Sep 27, 1990


GENEVA, SEPTEMBER 23 (BY CHAKRAVARTHI RAGHAVAN)— Foreign Ministers of the Group of 15 and other interested Third World countries are due to meet in New York Friday to discuss the Uruguay Round Multilateral Trade Negotiations (MTNS) and assess the prospects.

The New York meeting has been convened by the Steering Committee of the G-15 (Malaysia, Seneghal and Venezuela) after consultations in Geneva and capitals. The G-15, the "Summit level group for South-South Consultation and Cooperation", consist of Argentina, Brazil, Egypt, India, Indonesia, Jamaica, Mexico, Nigeria, Peru, Seneghal, Venezuela, Yugoslavia and Zimbabwe.

Others expected to participate include Chile, Colombia, Cote D’Ivoire, Pakistan, Philippines, Tanzania, Thailand, and Uruguay.

The Foreign Ministers of these countries are expected to take advantage of their common presence in New York for the UN General Assembly to hold the consultations and exchange views on the state of play in the Round and its prospects, particularly from the perspective of the Third World countries. They are not expected to reach any conclusions or decisions but the meeting could lead to the convening in Geneva in November, of Ministers responsible for GATT affairs in Third World countries, to try and evolve a coordinated position.

While it is recognised that individual countries and groups of them have some differing interests in some of the market access areas and issues, the Third World as a whole has also some common interests in terms of the rules and principles of the game - both in the existing GATT framework and ones sought to be forged in new areas - services, intellectual property rights and investments.

At their Kuala Lumpur Summit in June reaffirming their commitment to "a balanced and successful conclusion" in the Uruguay Round which would take into account "the concerns and needs of the developing countries", the G-15 had said: "We shall closely consult each other and coordinate our efforts towards this end". As a general proposition, the G-15 have also said that while they would consult, concert and coordinate among themselves on South-South cooperation and North-South issues, both their projects and processes would be open to all the NAM and G-77 countries. The Uruguay Round negotiations, unlike those in earlier GATT rounds, goes far beyond traditional border trade issues in its sweep. It involves renegotiations of substantive trade rules of the GATT, as well negotiations for formulation of rules and principles governing production and trade of countries, including movement of capital and rights of foreign investors, development of technologies and trade and production of services.

The outcome of the negotiations would undoubtedly have significant impact on worldwide patterns of production, trade, competition (within and among countries), investment and domestic regulations for the rest of the century and perhaps well into the next century - a new Transnational World Economic Order rather than the NIEO that the Third World had been demanding in the ‘70’s. The Round is scheduled to be wound up at Brussels in the first week of December, at a Ministerial Meeting of the Trade Negotiations Committee - the overall body running the negotiations and comprising a membership of over loo participating countries.

With just about ten weeks left for the conclusion of the Round, there is now increasing pessimism in the GATT, both among Third World participants and those from Industrial Nations, over the prospects for a balanced and successful outcome for the Round.

There are even some doubts whether the Round could at all be formally concluded - with all the details settled, legal texts drawn up, approved by the Ministers and readied for signature and acceptance of governments.

Even the perennial optimists in the GATT are now talking in terms of the Ministerial meeting concluding with agreements of principle and substance, and a Special Session of the GATT Contracting Parties in March 1991 - for approving detailed legal texts and for actions to incorporate them in the GATT framework.

This is apart from the shadow cast over the world economy and international relations by the Gulf crisis. In the GATT itself, and among the participants, there appears to be a tacit understanding not to raise these issues, and their effects on the Round. But everyone is agreed that it could even wreck the round.

Since the resumption of negotiations in September, after the summer recess, Third World participants say there has been no progress or even attempts at serious negotiations in individual negotiating groups and they don't expect any before mid-October - when an intense phase of negotiations with participation of senior officials from capitals are expected to begin, with the aim of preparing an overall package of documents, with clearly delineated areas of agreement and disagreement for ministerial decisions.

The Group of Negotiations on Goods (GNG), which functions under the TNC, is scheduled to meet in beginning of November. Besides responsibility for the GATT negotiations in goods, the GNG is mandated before the conclusion of the Round to make an assessment of the results in terms of the objectives and general principles (which include the one for special and preferential treatment to Third world countries) and taking into account all issues of interest to the Third World countries.

Under the programme of work settled at the last meeting of the Trade Negotiations Committee in July, individual negotiating groups are to meet at least once before the week of October a and formally transmit an assessment of the situation in the negotiating group to the TNC, which is to initiate a process of intensive negotiations. The purpose of the TNC exercise is intended to identify the elements of various trade-offs necessaries to evolve a final package by the third week of November.

Since the resumption of work in the last week of August a number of negotiating groups have held formal and informal meetings and consultations, but with apparently no results.

Third World participants said that in none of the negotiating groups has there been any progress, and the sheer physical job of the TNC, with senior official involvement, assembling a package and putting them into a legal shape for consideration of Ministers seemed to be mind-boggling. There are fears among some Third World delegations that with very large areas of disagreement of principle and details in each of the negotiating areas, all waiting to be settled almost at the end, Third World delegations may be at a disadvantage in the coming weeks of intense negotiations.

The major trading partners, it is noted, have d clear picture of what they want their mutual differences that need accommodation and how to accommodate them, and how to press forward on their common interests against the Third World.

By and large Third World delegations seem to lack such a perspective and do not appear to have evolved a common strategy and tactics on a wide range of issues and areas where acknowledgedly they have a common interest. Even more, there are fears that if too many details and issues are left to the last, to be decided by ministers and senior officials from capitals, Third World countries might again be at a disadvantage, particularly in many cases their ministers do not have mastery over technical details or are not known to be assertive in negotiations.

When the Chairmen of the various negotiating groups presented texts to the TNC last July, the majority of them failed to provide an acceptable basis for further negotiations and no profile of any overall package emerged. There has been no improvement in this situation after resumption of negotiations in the last week of August, Third World participants said.

In July, the major trading partners showed an unwillingness to engage in serious negotiations and managed to wrap up the TNC with procedural agreements for continuing the negotiations after the summer recess. In the negotiations since then, there has been no change in their positions.

In some areas like services some basic differences that had been put under the carpet so far have come to the fore, making progress even more difficult. In others the differences seem to be a facade behind which the majors are engaging in deals of their own. In the area of tariffs, where the negotiations are on basis of "offers" and "requests", some 42 participants (including 26 from the Third World) have tabled "offers" and bilateral and plurilateral consultations have been under way.

The offers of leading ICs reportedly are tied to specific conditions that go beyond tariff negotiations, and few of the ICS have responded to requests from Third World countries on products of export interest to the latter.

In the area of Non-tariffs, the general discussions relate to the issue of rules of origin and pre-shipment inspection - a service used by many Third World countries to counter fraud and protect themselves against transfer pricing and capital flight.

Some of the least developed countries have an interest in the rules of origin issue, but the major focus and thrust is on behalf of transnational enterprises which are engaged in processing and manufacturing of products through several stages in different countries, with final (and large proportion) of final value added in the home country of the TNC. The reduction or elimination of specific non-tariff measures are to be dealt with in accord with a "request/offer" procedure, as a result of which several Third World countries are reportedly facing "demands" from their trading partners from the North. They are also facing prospect of having to "pay" for removal of measures of doubtful GATT consistency and which ought to have been phased out as part of the rollback commitments undertaken at Punta del Este in September 1986 - a commitment that remains unfulfilled. In Tropical Products (where the mandate calls for fullest liberalisation of trade in tropical products, including in their processed and semi-processed forms and covering both tariff and all non-tariff measures affecting trade in these products), the revised tariff-cut offers of the ICs would affect about $22 billion (in 1986) of their imports of these products from the world and of which some $14.3 billion were imports from the Third World. Estimations of direct trade effects show that the offers would create additional trade (or imports by the markets in the industrialised world) in the products of about $746 million or 3.3 percent of the value of such imports in 1986. Of these, only about $245 million or 1.7 percent of the increase would come from Third World countries. The benefits to the Third World under the mid-term offers had been estimated previously at $90 million.

Imports from Latin America would rise by about $250 million (as against $11 million in the mid-term), that from Asia by about $112 million (up from $81 million in the mid-term).

But the imports from Africa would decline by about $118 million, mainly as a result of these countries losing their current preferential tariff status in this trade.

The negotiations on trade liberalisation in natural resource based products have been stymied by the demand of some of the ICs for "access to supplies" (for fisheries, energy-based products). At the July TNC, the chairman of the negotiating group had said only six countries, four of them from the Third World, had made "requests" and only four had made "offers" or proposals. In Textiles and Clothing, while the U.S. has indicated elsewhere that it would now give up its idea of a global quota system as a modality for integration, it is apparently yet to indicate it within the group.

Last week, there were "technical" discussions in the group over coverage, when the EEC came up with the proposition that all the products falling under this category should be covered, whether or not in fact there are MFA-based restrictions.

Third World countries balked at this - pointing out that the mandate called for "integration" of trade in this sector into GATT, and unless a product was under restraint under the MFA (which is an authorised derogation from GATT), its trade in effect is already integrated and no new restrictions can be imposed. As a result the negotiations have come back to the group, with little progress. In Agriculture, all participants are to provide information on their support measures by Oct 1, and their "offers" for reduction or elimination by October 15. A meeting of the negotiating group set for this week has been put off to the next - due basically to disagreements within the EC on the kind of "offer" it should table - 30 percent reduction in support levels of 1986 or something more. There is a vast gap between the positions of the U.S. and the EEC, with the U.S. insisting on substantial reductions even while yielding on its original demand for "elimination" of all government supports over a five to ten year time span. There is fear among several participants that the two would be arguing (instead of negotiating) right to the end and would spring a last-minute compromise negotiated between them at Brussels and attempt to force it on others on a take-it-or-leave it basis.

Several of the Cairns group countries from the Third World assert that unlike in the past this would not be acceptable to them. Several of them have also been adopting some tough positions in other areas, like intellectual property, investment and services unlike at earlier stages of negotiations. Whether this is a tactic or basic is not clear, though many suspect it is tactical. In TRIPs, after two weeks of formal and informal consultations, the chairman of the negotiating group, Amb. Lars Anell of Sweden has undertaken to produce a new composite text, to be made available to delegates by October 1, which he hopes could be a basis for further negotiations. There are some fundamental differences between the ICs and Third World countries, on the structure of any agreement, including such questions as whether there should be one umbrella agreement covering all intellectual property issues or two separate ones one relating to trade in counterfeit goods and the other on IPR issues but at a general level and not too many details. This is apart from the question of where any such agreement on intellectual property would be lodged and implemented.

In the meetings which began on September 10, the discussions would appear to have covered norms and standards of IPRs, issues relating to acquisition of IPRs, enforcement of IPRs including border enforcement, basic principles of an agreement and transitional arrangements. Issues relating to dispute settlement and institutional arrangements are still to be discussed. At a formal meeting of the TRIPs group last week, when the Chairman reported on the informal consultations, he felt they had made good progress in the consultations and were in "good shape", but there were too many details and major difficulties yet to be sorted out and the time available was short - a problem which he noted was common to the entire negotiations. Peru, speaking for several Third World participants (who have put forward a common legal text), underscored that the common reference point for the negotiations was the Punta del Este declaration and its guiding principles, including the one for special and preferential treatment to Third World countries. Peru also underscored the mid-term accord in this area on public policy objectives (of a TRIPs agreement) including development and technology and the need to integrate these into the discussions and accords. Many Third World countries, the Peruvian delegate said, had reservations on extending the TRIPs mandate to include "trade secrets" (sought by the U.S. and EEC) and over the level of details being demanded for enforcement. Chile reportedly complained of the total lack of certainty on the legal framework. There could be no agreement on the basis of its being lodged in the GATT framework. But if there was to be an autonomous agreement or one to be lodged and administered by WIPO, there could be some prospects for a compromise.

Colombia reportedly suggested that Third World countries should realise that the ICs had needed them and their support for launching the Uruguay Round, and the ICs needed the Third World countries even for termination of the round. Unless the outcome was acceptable to them, Third World countries need not accept the accords reached. In other comments, Malaysia reportedly pointed out (in reference to the time-frame for further negotiations and the new text that the chairman was to prepare) that the issue was important and delegations like its would have to take it to the cabinet in their government for instructions, and hence last-minute papers would not help negotiations.

Other Third World participants said that one of the problems faced by many of the Third World delegations was lack of expertise when discussions went into details of IPR systems. Of the Third World participants, they said, only Malaysia and India had officials dealing with these issues. In services, the basic differences among the ICs, particularly the U.S. and EEC, have come to the fore on the question of coverage and exceptions - with the U.S. now wanting to exclude maritime and air transport, banking and a number of other sectors and subsectors. It also wants any MFN principle of the accord to apply only to multilateral concessions and agreements, and not to the benefits it has gained through bilateral commerce and navigation treaties with scores of countries.