Feb 28, 1991
WILL U.S. DETERMINE URUGUAY ROUND OUTCOME IN NEW WORLD ORDER?
GENEVA, FEBRUARY 27 (CHAKRAVARTHI RAGHAVAN) – GATT Director-General Arthur Dunkel discounted the view Tuesday that in the New World Order of the post-Gulf world, the U.S. would emerge so strong that it could decide the outcome of the Uruguay Round.Replying to a question at his press conference, Dunkel said everyone could speculate in terms of the negotiating positions of different participants in the Round and "you can find reasons for changes of attitudes or confirmation of previous attitudes depending on the criteria you use". "Some observers", Dunkel point out, "are speculating that the U.S. has been the leading military power and is still the leading military power in the Gulf coalition". "But there are others who are ready to remind us that if you look at it in terms of financing the costs the situation is very different". "So I don't think we should mix up the two aspects of the evolution in the geopolitical situation i.e. the military aspects and the economic operations", Dunkel said. As for the impact of the Gulf War on the Round, towards the second half of 1990, not only the GATT secretariat, but in the World Bank, IMF, UNCTAD, etc., "we were already seeing signs of a downturn. We knew by experience that when you have an economic downturn it is harder for governments to be very open in terms of trade liberalisation and (observance) of rules of conduct". "Today we are receiving hard facts of the last half of 1990 and this shows growth rates in a number of industrialised countries have been lower than expected last year and more important the Gulf War has had an impact on economic activity in areas which were not taken into account in any analysis all of which had been in terms of oil prices". "People had looked at oil prices and said if prices remained reasonable Gulf War will not have an impact. No one had expected this extraordinary downturn in travel, tourism and their impact on civil aviation and aircraft industries. We also see buyers have been more restrictive in buying activities like automobiles. In a number of countries we have not made calculations on what it means to have lost remittances of workers in the Gulf area - on India, Pakistan, Egypt - and its impact on their Balance of Payments". However he expected the GATT economists, in their first appreciation to be published by mid-next month, to be able to make an assessment of the economic outlook. "This is not a very structured analysis", Dunkel confessed. But the Gulf war was having an economic impact, which was not expected, and of the nature he had described. "I am also concerned that the business community has been very hesitant to take hard decisions in terms of new investments etc during the first months of this year". "But please do not dramatise", Dunkel told the newsmen. "The negative trends in turn could very quickly be reversed as soon as we-have solved this tragic conflict of the Gulf War". Dunkel was reminded that in fact even before the Gulf hostilities the world economy was already in the downturn. Many analysts who had been seeing this downturn coming and how it had come, including such facts as behaviour of the banking and financial sector the unwillingness to take risks and lend and their problems because of the deregulations of the past, saw the current downturn more in terms of the one that the world economy had in the 30’s than any recent experiences. This would mean that the recession could well continue even after the Gulf War ended and if so how did Dunkel see its effects on the Uruguay Round? Dunkel said that he had mentioned some points about the downturn reversing itself in terms of the Gulf War. But he agreed entirely that even at Brussels, when everyone had hoped the conflict would not blow into a full war, the world economy had been in a downturn and has not been in the best of shape. But Dunkel’s response left unclear as to the view the Secretariat was taking about the effect of the recession on the prolonged Uruguay Round.