Nov 10, 1989


GENEVA, NOVEMBER 8 (BY CHAKRAVARTHI RAGHAVAN)— A controversial report of the GATT Director-General for closer secretarial-level links with the Fund and the Bank and for a role when third world countries negotiate loans with the fund and the bank has met with strong criticisms in the GATT this week.

The criticisms were voiced at the meetings of the Uruguay round negotiating group on the functioning of the GATT system (FOGs).

Among those who spoke critically were reportedly India, Brazil, Czechoslovakia, Yugoslavia, Jamaica, Israel, Nigeria, Egypt and Morocco.

The Indian speech was described as particularly tough. It questioned some of the basic premises of the report, both about the "institutional" nature of the GATT and the role of the Director-General, noting that the Director-General was "only a functionary to assist the contracting parties".

India used some sharp language to reject several of the proposals and suggestions of the GATT Director-General that would have extended GATT jurisdiction and the secretariat's "empire", and increased GATT obligations: a secretariat role in advising contracting parties on their macro-economic policy or becoming "a junior partner, of the fund and the bank, or in negotiations of countries for loans from the Fund and the Bank.

The Brazilian speech, though more diplomatically worded was equally firm in rejecting most of the proposals and recommendations of the GATT Director-General, participants said.

Except for the United States, no one really liked the report, even if the reasons for their dislike were on different grounds, one participant said.

All the third world countries who did take the floor were against the major thrust of the report, namely, for institutional and other collaborations amongst the Fund, Bank and the GATT secretariats in ways that would have increased the conditioality problems of countries seeking Fund-Bank assistance, and made the GATT secretariat a kind of "trade policeman" over the third world.

The mandate to the GATT Director-General for his talks with the fund/bank chiefs as a first step was "to explore ways to achieve greater coherence in global economic policy making through strengthening the relationship of GATT with other relevant international organisations".

On the issue of "inconsistencies" between monetary, financial and trade policies, identified by countries in the discussions in the FOGs group, the GATT Director-General's report had the heads of the three institutions as being "in broad agreement that problems of this kind are among those least amenable to improvement through actions by international agencies themselves".

Several of the third world delegates would appear to have been critical of the three heads on this score (with the Indian delegate characterising it as the three washing their hands off) and not addressing the issues at the heart of the global incoherence and needing solutions for stability and growth in the international economy.

The IMF representative would appear to have intervened to distance the fund from this particular part of the report and suggested some changes in the language of the para, stating that as it stood it was likely to create some misunderstanding.

The European Community which had raised this issue of links in trade, monetary and financial policies, before and after Punta del Este, would appear to have been not too happy with the outcome, and even more with the failure of the GATT Director-General, Arthur Dunkel, to personally present the report and explain it, one participant said.

The participant also noted that when India had challenged the legal basis of the GATT secretariat, and the EEC had sought the views of GATT’s legal counsel, Mr Ake Linden, the latter agreed that as far as the general agreement was concerned the secretariat did not exist.

Linden, who first reportedly said there was no difference in international law whether GATT was a full-fledged treaty or only a provisional one (as it is now), was reportedly challenged by brazil whereupon he conceded that in national domestic laws there was a difference if countries tried to impose GATT-law.

"It was a strange and confusing situation, with the secretariat quite upset and embarrassed, and the Director-General's report not finding favour with the large number of participants", another third world source said.