May 2, 1991

DUNKEL FOR QUICK COMPLETION OF NEGOTIATIONS.

GENEVA, APRIL 30 (CHAKRAVARTHI RAGHAVAN) Ė GATT Director-General Arthur Dunkel, in a speech to the Fund/Bank meetings in Washington this week appeared in effect to be pleading for changes in position of EC on Agriculture and of the South on TRIPs and TRIMs to ensure successful conclusion of the Round.

Dunkelís statement to the Interim and Development Committee meetings of the IMF and the World Bank was released here by the GATT secretariat.

Referring to the re-started negotiations, Dunkel said that progress in the re-started Uruguay Round negotiations would depend on a number of factors.

A specific and short-term one was the renewal of "fast track" negotiating authority of the U.S. administration.

Another he said was the outcome of the current national debates on agricultural policy in a number of countries - presumably a reference to the EC internal debate as well as in other European countries and Japan.

Dunkel then added: "Similarly, certain governments are reviewing their policies regarding such other controversial Uruguay Round issues as the protection granted to intellectual property and the trade-related conditions applied to foreign investment".

This appeared to be a reference to the Third World countries and the need for them to make concessions to the U.S., EC, Japan and others pushing for GATT agreements for enhanced and uniform global norms and standards and their enforcement.

"In the coming weeks and months, governments will need to demonstrate considerable resolve and courage to bring the Uruguay Round to a successful conclusion", Dunkel continued. The stakes .... are very high. But just because thy are high, there is good reason for continued optimism about the outcome of the Round".

Earlier, in his statement, Dunkel had noted that comments on developments in the Uruguay Round had tended to focus on prospects for reaching agreement "in a few particularly difficult or sensitive areas, such as agriculture or intellectual property".

However each area of negotiations was important to individual governments and those facing adjustments in the "most politically exposed areas" of their domestic economies need balancing results in areas of strength.

"For some", he said, "this may mean that concessions on agriculture or on textiles and clothing, for example, need to be offset by gains on services or market access; for others the terms of the deal will appear in opposite terms".

"This situation means that success in the Uruguay Round still has to be defined as success across the board. Governments require a global package of agreements, each of which represents a substantial and positive result for its particular area of negotiations".

Dunkel that no deadlines had been set "for achieving that success", since experience had shown that "deadlines plucked from the air" had been an inadequate instrument to persuade governments to take hard policy decisions for which they were not ready.

"The present need is to establish firm understandings about the main elements in the final package: realistic deadlines for completion should then emerge naturally. However, all governments clearly desire to complete the negotiations as soon as possible".

It was in this context that Dunkel made his remarks about progress depending on a number of factors, and mentioning the "fast track" authority, agricultural policy and the review of policies in countries on intellectual property protection and trade-related conditions applied to foreign investment.

Coming after the U.S. action in citing three countries (China, India and Thailand) for investigations and actions under the "Special 301" provisions of its domestic law in areas under negotiations in the Uruguay, Dunkelís silence on this arm-twisting by U.S. of negotiating partners, in violation of the Punta del Este Declaration and its standstill commitments, was noticeable too.

Though Thailand has been named by the USTR under Special 301, the Washington announcement said that the deficiencies in Thailand were already the subject of S. 301 investigations and hence no investigations would be initiated under Special 301.

Under the "Special 301", within 30 days of naming countries, the USTR "must" initiate investigation of policies and practices which are the basis of identification (and not already subject to "S. 301" investigations. An investigation initiated must be concluded within six months, but this period may be extended to nine months, and at the end the USTR "must" decide whether the measures under investigation are actionable, what response, including possible retaliation, is appropriate.

The time periods clearly relate to the U.S. time-horizons for the completition of the Uruguay Round. When it faced a stonewall from the EC over agriculture, the USTR is known to have advised its trading partners that it would need to be compensated by agreements in TRIPs and Services.

The USTR announcement has continued Brazil, the EC and Australia under the "priority watch list" (which could be very quickly converted into "priority countries" for actions under special 301).Brazil has been placed over its failure to provide process or product patent protection for chemicals, foodstuffs and pharmaceuticals. Brazil is due to introduce in Parliament a new law on this (to provide protection), and USTR has said this will be reviewed "carefully". Brazil has also been cited for prevalence of video and computer software piracy, but that there had been some improvement and legislation had been introduced to remedy this.

In the case of the EC, the U.S. complaint (justifying the continuance on priority watch list) is related to the EC broadcasting directive, which is to take effect 3 October 1991, whereby member-states "where practicable" should ensure a majority of TV broadcast time is reserved for European works.

Australia has been similarly cited for maintaining a 40% quota for Australian origin programmes, rising to 50% in 1993, between six in the morning to midnight and, except for 20% of pictorial matter for all advertisements to be produced in Australia or New Zealand.

Those retained on the watch list, a lower category, but quickly up-gradeable, are Australia, Canada, Chile, Colombia, Cyprus, Egypt, Germany, Greece, Indonesia, Italy, Hungary, Japan, Korea, New Zealand, Pakistan, Philippines, Spain, Taiwan, Turkey, Saudi Arabia, United Arab Republic, Venezuela and Yugoslavia.In the GATT secretariat's recent review of overall developments in the trading system, the failure to renew naming of countries and investigations under "Super 301" was approvingly quoted, but the silence on the "Special 301" was glaring.

Though the U.S. administration would also appear to have privately advised the countries affected about their going to be named as "priority foreign countries" for action, and this was apparently known to their diplomats, no reference appears to have been made in the Council debate last week.

The U.S. would appear to have tried to explain away to the countries concerned its actions by saying this had been done to satisfy Congressmen and Senators in order to win fast-track authority.

However, Dunkel speaking in Washington and talking of need for change of policies in countries over TRIPs and TRIMs, but remaining silent in the violation of standstill (whose validity and importance was reiterated by the TNC in agreeing to re-start the negotiations) was noticeable.