WHEN GATT BASIC PRINCIPLES SEEN AS "PROBLEM"

Feb 22, 1989

WHEN GATT BASIC PRINCIPLES SEEN AS "PROBLEM"

GENEVA, FEBRUARY 20 (IFDA/CHAKRAVARTHI RAGHAVAN)— GATT Director-General, Arthur Dunkel would appear to have presented Monday some of his own ideas for resolving the deadlock over negotiations on the "safeguards" issue in the Uruguay round which failed to address the primary concerns of third world countries in this area.

Safeguards are emergency actions that contracting parties could take under article XIX of the general agreement to protect their domestic industry against imports, but in specified circumstances and conditions.

The safeguards issue on the agenda of the Uruguay round is one of the four areas of deadlock that developed at the Montreal mid-term Ministerial meeting.

The Montreal meeting asked Dunkel to hold consultations in Geneva on all the four items, meanwhile putting the results obtained at Montreal in other areas "on hold".

The outcome of the consultations, the results on "hold" and other issues are to be reviewed at a high level meeting of the Uruguay round Trade Negotiations Committee (TNC) in the first week of April in Geneva.

This is the second round of consultations that Dunkel has been holding on the four items.

The issue of a comprehensive agreement on safeguards has been on the GATT agenda since the launching of the Tokyo round in 1973.

Agreement has eluded the negotiators because of the insistence of the European Community States (and now supported by several other industrialised nations) that a safeguards agreement must provide for "selectivity" - the right of the importing country to restrict imports from some but not all sources.

The third world countries and smaller trading partners have been opposed to the idea of "selectivity".

They have seen this as contrary to the GATT’s the fundamental principle of "Most-Favoured-Nation" (MFN) treatment enshrined in article one of the general agreement.

Also, in practical terms, if this were permitted, such a power would be used by the powerful trading nations to impose discriminatory actions against the smaller and weaker partners who do not have the power to retaliate.

The Punta del Este mandate has said that the agreement on safeguards "shall be based on the basic principles of the general agreement", and shall contain a number of elements outlined by the mandate.

The deadlock over safeguards in the negotiations, at Montreal and in the consultations, has been over the insistence of third world countries that given the long history of the negotiations on this issue, and the inability to move forward to negotiations despite the considerable technical work and preparations, there should now be a clear political direction for further negotiations.

This direction, the third world countries had said at Montreal, should be through a direction that the safeguard measures should be of limited duration, should be "non-discriminatory", and that "grey area measures which result in selective application should be proscribed".

In the first round of consultations held by Dunkel in January, third world participants had argued that the Punta del Este mandate had made a clear distinction between the "basic principles" of the general agreement on which the safeguards agreement "shall be based", and the various elements of the safeguards agreement whose details had to be negotiated.

Also, given the fact that the multilateral GATT trading system and its credibility had been eroded by the application of bilateral and other measures outside the GATT framework, any safeguards agreement had to deal with this by proscribing the "grey area" measures.

The EEC, U.S. and other major trading nations appear unwilling to commit themselves to negotiate on the basis of the "basic principles" of the general agreement, or to agree to have the "grey area" measures proscribed.

In the ideas he formulated Monday Dunkel, according to third world participants did not address these third world concerns at all, while meeting more than halfway the viewpoints of the industrialised nations.

While putting forward the ideas, Dunkel would appear to have repeatedly suggested that the participants should "reflect" upon the ideas, implying presumably they should not negative it off-hand.

Third world participants, while agreeing to reflect on the ideas, however reportedly made clear that the ideas formulated could not be a basis for a compromise or even for negotiations.

As basic concepts, Dunkel would appear to have suggested a four-point chapeau: the vital importance of a comprehensive agreement on safeguards, the agreement being based on the basic principles of the general agreement, of a comprehensive agreement re-establishing multilateral control over safeguards, and the vital character of on agreement on safeguards.

In this regard, Dunkel would appear to have said that the concept of the safeguard agreement being based "on the basic principles of the general agreement" was the most contentious and controversial.

The operational part of Dunkel’s proposal would appear to have involved procedural actions such as the chairman of the negotiating group drawing up elements for inclusion in a draft text of an agreement and for the negotiating group to began negotiations on the basis of the chairman's text expeditiously by June 1989.

In their comments, a number of third world participants reportedly reiterated their view that any mid-term agreement on safeguards should send the correct signals and provide a political impetus to the negotiations, keeping in mind the fact that the GATT trading system was facing disintegration because of the recourse to bilateral and other "grey area" measures.

India, Colombia, Brazil, Mexico, Pakistan and argentine were reportedly among the countries who put forward this view to suggest that the ideas formulated by Dunkel would not meet this test.

Several of them also wondered how and why the "basic principles" of the general agreement could be inclusion in the compromise, more declaration itself mandated this.

While third world participants reacted negatively to the Dunkel ideas, the industrialised nations reportedly encouraged him to proceed along the lines indicated by him.

All of them agreed with Dunkel that the proposals should be "reflected" upon before comment.

Nevertheless, the U.S. and the Nordics found the proposals as moving in a positive direction, while the EEC applauded Dunkel for his, "very courageous" proposals.

Hong Kong also found his ideas "logical and helpful".

Some third world participants later said that the proposals were in fact inadequate and unacceptable to them as a compromise or even a basis for negotiations.

Dunkel would however appear to have made the point that the delegations had to "negotiate" with each other and not with him on the text.