WORK BEGINS ON "CLEANING UP" DRAFT FINAL ACT.

Feb 6, 1992

WORK BEGINS ON "CLEANING UP" DRAFT FINAL ACT.

GENEVA, 5 FEBRUARY (TWN) -- Work on cleaning up the "draft Final Act" - the Dunkel compromise package of agreements on the Uruguay Round negotiations - began here Wednesday at the GATT in a legal drafting group chaired by former GATT Deputy Director-General Madan Mathur, who is heading the Uruguay Round surveillance body.

This is being the second meeting of the group, the first one having been devoted to organisation questions of the work.

At the current meeting the drafting group is looking at the agreement for a Multilateral Trade Organisation (MTO) per se, its various articles and the agreement for an integrated dispute settlement mechanism.

Under the Dunkel proposals for a four-track approach for further work in the Round, agreed to be the Trade Negotiations Committee on 13 January, the "third track" was for scrutinising and cleaning up the text for legal and internal consistency.

The first two tracks relate to the negotiations for market access in goods and negotiations for initial commitments in services.

Participants said that while the "cleaning up" in the legal drafting group is a formal and technical work, they anticipate considerable work would be needed on some matters including the text of the draft agreement for a Multilateral Trade Organisation and for an integrated dispute settlement mechanism which are first on the agenda.

The MTO and integrated dispute settlement mechanism are two areas not covered by any item on the agenda of the Uruguay Round approved in the Punta del Este Declaration and could at best perhaps come under Part III of that Declaration whereby the Ministers reserved to themselves to decide on the international implementation of the respective results.

This was to be done by them, meeting on the occasion of a Special Session of the GATT CONTRACTING PARTIES, "when the results of the Multilateral Trade Negotiations in all areas have been established".

On a plain reading of the Punta del Este declaration therefore, the idea could if at all only be pursued at the meeting of the Ministers after the results are established, and he perhaps part of future negotiations.

However, this has been pursued in the GATT and the Uruguay Round in line with what a senior official of the EC (which is mainly responsible for pushing the MTO concept) had once told newsmen, namely, that "anything is possible in GATT between consenting adults".

Though the agreement is still up in the air, and the results are yet to be established. Dunkel's draft package (even though the provisions in it were "negotiated" and agreed upon in a small group of key countries) provides for the creation of an MTO and for an integrated dispute settlement mechanism providing for cross-retaliation across the agreements, though with some safeguards, and for this to be accepted as a part of the package.

The "substance" of this will not be considered in the "third track" but only its legal language and consistency, a GATT source said, while other participants said this type of "technical" work often masks some substance too.

At Wednesday's meeting, Thailand reportedly made clear that the idea of an MTO and the integrated dispute settlement mechanism was not within the mandate of the Round given in the Punta del Este Declaration and hence while they were participating in the work, this was without prejudice to the position on the MTO.

Meanwhile there is no indication of the "fourth track" or what could or could not be achieved in that.

On January 13, when the TNC met to consider the Dunkel package presented before Xmas, the EC made clear that it needed substantive changes in the text, and the agriculture part of it was particularly mentioned.

At that time Dunkel let it be known that it is for participants seeking changes to "negotiate" with their partners and secure an agreement, and that he did not plan to hold "consultations" on making changes.

The EC since then has made clear that it needed changes.

The EC External Relations Commissioner and Vice-President, Frans Andriessen has been reported as saying in Rome Tuesday that while it was essential for the EC to make a final effort to reach the best possible consensus across the board, the EC's final efforts to compromise had to be matched by parallel engagements and concessions by all the main trading partners in the GATT.

Andriessen has been further quoted as saying "There are no chances of a negotiated deal without the Community; but even lesser chances of a deal negotiated against the Community".

The Dunkel package needed "substantial improvements, notably in agriculture" and the EC (in being asked to accept the package as is) was being asked "what we cannot deliver; and what we can deliver is not accepted by our partners".

While talking about the "window of opportunity" before Easter to conclude the Round, failing which the U.S. Presidential elections campaigns and stress there on isolationism and protectionism in that which would close the "window" for remainder of 1992, Andriessen also said that the EC Commission was not eager to get a deal at any price, Brussels did not accept deadlines "as blind dates" and there was no way the Commission could recommend a deal to the EC Council of Ministers which did not seem "suitable and profitable to the Community's long-term economic interests".

Last week, Dunkel went to Brussels for meeting with the EC Commissioners but little appears to have come out of it.

GATT participants said that the "fourths-track" was in Dunkel's hands and few knew what he was going to do, but that the EC was hoping he himself would put forward suggestions for changes desired by the EC to make the package palatable to its member-States.

The EC Commission, according to some participants, is letting it be known that it would stick to the schedules envisaged in the Dunkel package, which envisages (under the modalities for establishing specific binding commitments on domestic support, border protection and export subsidies) for countries to submit no later than 1 March "lists of commitments" and supporting material on the reduction commitments in accordance with an agreed format.

It is difficult to see how the EC could do this, unless it plans to go ahead and present its "commitments" in line with its own "offers" and ideas - which would involve reduction of domestic support and putting some of the support measures (part of the planned CAP reform) in a "green box" of its own, and cuts in export subsidies and border protection with some "rebalancing".

But while on the face of it, the situation seems to be totally deadlocked a blocked, there are some suggestions that in fact talks are going on "deep underground".

In this view, it is said, that even the U.S. and some of the Cairns Group may be agreeable to see whether the EC could be accommodated in the agriculture so as to get them on board (and without whom no reform of GATT rules on agriculture are possible or the Round concluded) so long as the fundamental direction of reform was not changed or affected.

At one stage the US and EC were reportedly near agreement on a special "green box" (of support measures that could continue without being challenged or made actionable).

Some participants think this might still emerge - particularly if it has an overall ceiling, something that would be welcomed by EC Finance Ministers too, and has some time-limitations or time-bound waivers.

Much of February, and particularly after the U.S. New Hampshire primary and its results, could be spent on this, but would make it even more difficult to complete the negotiations and wrap up the package in the "window of opportunity" between end of Ramadan and Easter, one of the participants said.

Others felt that if there was political will, the whole thing could be wrapped up in a week of hard work, just as the Dunkel package was done in the third week of December.