Nov 11, 1989


GENEVA, NOVEMBER 10 (BY CHAKRAVARTHI RAGHAVAN) – The GATT Director-General, Arthur Dunkel, is now expected to attend the next meeting of the Uruguay Round negotiating group on Functioning Of the GATT System (FOGs) to respond to critical third world comments on his proposals for increasing GATT’s secretariat’s role and its relations with the Fund/Bank staff.

The FOGs group this week has been discussing a report of the Director-General, in relation to the Punta del Este mandate for increasing "GATT’s contribution to achieving greater coherence in global economic policy making through strengthened GATT relationships with other relevant international organisations".

Under the mid-term accord, the GATT Director-General had been asked, as a first step, to consult with the heads of the Fund and the Bank on ways to achieve this greater coherence in global economic policy-making, and submit a report.

In the discussions in the group this week on this report, both general and various sections of it, third world countries have been critical of the heads of these three institutions for not having addressed the main thrust of the mandate, namely, achieving greater coherence in global economic policy-making.

As India put it, the three heads "have washed their hands off any need to undertake any joint measures" for eliminating the inconsistencies in aims pursued by monetary, financial and trade policies and which arose "primarily from actions of major economic powers whose policies have a significant impact on the multilateral trading system".

The countries were even more critical of the three trying to pursue instead, as proposed in Dunkel’s report "consultations with GATT in the formulation of trade reform objectives in Fund and Bank loan programmes" which third world countries negotiate with these institutions.


Third world countries clearly saw this as another in the kind of "conditionalities" and "cross-conditionalities" they were going to be subject to, with the GATT secretariat trying to assume a role, which it can exercise only with the third world economies and not with the major economies, in "advising" them on their trade policies and ensuring through this their adoption of policies favourable to TNCs and foreign enterprises.

One participant said that even several of the industrial countries who spoke, including the EEC, spoke of their "understanding" of the concerns of third world delegations, though a few of them tried to argue the GATT secretariat case by suggesting these fears were exaggerated.

At the end of the discussions on Thursday evening, the chairman the group, Amb. Julio Lacarte of Uruguay, is reported to have said that the GATT Director-General would attend the next meeting and respond to the criticisms and clarify the proposals.

Though no meeting of the fogs group had been scheduled in the GATT calendar for the rest of the year, a meeting has now been fixed for December 15, according to participants.

One of the participants at this week’s meeting said that the FOGs group was now in a strange situation.

The attempts to "institutionalise" GATT and strengthen the role of the GATT secretariat and its functioning as a junior partner of the Fund-Bank institutions in policing third world policies, the participant said, has been an U.S. objective for the round spelt out in its omnibus trade and competitiveness act.

However, the U.S. is equally determined not to "institutionalise" GATT through amendment of its articles and making the GATT a full treaty enforceable in U.S. domestic law, rather than the provisional one it is now.

During the first two years of the meetings of the FOGs group, then chaired by Julian Katz a Former State Department Official (and now a deputy to the U.S. Trade Representative), who was asked to chair the group as an "independent person", third world delegations found themselves having to negotiate with Katz who was pushing the U.S. and GATT secretariat ideas, which had been first unveiled in 1982/83 by the GATT Director-General in the informal consultative group of 18.

"Now that Katz has gone, we find this a strange negotiating group, with contracting parties negotiating not among themselves but with the "contacted party" (the GATT Director-General and his Secretariat) on their ideas for enhancing their own roles and status", the participant remarked.

Most participants don’t like this idea of either negotiating with the secretariat or having to come out to make clear that the Secretariat of GATT has not the same status of secretariats of international organisations set up under full treaties.

But they have been forced to take this position, lest they find themselves subject to more "harassment" through conditionalities and cross-conditionalities in their dealings with the Fund/Bank institutions, the participant noted.

Even the third world idea of getting 'credit' in the negotiations for trade liberalisations forced on them in Fund-Bank programmes, was now sought to be used against them by forcing them to bind it GATT.

"This is now becoming a code word like the one about 'greater participation of developing countries in the GATT', which really means assuming greater obligations than warranted by their situations", a long-time GATT observer commented.

In such a situation, he added, polite and subtle language couched in 17th century diplomatic language would be lost, and only frank statements would work, he added.

When the fogs group met on November 6, Dunkel did not attend the meeting, but his deputy M. G. Mathur came to formally present the report. This itself aroused some critical comments including from the EEC, participants said.

But Dunkel is reported by GATT sources as having been quite upset by the criticisms and comments, particularly those challenging the GATT secretariat's legal status or the institutional character, and which the GATT’s own legal counsel had to say in the fogs group was the correct one.

The major trading partners are also reported to be upset that theirs efforts to strengthen GATT secretariat's role and institutionalise GATT without formal amendments in the agreement, might have received a setback.

Dunkel has since been travelling, visiting India (one of the countries which delivered a strong rebuttal of the claims), and after visiting some of the Asian countries will be going to Tokyo for an informal meeting of Trade Ministers of select countries to review progress in the round.

Two of the critics of the FOGs proposals, Brazil and India, both in the throes of major elections, won’t represented at Tokyo by Ministers, but perhaps by senior officials.

In his travels, Dunkel is expected by GATT officials to take it up in capitals, and present his own proposals as trying to champion third world cause with the Fund-Bank institutions. He is also expected to try to get an endorsement for his line from the Tokyo meeting, though the meeting or its chairman’s conclusions, which is how such meetings end, have no official standing.