Nov 27, 1990

ESTABLISHMENT OF MTO ON AGENDA OF BRUSSELS MEETING.

GENEVA, NOVEMBER 26 (BY CHAKRAVARTHI RAGHAVAN) If the Industrialised Countries have their way, the Brussels Ministerial meeting of the Uruguay Round Trade Negotiations Committee (TNC) is to take steps to establish a Multilateral Trade Organisation (MTO) that would effectively take over the work of the rest of the UN system in areas covered by the Uruguay Round negotiations.

The report of over 400 pages (with perhaps over 1000 square bracketed texts) - of various elements in each of the 15 negotiating areas needing ministerial decision at Brussels - which the Trade Negotiations Committee (TNC) meeting at official level Monday evening will forward to Brussels will include a draft document embodying the results of the Uruguay Round of Multilateral Trade Negotiations, a possible Final Act, to be signed by participants.

The draft for a Final Act (there is no agreement even on this), with several square brackets indicating some considerable disagreement among participants, in effect would commit Ministers, as part of the Uruguay Round package of agreements that might emerge at Brussels, to a process leading to the establishment of the MTO when they meet before end of 1991 to decide on the international implementation of the results of the Uruguay Round.

While the Industrial Countries have formulated language that would result in the GATT being institutionalised with a secretariat to implement all the agreements covered by the Uruguay Round and carry forward negotiations where no agreements are concluded, the formulations of some Third World countries would envisage the future MTO becoming an Organisation that in effect would take over the functions currently being undertaken by the GATT and UNCTAD.

The draft shows there is disagreement on a number of crucial issues, starting from whether or not the document is to be called the "Final Act".

Under international law and practice, this term is used for the final document at the conclusion of a negotiating conference of plenipotentiaries of countries to incorporate the text of any agreement adopted at the negotiating conference. Signature of the document by plenipotentiaries implies merely that they agree that the text annexed is the authentic one of the agreements concluded at the conference and that the signatories would present the documents to their governments for their consideration.

But the term is now sought to be used to mean something more and implying the adoption of various agreements in a single package or protocol for acceptance of the package as a whole and commitments to implement them.

As envisaged in the draft, the "Final Act" would have four annexes - one involving results of agreements on trade in goods, a second of the agreement on trade in services, a third on trade related intellectual property rights and a fourth setting out the basic elements of an organisational agreement.

Though the text of the draft would suggest that the Brussels meeting would end with agreements on all the elements covered by the Uruguay Round, as drafted it would enable the conclusion of a "mini-package" of accords, shoving on the balance to continued negotiations of sorts in the new MTO.

Under the mid-term review the institutional aspects of the implementation of the TRIPs agreement is to be decided by Ministers at their meeting (on the occasion of a Special Session of the Contracting Parties) when they are to decide on the international implementation of the results of the Uruguay Round negotiations. Hence the separate annexe for the TRIPs agreement.

Such a meeting is envisaged to be held towards end of 1991.

The agreements are envisaged to enter into force only on 1 January 1992, though the provisional implementation among signatories accepting it before that date is also envisaged.

As for the MTO, the participants would be asked to choose between several options and agree on one in order to provide the administrative infrastructure for the international implementation of the Uruguay Round results.

The alternatives include one to establish a new MTO to service the GATT or a new organisational structure for this purpose.

One square bracketed text, presumably put forward by some of the Third World participants, would provide as the function of the MTO or the new organisational structure "to service the GATT, the Uruguay Round Agreements and provide a forum for negotiations of agreements in areas related to trade and development".

This in effect would combine the functions now being carried out by the GATT as a contract and UNCTAD as a UN General Assembly organ and forum for negotiations - more like the International Trade Organisation envisaged under the Havana Charter and an issue which the Group of 77 are planning to bring up at UNCTAD-VIII.

Under another formulation (within square brackets and sub-brackets), and one favoured by the ICs and the GATT secretariat, the new structure "shall oversee and ensure the operation of the Uruguay Round Agreements and service negotiations falling within the purview of the Uruguay Agreements and in related trade areas".

While the MTO as such would not be established at Brussels the document has provisions for work on this and for agreements to be reached in time for its adoption at the envisaged Ministerial meeting before end of December 1991, and for its coming into effect at the same time as the Uruguay Round agreements.

The idea of converting GATT into the ITO was flagged by the EC early this year. The Italian Foreign Minister in a press interview (explained away later) had said this would help mask the failure to reach agreements and conclude the negotiations, and enable the negotiations to be continued beyond the Brussels meeting.

The Group of 77 at UNCTAD and elsewhere came out against converting GATT into the ITO, whereupon the EC put forward the idea of an MTO which in name would be different from the ITO but in practice would amount to the same thing.

As envisaged by the ICs now, the details of the agreement for an MTO are to be worked out by an Interim Committee, to be serviced by the GATT secretariat and open to all participants in the Uruguay Round who sign the Final Act and indicate their intention to accept the Agreements as a whole.

Third World countries have put forward formulations for the details of the structure and functioning of the agreement for an organisational structure to be worked out by a committee.

The annex I of the document shows that in the area of trade in goods, 24 agreements, decisions and understandings are envisaged.

There is in fact no agreement so far on all except a few minor ones where ad interim texts have been drawn up, and the texts going to Brussels in the non agreed texts have many square bracketed portions of substance to be decided by Ministers.

Though so far there has not even been any agreement to take up for negotiations the question of changes in GATT provisions on balance-of-payments or even understandings and decisions to revise the 1979 procedures, the subject of Balance of Payments Provisions of the GATT are listed as one of the subjects for agreement.

Apart from the protocol (to be called the Uruguay Round protocol) incorporating the schedules of concessions exchanged, the others listed in the Annex are:

Rules of origin, pre-shipment inspection, anti-dumping, technical barriers to trade, import licensing procedures, subsidies and countervailing duties, customs valuation, agriculture, sanitary and phyto-sanitary measures, safeguards, TRIPs, TRIMs, textiles and clothing, amendments to GATT articles, with each listed separately - Art. II: l, Art XVII, BOP provisions, Dispute settlement, Arts, XXIV, XXV, XXVIII, XXXV, the protocol of provisional application of GATT (the document envisages the definitive application of GATT) and Functioning of the GATT system.

The annex relating to this issue, Annex IV, has language put forward by the ICs, which would commit participants to agree on the basic elements of an organisational agreement and to include provisions on:

* Establishment of a permanent institutional structure along the lines of the structure established for the negotiations,

* Membership,

* Functions, including power

-- to adopt a uniform dispute settlement mechanism,

-- to adopt a uniform TPRM,

-- to launch negotiations falling within the purview of the Uruguay Round Agreements and in related trade areas,

* Provisions concerning budget and personnel.

While the draft document would give the impression that it depends on a substantial package, it is compatible with a "mini-package" for which the majors and GATT itself appears to be working on, and for carrying forward unfinished agenda through the MTO.

One Belgian Green Parliamentarian, on GATT's general organising Committee, suggested that pressure had been exerted by the committee to stop actions, which could upset the smooth running of the Conference.

The Belgian government wants to put across to the world the image that it is the "capital of Europe" and a meeting of 105 countries is just the opportunity to fly the flag.

According to. members of one non-governmental Organisation, Gattastrophe's organisers are still hopeful that their hotel reservations will be honoured.