INDIAN CONCERNS OVER DUNKEL DRAFT TEXT.

May 15, 1992

INDIAN CONCERNS OVER DUNKEL DRAFT TEXT.

GENEVA, MAY 13 (TWN) – Indian Commerce Minister, P. Chidambaram met GATT Director-General Arthur Dunkel Tuesday and conveyed to him Indian concerns over some of the proposals in the "Draft Final Act" or the Dunkel Draft Text (DDT).

Dunkel however advised him that it was really a matter for negotiations by India with other participants.

According to an Indian mission press release Chidambaram conveyed to Dunkel Indian concerns on some aspects of the package, relating in particular to areas of market access where India has comparative advantage like textiles and clothing (governed now by the MFA), and "public interest" in areas of food security and access to health care (as in agriculture and TRIPs), as also some aspects of the "Rules".

According to the press release, Dunkel explained in some detail the "long and tortuous negotiate process" that culminated in his tabling the DFA text and Dunkel "believed that there would be opportunities for participants to address their concerns before these negotiations conclude".

Chidambaram is on a visit to Geneva for a meeting organised by the World Economic Forum, the private sector business lobby group, where he was due to explain the latest Indian policies and try to attract foreign direct investment. He was due to return home on Thursday.

Dunkel had presented to the participating governments, through the official level TNC meetings which he chairs, in December last a package of proposals, incorporating large areas of agreement but filling in with some proposals and figures of his own to bridge gaps in several key areas where negotiators had been unable to resolve their differences.

Though he did not specifically state it, everyone was left with the impression that this was to be a "take-it-or-leave-it", since tampering with any portion would unravel the entire package.

But in January 1992, it became clear that this "gambit" had not succeeded and that the EC would not accept the text without major changes in the agricultural portion and that, while the U.S. was opposed to the change and claimed it did not want to reopen the package, it was merely waiting for others to "unpack" the Dunkel package, to call for changes of its own.

The U.S. proposals and stance on services and initial commitments also make clear that the US in effect wants a virtual rewriting of the General Agreement on Trade in Services.

In December last, and early this year, there had been talk of completing the negotiations and concluding the Round by April, the deadline has proved to be no such deadline.

Everyone now seems agreed privately that the Round cannot be completed before the U.S. elections are over. While some think it could be quickly wrapped up thereafter, others are slightly more sceptic, only saying that either the Round would be completed before February or would get prolonged indefinitely, since no one would be prepared to say the negotiations were a failure and call it off.

Dunkel had put forward the text, and had been privately encouraged by EC and U.S. officials to do so, after having announced earlier that he would not accept any new mandate (to continue as GATT Director-General) after end of 1992 when his term expires.

GATT officials at that time had explained that Dunkel's no more term in GATT was aimed at strengthening his own hands and pressuring the majors to settle their disputes and conclude the Round successfully.

The Chairman of the GATT CPs, Lars Anell of Sweden, had told the last meeting of the GATT Council (that in accord with the agreed procedures), he would start consultations with Contracting Parties from 1 June on selection of a successor to Dunkel.

But the talk is gaining currency in Geneva that Dunkel could be asked to continue, at least till next February or March, in an effort to wrap up the Round by the U.S. Congressional fast-track authority deadline which require that the package of agreements should be presented to Congress by 1 March 1993.

There are some who see this as essential, since any new man could complicate the process of negotiations, while others outside see that it would probably deliver one more blow to the GATT credibility, already in tatters because of the "majors" who are unable to conclude the Uruguay Round negotiations and insofar as their conduct is concerned, feet no need to observe GATT rules if it does not suit them.

In India, there has been a wide-ranging public debate, with industry and commerce, particularly those with transnational links, favouring acceptance. But public interest groups and many academics are campaigning against it, particularly over the impact of the proposals on development of Indian agriculture (both by the agriculture proposals themselves as well as the TRIPs proposals and their effects on agriculture through gene patenting).

The government itself has not so far announced its position.

But at a press conference Tuesday (before his meeting with Dunkel), Chidambaram had said that like others India too was unhappy over parts of the Dunkel package which he said had both positive and negative aspects.

India, he said, was not happy with the 10-year period for phase-out of the Multifibre Agreement (MFA) or with the rate of integration and the growth factors (for the trade during the phase-out). "We think the phase-out of the MFA is 'back-loaded' and not adequately 'front-loaded' and hence not credible", Chidambaram said. "We would like to make the provisions for MFA phase-out more credible".

India also had serious reservations over the TRIPs proposals which "we think does not take into account the concerns of the developing countries". India’s principal concerns were with food security and access to drugs. India also had reservations over the package on agriculture, as well as on rules and dispute settlement. While some of these were technical, there were some ambiguities in the language used. For example, would unilateral trade retaliation provisions in some national laws, like the U.S. Special 301 be consistent with the DFA. Any prospect of S. 301 surviving under the Dunkel proposals, in whatever form, was not acceptable. These ambiguities had to be removed.

At his press conference, largely devoted to Indian investment policies and hopes of attracting FDI, Chidambaram also answered questions over the U.S. "trade sanctions" against India over its going ahead with the deal with Russia for rocket technology as well as the announced intention of denying India GSP benefits for its exports of drugs and chemicals to the U.S. market over India's failure to yield to U.S. demands on intellectual property protection in these areas.

The Indian Minister said that the U.S. action over the space technology was totally uncalled for, since India needed them purely for peaceful purposes of weather, crop and other such satellites.

On the IPR and denial of GSP issue, Chidambaram said the government was assessing the situation. The U.S. notification, he noted, was made on 29 April and would take effect 15 days after its publication in the U.S. trade register. India has made representations in Washington and conveyed to the White House its "unhappiness". India was awaiting the outcome and would thereafter formulate its response.

"Sustainability can only be achieved in planned steps and while ensuring forests shall be used rationally for maximum protection, on a sustained yield basis, of benefits of all the products obtainable from them - which means the people must be involved in order to know their wishes".

Not only do 95 percent of Africa’s 640 million people depend on wood as a source of energy, but their countries are so heavily indebted to the developed world that they must exploit all their resources to pay back their loans or "they will continue to borrow and forever remain poor".

"Campaigning for a boycott of tropical timber without considering this reality is, therefore, politicking, unscientific, malicious and unrealistic and only helps to mislead the world community about what sustainable forest management is all about", the ATO Secretary-General says.

Although the causes behind rainforest destruction are complex and varied, the heavy debt burden of these rainforest countries (Cameroon, Gabon, Ghana, Central African Republic and Zaire, in Africa) are a major contributory factor. The indebted countries depend on export of basic commodities such as agricultural produce and timber.

Many have little choice but to reduce imports and maximise exports in order to earn foreign exchange to service debts. But failing commodity prices, coupled with rising interest rates, have meant that countries have to export more and more just to remain in the same position, Garba says.

This has led countries to encourage development for export, resulting in clearing forests for timber, agriculture or plantations. Peasant farmers displaced from fertile lands needed to grow cash crops have been forced to clear forests to grow food, thereby adding to the problem.

What the industrialised countries should do is to provide Africa with needed financial assistance not only to manage its forests sustainable, but also to develop its agricultural technology to allow for maximum yield within restricted land area, Garba adds.