Feb 3, 1992

URUGUAY ROUND IS UNDERGROUND.

GENEVA, JANUARY 31 (CHAKRAVARTHI RAGHAVAN) -- "The Uruguay Round has gone underground" the Ambassador of a leading trading nation told newsmen this month, soon after the trade Negotiations Committee on 13 January agreed to a four-track approach for concluding negotiations by about mid-April.

Since 13 January, as Geneva negotiators go about their business of negotiating market access in goods and initial commitments in services, it has been difficult for observers to decide weather the Uruguay Round has gone underground or has been put under the ground.

The four-track approach was suggested by GATT Director-General Arthur Dunkel when the TNC met on 13 January to consider what has come to be known as the "Dunkel package" for concluding the Round.

The first two tracks, he had identified, as bilateral and plurilateral negotiations, but under multilateral supervision, for market access in goods (both tariff and non-tariff) and for initial commitments on trade in services.

The third track was for cleaning up the language of the "Dunkel package" for legal conformity and internal consistency.

Dunkel had spelt out the "fourth-track" as "work at the level of the TNC to examine whether and if it is possible to adjust the package in certain specific places ... an exercise that must be very precise and concentrated on what we can all collectively agree to without unravelling the package".

Though GATT officials and Dunkel himself have been telling that over 80 percent of the package represents texts negotiated by the participants themselves and that only very few parts of it are portions filled in by him as a part of "arbitration and conciliation" since the participants could not agree, the simple fact is that the 20 percent or even less parts supplied by him are the very core of the package.

In the immediate days after 13 January, when the EEC had made clear that it would need some "substantive changes" in the agricultural package through the fourth-track to enable it to accept the overall package, most of the others did not favour "opening up" of the Dunkel package, warning that if this was done, the whole thing would unravel.

Even the U.S., whose domestic lobbies wanted some substantial changes in the non-agricultural portions of the package, appeared to suggest that it too did not favour the opening of the package – though it was never clear whether it was because the U.S. did not want changes in the agricultural package or because it too was worried about the unravelling of the package.

Dunkel was also known to have been privately telling delegations that went to see him that while he had offered his "good offices" to ascertain a consensus under the fourth-track, it was really for the delegations seeking changes to negotiate with the others and find agreement, and that he himself would not set about finding solutions or suggesting changes.

Having said this, Dunkel went all the way to Bangkok to address a trade and environment meeting there to plead for the early conclusion of the Uruguay Round as a way of contributing to protection of environment.

On return, he went to Brussels for talks with the EC Commission (where he has been exploring the changes sought under the fourth-track) whose Agriculture Ministers in effect have reiterated their position for substantive changes in the agricultural package.

He also went to Davos from Brussels, for the annual meeting of the "World Economic Forum", a Geneva-based private enterprise business lobby of the major TNCs that brings together (for a fee) businessmen and leading government officials and policy-maker from the Third World, to canvass support from the business community for pressures on their governments to conclude the Round.

The focus of GATT over the years on the business community, which Dunkel and GATT officials often talk about as their real constituency, in the context of the Uruguay Round, and its non-transparent ways of conducting business and concluding agreements, has come under criticism from environment and other public interest groups in the U.S. where domestic protectionist lobbies, sectors dissatisfied with possible gains in the Dunkel package and greedy for more, and environment and other groups ranged against GATT.

Though GATT officials and Dunkel himself has been telling that over 80 percent of the package represents texts negotiated by the participants themselves and that only very few parts of it are portions filled in by him as a part of "arbitration and conciliation" since the participants could not agree, the simple fact is that the 20 percent or even less parts supplied by him are the very core of the package.

As one official put it, the parts supplied by Dunkel is the "soul" of the package; without it the rest of the over 430 page document is just a dead carcass that would have to join the "cemetery of papers" in the GATT - a phrase used by Dunkel, at a press conference in Geneva soon after the collapse of the Brussels meeting in December 1990, to describe the state of the various drafts and proposals and country-positions advanced during the four-years of negotiations.

With the Group of 7 Finance Ministers at their "Garden City" meeting in New York having failed to provide any lead for conclusion of the Round, and with some of the political decision-makers paralysed by the impending electoral processes (such as the primaries and the elections for President and Congress in November in the U.S. and the regional elections this year in France to be followed next year by Parliamentary elections), there seemed very little life in Geneva for the Uruguay Round negotiations.

Since 27 January, bilateral and plurilateral negotiations have been going on in market access for goods and for initial commitments in services, with a multilateral review of progress set for 6 February.

In services, where too bilateral negotiations for initial commitments are taking place, the multilateral review is set for March 6.

In the negotiations for market access for goods, in the absence of clarity about the agriculture package, it has been difficult for negotiators to do their "deals" across a vast range of products, particularly those of interest to the developing world.

The U.S. insistence on the "zero-for-zero" option (for cutting down tariffs to zero across a range of sectors – steel, fisheries, chemicals and pharmaceuticals, non ferrous metals – as well as the EEC proposals for "harmonisation" of tariffs (under which countries in particular sectors or product lines would harmonise their tariffs to achieve a common tariff) have also held up the whole tariff negotiations.

Third World countries have been reluctant to agree to the U.S. "zero option" arguing that this was not a feasible option in view of their development needs and nascent nature of their industries. They have been pressing on the U.S. to abandon this sector-approach, but rather seek concessions on a tariff-line basis.

Similar has been the reaction to the EC harmonisation move.

As one Third World negotiator put it, the U.S. and EC have had protection for over 40 years for their senescent textile industry - first behind high tariffs and then a discriminatory quota regime - and have still been unable to carry out structural adjustment and seek at least another ten more years. Yet they want the developing world to reduce its tariff and other barriers in 3-4 years.

All that has been happening in the market access negotiations, one negotiator said, is for the delegates to go through the motions, seeking clarifications and explanations, but no real negotiations.

In the services negotiations, a complicating factor for the developing world has been that most of them do not know the nature and details of the regulatory regimes in the industrial world, while the majors in the industrial world, particularly the U.S. and EC, have computerised all this.

This has resulted in the Third World negotiators unable to make meaningful "requests" for market access in services to the industrial world, while the latter, after scrutinising the "offers" from these countries is able to put in "requests" aimed at reducing the regulatory and administrative barriers.

Some of the developing countries privately say that they themselves are not fully aware of their own regimes in their countries - spread as regulations on services across various Departments and Ministries of their central governments, as also of state governments and local authorities.

In this highly complex situation, negotiators privately are becoming more and more sceptics of being able to complete all the intricate details in time for the various deadlines.

In Agriculture, the countries have to file some schedules by March 1. In market access for goods, the deadline for filing country schedules is 31 March, which is also the deadline for the services schedules of initial commitments.