Oct 29, 1991

CONTINUED NORTH-SOUTH DIFFERENCES ON MTO, SINGLE UNDERTAKING.

GENEVA, 26 OCTOBER (CHAKRAVARTHI RAGHAVAN) Industrialised and Third World countries continue to differ on the issues of the Uruguay Round agreements being treated as a "single package" as well as about the idea of a Multilateral Trade Organisation (MTO).

This came out at a meeting of the negotiating group on Institutions, chaired by Amb. Julio Lacarte-Muro of Uruguay.

The Brussels Ministerial meeting had before it a draft Final Act, incorporating the draft agreements in various negotiating areas as annexes, and among other things provided for further discussions and negotiations for an institutional framework for the GATT in the shape of an MTO to serve as a forum for negotiations on all issues on the Uruguay Round Agenda.

It also provided for the agreements in the Round being viewed as one single package, with all participants being forced to sign all of them.

In the discussions this week, a number of ICs including the EC, US, Canada, Japan, Australia, Switzerland, the Nordics and Austria as well as Korea and Hong Kong are reported to have supported the view that the agreements in the Round should be accepted and implemented as a single undertaking.

Switzerland reportedly suggested that instead of the four different annexes in the draft Final Act, there should be just one annex with all the agreements.

The U.S. and EC reportedly made clear that at the end of the Round the results of the agreement would be accepted as a whole by all the participants. The EC suggested that those countries that would not do so would have a problem.

In discussions before Brussels, the EC had suggested in this regard that the Contracting Parties as a whole might then "invite" the Contracting Party not accepting all the agreements to withdraw from the General Agreement.

Sweden on behalf of the Nordics underscored their view on the need for an uniform dispute settlement mechanism applicable to all the agreements so as to avoid fragmentation - as had been the case after the Tokyo Round in respect of the GATT and the various codes.

However, a number of Third World countries took a more cautious and reserved approach. Malaysia, Mexico, Argentina and Thailand argued that without a clear picture of the emerging results of the negotiations, it was premature to discuss this issue. It was only when the final outcome was clear that the concept of single undertaking could be looked into and defined.

Brazil and India said the process of negotiations and its implementation should be treated differently.

In their view the single undertaking mentioned in the Punta del Este Declaration related only to the negotiations in goods and had nothing to do with the implementation of the final results of the Uruguay Round.

Under the Punta del Este Declaration and the Mid-term Review, there were three distinct areas of negotiations - trade in goods, trade in services and Trade-related Intellectual Property Rights (TRIPs) - and it was only when the results of the negotiations in all the areas of the Uruguay Round were concluded and established, that the question of the implementation of the respective results of the negotiations were to be considered and decided.

Brazil, India, Venezuela and Tanzania also expressed their concern over the concept suggested of the implementation of the agreements as a single undertaking and the possibility it could open up for cross-retaliation.

On the question of institutional arrangements, the EC and Canada were still in favour of establishing in MTO or a world trade organisation.

While the current draft merely expresses the view that it would be "desirable" to establish an MTO, the EC wanted a more definitive language: "a new multilateral trade organisation shall be established". The U.S., Japan, Australia, Switzerland and Hong Kong they would have an open mind on this.

Brazil, Tanzania, Malaysia and Venezuela said that due to the complexity of the issue, including the question of links with other organisations, more time was needed to consider this and the opinions of other international organisations involved in trade issues would have to be taken into account.

In this connection Venezuela as well as the Chairman of the Negotiating Group, Amb. Lacarte referred to the UN General Assembly resolution in this connection and the initiative taken by the UN Secretary-General to prepare a report for the current 46th Session of the UN General Assembly on institutional developments related to the strengthening of international organisations in the area of multilateral trade.

India underscored the importance of a successful conclusion of the Round with meaningful and balanced results. It was premature in India's view to address institutional questions at this stage.

The EC suggested that the MTO proposed by it should cover all aspects of the trading system, such as the-results of the Uruguay Round and the GATT and the issues that would emerge after the Uruguay Round. The EC however specifically referred only to two aspects namely the Trade Policy Review Mechanism and the Dispute Settlement. In the EC view all Contracting Parties which accepted the results of the Round could become members of the MTO.

The U.S. and the EC also said that the results of the Uruguay Round could be enjoyed only by those Contracting Parties, which accepted them.

In consultations in other areas, participants said there has been a complete deadlock in the Negotiating Group on Rules over the question of anti-dumping - where the U.S. and EC have taken rigid positions which effectively would legitimise their current unilateral interpretations of the Tokyo Round codes and preserve the scope for unilateral actions.

Rudolf Ramsaeur of Switzerland who chairs the consultations on this in the Rules negotiating cluster reportedly said there would be no more consultations and he would report the issue back to the TNC Chairman, Arthur Dunkel.

The U.S. and the EC have in effect said that the current Tokyo Round codes in the area of anti-dumping and counter-vailing measures should be incorporated as the agreements.

A number of smaller industrial nations as well as leading Third World trading nations have opposed this. In a statement before the group last week, the Nordics made clear that any final package for them should include clear and unambiguous rules in this and other areas including safeguards.