Jan 31, 1987


GENEVA, JANUARY 29 (IFDA/CHAKRAVARTHI RAGHAVAN) – With the approval Thursday of what GATT Director-General Arthur Dunkel described as the "nitty-gritty" issues of procedure and substance, the way has been cleared for the start of the negotiations in the Uruguay Round of Multilateral Trade Negotiations (MTNS).

The Punta del Este Ministerial declaration agreed on the objectives, principles, subjects and modalities of the new round of MTNS, but left the details to be filled in by the three bodies it created – the Trade negotiations Committee, and under it the Group of Negotiations on Goods (GNG) and the Group of Negotiations on Services (GNS).

Though officially launched as of September 20, 1986, the actual start of the negotiating process has had to await decisions on these and other organisational details.

Ending several weeks of protracted consultations, the Uruguay round participants adopted thursday a number of decisions on a package of issues, thus clearing the procedural hurdles to the start of the negotiating processes.

First meeting as the GNG, they designated a mechanism for surveillance of standstill and rollback, and approved the negotiating structures and negotiating plans for each of the 14 subjects in the area of trade in goods included in the GATT MTNS. They also approved an initial calendar of meetings for the first quarter of 1987.

Then meeting separately as the GNS, they approved a programme for the initial phase of negotiations on services, outlining five broad elements to be addressed in 1987.

Finally, meeting as the TNC, they established the surveillance mechanism, and approved the procedures for the TNC’s periodic evaluation of the implementation of the standstill and rollback commitments undertaken at Punta del Este.

All the principal protagonists expressed satisfaction at the outcome and each claimed they had won their points, but much of this appeared intended for their domestic audiences.

Some third world participants said that despite their best efforts, it was clear that the main emphasis in the new round would again be on the issues between the major trading partners, and the new issues, while the long-standing concerns of third world could again be sidelined or ignored.

In trying to project the decisions as important, Dunkel told a press conference that the outlook in the world economy – in terms of monetary and financial problems, the debt crisis, etc. – was now less hopeful than many international institutions including GATT had thought in mid-1986.

That governments, against this background, had still agreed on a package of decisions was an indication that at least in the trade policy field they were trying "to keep things under control", he added.

The decisions on negotiating plans and structures approved, in effect map out the work ahead, opening the way for the start of the negotiating process, with the first set of negotiating groups due to meet in the week of February 9.

But before the groups could start functioning, one more hurdles have to be crossed: designating the chairmen for the 14 negotiating groups and for the Surveillance Body.

The GNG has agreed to the setting up of 14 negotiating groups, one each for the 14 subjects in the GATT MTNS.

But it has been also agreed that while each of the 14 groups would have its own chairman and operate as a separate entity, a given person might be appointed to the chairmanship of more than one negotiating group.

It is envisaged that, subject to agreement on the person in question, the same individual might be appointed for the initial phase to chair the four groups on tariffs, non-tariff measures, natural resource products, and textiles and clothing.

While the U.S. agreed to a separate group on textiles and clothing, India agreed to a common chairman at the initial phase.

Consultations on the chairmen for various groups and the Surveillance Body are being held by Pakistan’s Manzur Ahmad, in his capacity as chairman of the GATT contracting parties, and are expected to be completed in the first week of February, when decisions are to be taken at a meeting of the GNG at the level of heads of delegations.

The negotiating plans approved call for an initial phase to be completed before the end of 1987, in most cases devoted to study and collection of data, but in some cases also envisaging submission of proposals and development of a negotiating basis.

In the subsequent phases of negotiations, the negotiating groups would have to identify the issues and establish a negotiating basis, after which bilateral, plurilateral or multilateral negotiations could begin and be completed.

These seemingly procedural issues had given rise to considerable difficulties over the last few weeks, since under the guise of settling procedures some of the participants, and particularly the U.S., in effect wanted either to rewrite the Punta del Este decisions or to prejudge the substantive negotiations and their outcome.

In the final stages this week, issues in the area of agriculture gave rise to a conflict between the European Communities on the one side, and the U.S. and Cairns Group of agricultural exporters on the other.

These differences over the ace of negotiations in agriculture and the distinction between what would be done in the initial study phase and in the subsequent negotiating phase, proved very difficult and were settled only early Thursday morning, after all-night talks.

Much of the dispute was over how to present the outcome to domestic audiences – with the U.S., Argentina, Australia and a few others anxious to show that negotiations to agricultural problems were on way and solutions would be found, while the European Community and France within it were determined to prevent any such appearance until French elections next year are out of the way.

The final compromise on this and others were achieved through recourse to ambiguous language, that protagonists could interpret as they wished to their domestic audiences, but which are certain to create difficulties during the negotiating process.

In agriculture, U.S. and Cairnes Group sought a formulation that would involve tabling and study of proposals this year, and start of negotiations in January 1988.

The language finally approved would appear to suggest that proposals would be tabled, and be subject to initial study in 1987, while in the subsequent phase beginning in 1988, the proposals could be subject to further study and negotiations started.

But other participants noted that whatever the language used now, no negotiations could start unless all the key actors are ready to negotiate, and the EEC clearly is not ready to allow negotiations in agriculture to begin before the middle, if not end of 1988.

Some participants felt that the heavy price the EEC has had to pay to the U.S., as compensation for lost export market due to Spain’s accession, might in fact make the multilateral negotiations in agriculture more difficult.

In retaliation against the loss of corn and maize exports to Spanish market, the U.S. had announced its intention of imposing 200 percent duty on French cognac, white wine and cheese – all luxury items of export to the U.S. market.

The U.S.-EEC bilateral negotiations, and final agreement, have been conducted under this threat.

In effect the French government was thus forced to choose between the interests of its farmers and the more powerful cognac/white wine lobby which ultimately prevailed, forcing the French to agree to larger imports into EEC of corn and maize over the next four years.

In underscoring the adverse impact of the bilateral outcome on the GATT round, the EEC spokesman Tran Van Thinh made clear to the GNG, after it had approved the negotiating plans and structures, that the EEC had already paid a heavy price to the U.S. in the bilateral dispute over Spain’s accession, and in the Uruguay round negotiations on agriculture "our capacity to make concessions will be very limited".

Tran is also reported to have underlined the need for strict respect to the standstill and rollback commitment, and warned that otherwise there could be no significant outcome to the negotiations.

This was seen as a pointed warning the U.S., where protectionist trade measures are being contemplated in the U.S. Congress.

In an answer to those who sought a faster pace of negotiations and implementation of results in agriculture or any other sector, Tran insisted on the EEC view about the "globality" of the negotiations in goods.

This, he said, did not mean in the technical, proportionate or organic sense, but in the sense that there had to be a balance of concessions received and given, and a balance of burdens shared among the different sectors and the trading partners.

Progress in negotiations on all sectors had to be parallel, and the outcome too had to be balanced, Tran is reported to have stressed.