such an approach.

But there was also the view of some others including South Korea (whose concerns in agriculture are similar to those of Japan) and some of the food-importing countries who want the package to be "fine-tuned" from their point of view.

Statements on behalf of the Asean and the Latin American and Caribbean countries suggested that neither of them would want the package to be reopened in any way.

The Latin American group, which had a prepared text, supported the first three tracks (of the Dunkel proposals at the "green room" on Thursday) which they noted reflected the work programme implicit in the draft Final Act: finalising and conducting the initial market access negotiations in goods, similar negotiations on initial commitments on services and to tidy up the texts to ensure legal consistency.

As for Dunkel's "fourth track", the Latin American statement noted that the package contained serious deficiencies from the point of view of their expectations and interests.

"Nevertheless, it represents a carefully crafted package, reflecting the balance in the negotiating positions, as read by the Chairman of the TNC after over five years of delicate, fragile negotiations".

"To reopen the texts now could unleash a process of changes and revisions with unforeseen consequences, which could jeopardise the entire negotiating efforts. Participants wishing to do so would have to bear the full political responsibility of such a step".

"Should the text be reopened, this could not be done in a partial and restricted manner, as it would necessarily have to involve modifications in all areas in order to reflect the serious difficulties that the preliminary results pose for our countries".

The Asean too reportedly made a similar statement, viewing the Dunkel package as a reasonable basis to continue work but expressing reservations and concern over the fourth track.

Morocco, which chairs the informal Third World group, is expected to speak in the TNC Monday, reflecting these positions. But a number of individual countries are also expected to speak to outline their national concerns and positions.

And while developing countries and the smaller industrial nations are approaching this entire exercise in terms of probable benefits to them over the long-term through certainty of multilateral rules and disciplines, the goings-on among the major actors suggest that any emerging new disciplines of the new GATT will be as much a casualty as the older one.

An example, as some see it, is that even as the Uruguay Round safeguards agreement is trying to prevent new "grey area" measures and phase-out older ones (several of whom are illegal any way even now and ought to have been phased out under the non-implemented rollback commitments), the U.S. President went to Japan, with the three major U.S. auto-makers, to reach a "managed trade" agreement for Japanese assured imports of U.S. cars and auto-parts.