Nov 8, 1990

DUNKEL DISAPPOINTED WITH RESPONSES AT TNC MEETING.

GENEVA, NOVEMBER 6 (BY CHAKRAVARTHI RAGHAVAN)ó GATT Director-General Arthur Dunkel, "disappointed" with lack of signs of "movement" and "fundamental changes" in positions, was planning green room consultations from Thursday to test "flexibility" and draw his conclusions on possibilities of bringing the Uruguay Round negotiations to a successful conclusion, a GATT spokesman said Tuesday.

Dunkelís disappointment, and plans over the next few days, was conveyed at a briefing following the informal meeting of the Trade Negotiations Committee which met Tuesday to draw conclusions from Dunkelís assessment of the state of negotiations last Friday.

At the Tuesday meeting, at heads of delegations, Brazil in a statement on behalf of the Third World countries blamed the major trading partners for lack of progress and warned of the serious danger of failure, if the major trading partners tried to present "any ready-made package", agreed among themselves, to others on a "take-it-or-leave it basis, as a pretext for salvaging the Round".

Dunkel told the TNC at the end that there could be no Brussels meeting which was both "confrontational and directionless", and that he would start consultations at level of senior officials and draw his own conclusions on the possibility of bringing the negotiations to a successful end.

Dunkel is planning consultations, at level of senior officials, from Thursday on agriculture, services, subsidies and countervailing duties, textiles and clothing, safeguards, TRIMs (trade-related investment measures) and pre-shipment inspection.

The choice of issues seemed to indicate not only Dunkelís appreciation of a package of issues on which agreements would be needed to conclude the Round successfully, but also areas where he, and the U.S. and EEC, are trying to blame the chairmen of negotiating groups concerned for failure to advance the negotiations.

But long-time GATT officials were privately blaming Dunkel for lack of leadership and merely going along on basis of U.S.-EEC power equations of major trading partners.

On friday Dunkel had given the informal TNC an assessment in each of the 15 negotiating areas, and had said that at Tuesday's meeting conclusions would be drawn.

At that time Dunkel had hoped that over the weekend there would be some Ministerial involvement and inputs into the process to enable the negotiations to move forward.

While he had expected a number of Ministers Geneva and become involved, the only Ministerial did take place was a meeting of the Cairns Group porters, and the presence in Geneva since Monday Representative Mrs. Carla Hills. With the EEC Agriculture and Trade Ministers still unable to agree on an "offer" to be tabled, the EC Commissioner Andriessen did not turn up.

(Late Tuesday, the EC Ministers agreed in Brussels to tabling the Commission's proposals for a 30 percent reduction of support, but reportedly weakened further in terms of market access and cuts to be present in involvement that of Agriculture exof the U.S. Trade in export subsidy. The U.S. and Cairns Group members have already said it is inadequate basis for negotiations and while everyone is waiting to see the "offers" and its fineprint, they did not see how the negotiations could advance or crisis avoided).

The debate at the TNC was kicked off by Amb. Ricupero who read out a prepared text on behalf the Third World countries, and told Dunkel that they shared his feelings and misgivings and that they were ready to collaborate fully with his efforts to make the negotiations succeed "in a balanced and realistic way" taking into account the legitimate interests of the Third World countries.

They were distressed to see that the fears and misgivings expressed by them at the July TNC were fully justified.

"No meaningful progress has been achieved since that date, in particular in those areas such as agriculture and textiles, of particular importance to the developing countries".

"There has been no progress because there have been no real negotiating efforts. There have been no real negotiating efforts because there has been no real political will on the part of some of the key trading partners".

On their part, Ricupero said, Third World countries had tabled offers and had made contributions in a constructive spirit. They had shown their preparedness to negotiate "in a realistic and pragmatic fashion, including in those areas, which are mainly of economic interest to their highly industrialised trading partners".

But their trading partners had not reciprocated. They had lacked the "necessary flexibility" to achieve balanced compromises in key issues and had insisted in maintaining "unrealistic propositions" which went far beyond the Punta del Este and the Montreal negotiating mandates, "have reversed positions in some areas and undercut the dynamics of the negotiating process".

They bore the responsibility for the "major blockages" at the current stage of negotiations and thus "for the dire situation in which we find ourselves".

"At the time when the idea of a GATT Steering Committee composed primarily of the largest trading partners is being put forward", Ricupero said, "it is paradoxical to see that economic power does not always bear with it the corresponding sense of responsibility".

This last appeared to observers as much a hit directed at the U.S. which was pushing it as at Dunkel for helping to resurrect it (by his statements at the July TNC and last friday), even after the Montreal Ministerial meeting had turned it down and had not even mentioned it for future negotiations.

"Let me make it perfectly clear to all participants in the Round", Ricupero said, "that developing countries continue to maintain a constructive attitude in the negotiating process and remain firmly committed to an open, multilateral trading system. We wish the Uruguay Round to succeed, and we are prepared to negotiate in a flexible spirit to that effect".

"However ... this does not mean that developing countries are prepared to accept a ready-made package agreed among the major trading partners and presented on a take-it-or-leave-it basis as a pretext for salvaging the Round".

"In that case, there is a serious risk that the Round will flounder. We are prepared to do the utmost in the remaining weeks to prevent this. The industrialised trading partners must however do their full share".

In other comments, Australia reiterated the position of the Cairns Group set out in the statement of their Ministers Monday.

Nigeria and Zaire expressed concern and dissatisfaction at failure to reach an agreement on the pre-shipment inspection issue.

Switzerland agreed that the Round was in a crisis but felt. that this reflected political realities. In many areas they were dealing with introduction of greater competition and this required political risks of adjustment and hence political-decisions. The Swiss delegate called for start of negotiations in agriculture immediately and was sure that the EC would participate in it. There could be negotiations on rules in this area, even if no EC offer was on the table. The services negotiations should be taken up by chief negotiations and they could not allow important service sectors to be excluded from coverage or subject to derogations from the most-favoured-nation principle.

Mexico suggested that it was time the advocates of free trade backed up their words with action. It was time they put their cards on the table. Mexico like other Third World countries could not match the financial resources of the major trading partners in regard to export subsidy in agriculture.

Hong Kong focussed on the textiles and clothing sector and was concerned that through there was the "beginnings" of an agreement (in the chairman's text), the major trading partners were not prepared to talk specific figures for a time-period to phase out the restrictions or on transitional arrangements.

Sweden was concerned over the tendency in services to exclude broad sectors from the MFN principle. Several of the negotiating areas should be brought together to establish linkages and bring in a whole package into a single entity, a reference presumably to the idea of a single protocol for all agreements.

India was dismayed at attempts to bottle up the Textiles negotiations, and creating as many obstacles as possible, by linking to GATT rules. In anti-dumping and countervailing, user countries were demanding changes in rules to enlarge their own options in investigation and imposition of duties. In safeguards they were still pursuing selectivity. This, with failure to act on Art XXIV (customs unions and free trade areas) would strengthen bilateralism and regional blocs. There was also no willingness to accommodate Third World interests in new areas. In TRIMs and TRIPs, the only refrain was for "time derogations" for the Third World. In Services, major participants were now seeking derogations from basic principles and even exclusions. Without meaningful response from ICs on labour mobility, India would not find a multilateral framework attractive. It could not also accept any GATT management board, with permanent seats for four, even in a consultative capacity.

Pakistan also shared the concerns over textiles and was critical of the position of the ICs on subsidies negotiations. The ICs were subsidising agricultural exports and refusing to eliminate it, but were demanding that Third World countries should accept obligations not to subsidise industrial products.

Borrowing a phrase from the European Development NGOs campaigning against the thrust of the major ICs in the round, Japan said that a "Gattastrophe" should be avoided at all costs.

The EC delegate said he shared the assessment of the GATT Director-General about blockages in a large number of areas. The EC was earnest and trying to negotiate in good faith, and the number of meetings of their Council of Ministers was proof of their attempts to find solutions. The EC delegate suggested that other countries should hold similar meetings in their capitals to resolve other issues where their positions blocked progress.

Earlier, at a press conference, the EC's chief negotiator, Hugo Paemen, had named U.S. for holding up and creating blockages in the services negotiations, by the demand for exclusion of a number of sectors, and suggested that cabinet meetings should be held in Washington to change that country's positions.

In summing up the discussions, Dunkel said that they could not have a Brussels meeting which was both confrontational and directionless. "That would be the worst possible message to the users of the trade system", he said.

There was need for whole-hearted efforts over the next four weeks to reach solutions. He would begin consultations from Thursday at level of senior officials and apply maximum pressure on them to finalise as many matters as possible, and isolate problems that would clearly require political decisions.

Dunkel recalled his earlier statements about "entrenched positions" of governments and regretted that there had not been many signs of movement.

Unless there are fundamental changes in position in all the 15 negotiating areas, it would not be possible to make progress.

The willingness of delegations to be flexible would be fully tested over the next few days and he would draw his conclusions on the possibility of bringing the negotiations to a successful conclusion, Dunkel told the meeting.