Nov 6, 1990


GENEVA, NOVEMBER 2 (BY CHAKRAVARTHI RAGHAVAN)— GATT Director-General Arthur Dunkel presented Friday a sombre and bleak assessment of the Uruguay Round negotiations and said the gap between the objectives and what was in hand was "alarming".

In his assessment Friday evening to an informal meeting of the Trade Negotiations Committee, Dunkel told the negotiators "while we still have everything to gain, the risk of losing everything has never been so present".

The TNC is to hold on another informal meeting on 6 November, to draw "conclusions" from this assessment.

Dunkel indicated that from 7 November he wanted involvement of chief negotiators in the negotiations and that he planned to ask some of them to share with him responsibility for identifying and eliminating points of divergence subject by subject.

From 7 November, he added, the TNC would be the focus of the negotiations, backed by formal and informal meetings under his own chairmanship or chairmanship of some chief negotiators acting on his invitation.

The assessment of the state of negotiations in each of the 15 areas, "thirty-one days away from Brussels" and 21 days from the effective deadline, appeared "bureaucratic, rather than political".

Some Third World delegations felt that Dunkel had presented not only his preoccupations but also those of key delegations in a "fair way", but others saw a continuing tilt, as in his summing up at the July TNC meeting, in areas where there was a common position of the ICs vis-à-vis the Third World.

His assessments in some areas, such as the U.S. push for "management board" in GATT (which had been rejected in the FOGs group) as well as on TRIPs or TRIMs or Services where he has highlighted the preoccupations of the ICs - such as of the U.S. in services, or U.S. and Japan in investment, or of the ICs in TRIPs without mentioning the Third World preoccupations and collective statements - did not bear out the assessment that Dunkel had tried to be "fair" in reflecting Third World views.

In agriculture, Dunkel gave what he called a "dramatically short" assessment and merely spoke of negotiations being held up because of the EEC's inability to table its "offer". But he made no reference to the vast gap in substance between the demands ("offers") of the U.S. and Cairns Group on the one side, that of the Japan and Europeans like the Swiss and of the EC Commission's proposals which even if tabled are very meagre, and the positions of Third World countries and net food importing ones among them.

His statement also conspicuously omitted the whole issue of evaluation from the perspective of "special and differential treatment" to Third World countries which is a basic requirement under the Punta del Este mandate and of another basic principle, namely, "balanced concessions should be sought within broad trading areas and subjects to be negotiated in order to avoid unwarranted cross-sectoral demands".

Dunkel, has been pushing the view of the leading ICs for a package of accords on the basis of "trade-offs" in the Uruguay Round viewed as one "global undertaking" - with Third World countries making concessions in new areas like TRIPs, TRIMs and Services in return for market access concessions for their exports.

Dunkel said that from November 7 the focus of negotiations would be the TNC, "backed up by formal or informal meetings under my chairmanship or the chairmanship of chief negotiators acting on my invitation" - a reference presumably to "green-room" consultations and even smaller groups.

The procedures outlined by Dunkel, as well as the way he summed up the outstanding issues, would seem to suggest that he would use the non-transparent "green room" and even less transparent "sub-green room" processes to push "pre-cooked agreements".

If past practice be any guide, competent observers said, Third World interests would be sacrificed at the altar of the "GATT success" to further U.S.-EEC interests, where they were common.

There were few comments Friday after Dunkel’s statement.

EEC delegate, Amb. Tran Van-Thinh reportedly made clear that it was not feasible to extend the negotiations beyond the December Brussels meeting since the European Community had "other priorities and preoccupations", and implied that participants should scale down their ambitions.

In a reference to Dunkel’s remarks that the failure of the EEC to table its offer in agriculture had prevented the start of the real process of negotiations, Tran told the meeting that the EEC was negotiating in good faith, but that the entire negotiations could not be held up on that.

Participants present there later said this appeared to suggest that there was a 50-50 chance of the EC tabling its agricultural "offers", but that the other participants should engage in negotiations on agriculture "with or without an offer" and conclude the negotiations at Brussels.

The U.S. coordinator for the Uruguay Round, Warren Lavorel, reacted by narrating the story of a person, lost in a forest during a storm and thunder and lightning, and praying to god "Oh lord let there be less noise and more light".

In other comments, Indonesia speaking for the Asian group introduced the Asian Ministerial statement, issued after their recent Bali meeting outlining Asian concerns and preoccupations.

In his assessment, Dunkel made the following points:Market Access:

There has recently been some progress in tabling of market access offers, and "a major trading nation" (U.S.) has finally tabled its offers, while a considerable number of offers have also been improved. Some participants still had to table offers.

The absence of a key offer in agriculture had been a major factor in preventing detailed access negotiations getting under way in agriculture, and had also adversely affected access negotiations in other products areas such as NRBPs, Tropical Products and on negotiations as a whole.

If process of tabling offers in all areas is not completed, some offers on the table would inevitably be withdrawn, thus generalising a process which had already begun and which must be stopped and reversed.

He was also "deeply concerned" at the "unsatisfactory character" of the request/offer negotiations currently under way an unless these were intensified substantially, and delegations were prepared to improve offers in the course of negotiations, "we run the risk of not having a meaningful package on market access".Rule-Making:

There were ad referendum agreements to put on Art. II.1: b (increasing transparency of customs and user fees), Art. XVII (State Trading Enterprises), Art. XXVIII (modification of tariff schedules and renegotiations for them), Customs valuation and import licensing (both part of Tokyo Round codes). On import licensing, consultations were taking place on a proposal for establishing a working party in the post-Uruguay Round work programme to considers drawing up of rules of Export Licensing Procedures.

While there was an agreed basis for negotiations in a number of areas, there remained important contentious issues, including on Rules of origin, preshipment inspection, sanitary and phyto-sanitary regulations, Art. XXIV (customs and free trade areas), Art. XXV: 5 (waivers from GATT obligations), the Protocol of Provisional Application, Safeguards, Technical Barriers to Trade, Dispute Settlement and the Functioning of the GATT System (FOGs).

A number of technical difficulties were yet to be resolved on sanitary and phyto-sanitary measures, and there was also disagreement whether or not animal welfare, environmental protection and consumer interest measures should be covered by the proposed disciplines, how it would apply to local governments and relationship of new disciplines to the GATT provisions.

On changes in GATT Article XXXV (non-application clause), while a draft decision is to be forwarded to the TNC, some parties have indicated they were still considering legal implications.

In Safeguards, the issues to be decided include whether an exception should be made to the basic MFN rule so as to permit "selective application" of safeguards, how the prohibition and elimination of "grey area" measures is to be achieved, the obligations of customs unions, special and differential treatment to Third World countries and provisions on adjustment assistance measures. Proponents of "selectivity" are to table details of "exceptional circumstances", which would justify selective action, and the multilateral disciplines to which they would be subject.

In Technical Barriers to Trade, unresolved issues concerned provisions relating to regulatory activities of local government bodies and dispute settlement, as also relationship of this agreement to that on sanitary and phyto-sanitary measures in Agriculture.

While substantial progress has been achieved in Dispute settlement, differences remain on how to deal with "non-violation disputes" - measures which may not be contrary to GATT obligations but have nullified or impaired benefits to Contracting Parties. Intensive consultations are under way to settle them and differences are also yet to be resolved on procedures in the GATT Council for setting up panels, adoption of panel reports, adoption of appellate body reports and authorisation of retaliatory action.

In FOGs, full agreement had been reached on enhanced surveillance. Work on Institutional Reinforcement of GATT had gone as far as it could at the present stage, and the existing consultative and institutional arrangements to reinforce GATT would be re-examined in light of the results in other areas of the Uruguay Round. As for the proposed Declaration on Coherence in Global Economy Policy Making, the main outstanding issue was whether exchange and interest rates have been damagingly unstable in recent years and whether the Declaration should deal with such matters and their impact on the trading system.

"Another outstanding issue is a proposal regarding the establishment of a GATT Management Board".

(At the last FOGs meeting, this U.S. proposal was turned down by most participants, but Dunkel has sought to give it new life).

There was a third category of areas, Dunkel said, where "we do not even have an agreed basis for negotiations".Government Procurement:

Only two proposals still remained on the table - for expansion of the provision relating to special and differential treatment and for revision of procedures for accession, and consultations were continuing on these.Anti-Dumping:

There continued to be wide differences on most of the 15 main issues identified in this area, in particular on: improvements in the code for determinations of dumping and injury, modalities of new provisions on anti-circumvention, recurrent injurious dumping and repeat corporate dumping. There is yet no single text on which negotiations could be based, but efforts were continuing to produce such a text.

Subsidies and Countervailing Measures:

Work is focussed on finalising a draft, but three or four major issues still remained to be resolved. The work in these areas requires "political and not technical break-throughs" GATT Articles:

It has not yet been possible to agree whether or not to open negotiations on the Balance of Payments provisions.


It has proved impossible up to now to reach the stage of an agreed basis for negotiations, but negotiations are in process to achieve such a basis. The main blockages are: disagreement over level of disciplines to apply to TRIMs, particularly whether certain TRIMs can be prohibited on the basis of their contravention of Art. III and VI of GATT and whether others should be prohibited under new provisions; disagreement over coverage and whether disciplines should cover TRIMs enforced through offering or withdrawing a subsidy, investment incentive or other advantages; disagreement over inclusion in text of three subjects on which proposals have been received - for non-discriminatory application of TRIMs among Investors, provisions for reciprocal investment rights between countries, and provisions for control of abusive anti-competitive practices of investors.TRIPs:

A chairman's text has been used as basis for on-going negotiations but there are still many outstanding issues and intensive negotiations are continuing. Among them are: those related to structure and international implementation of any eventual agreement, including its relationship to GATT and question of dispute settlement; a number of important issues in the area of standards, notably relating to patents, geographical indications and protections of undisclosed information; and transitional or other special arrangements applying to Third World countries.Textiles and Clothing:

The only available basis for negotiations is a chairman's new text, reflecting progress in as much as it is built around a single modality. Substantial differences however remain in respect of fundamental elements of the approaches to phase-out of existing restrictions and transitional safeguards. Other divergences relate to question of strengthening GATT rules and disciplines and verification. The difficult of coming to grips with these issues has been accentuated by absence of even indicative numbers or ranges or percentages which will govern the rate at which integration takes place as well as length of stages for integration, let alone time-span of agreement.Agriculture:

"My assessment has to be dramatically short. The absence of an offer by a key participant -the European Community - has so far prevented start of any real process of negotiations".Services:

In the negotiations on the basis of the draft multilateral framework, there are still differences of views on various provisions not directly linked to legal or sectoral issues. Further development of the chapter relating to institutional provisions is also necessary. However, the main task is to revise and finalise the text taking into account comments by the legal experts and the suggestions for changes in the framework to cover the situations in different service sectors.

In the sectoral negotiations, in at least five of the service sectors - basic telecommunication services, land transport services, maritime transport services, air transport services and audio-visual services - participants are unwilling to accept application of some basic framework obligations, notably MFN, to some or all of the activities in these sectors. There are also difficulties over applications of some other framework provisions, such as transparency and dispute settlement. There is also disagreement as to whether there should be some specific provisions relating to the movement of personnel as a mode of delivery. Lack of progress in one area hampers progress in other areas. There are therefore serious questions as to what may be achieved in the services negotiations.

Consultations are progressing on procedures for negotiation of initial commitments.

Surveillance Body:

The next meeting of this body on November 9 is to adopt the Report of its Chairman for the Brussels meeting. If Ministers are to take action in Brussels, agreed texts of their decision covering issues raised in this body should be agreed by 12 November.