Mar 25, 1989

DUNKEL'S WORKING PAPERS SEEN AS PARTIAL TO NORTH.

GENEVA, MARCH 22 (IFDA/CHAKRAVARTHI RAGHAVAN)— GATT Director-General Arthur Dunkel Wednesday put forward "working papers" in the four areas of deadlock in the Uruguay round that on balance appeared to meet the viewpoints of the United States, and partially that of the EEC, at the expense of third world countries.

The four areas of deadlock that wrecked the Montreal mid-term review meeting, and where Dunkel was asked to hold "high-level consultations", are textiles and clothing, agriculture, safeguard and Trade-Related Intellectual Property Rights (TRIPS).

Dunkel has held three rounds of consultations in the four areas.

Concluding this phase of his work, Dunkel Wednesday evening presented to an informal meeting of heads of delegations of participants in the Uruguay round what a GATT spokesman later described as "a working paper", and suggested that delegations should consult their capitals.

The paper was handed over to delegations at the end of the informal TNC meeting.

Dunkel has planned what he has described as a final round of "green room" consultations starting March 31.

The TNC is due to meet at level of high officials on April 5.

Third world diplomats in their preliminary private comments viewed the Dunkel paper as partisan.

They noted that in areas of interest to the north, and particularly the U.S. (agriculture and TRIPS), Dunkel has in a sense adopted a framework approach and cut through the disputes about the mandate in calling for specific negotiations on some of the issues.

In TRIPS for example, he has called for negotiations on substantive norms and standards of intellectual property rights, and for effective procedures for multilateral implementation.

The TRIPS issue is one on which there is a fundamental north-south divide, and the Dunkel formulation side with the north.

In agriculture, where the third world exporters are looking for major relief in terms of short-term measures, the Dunkel paper has been vague.

But in textiles and Safeguards, where the north (U.S. and EEC particularly) have in effect not been negotiating, the Dunkel paper does not address the issues or even provide a clear framework approach or clear directions to move the negotiations forward, but merely quotes the Punta del Este declaration.

In TRIPS, where the U.S., EEC and other industrial nations demand GATT rules for enhanced norms in Intellectual Property Rights (IPRS) and where GATT has currently no jurisdiction, Dunkel has been able to spell out what "basic principles" of GATT are to be addressed, and specifies them as "national treatment", "non-discrimination" and "transparency".

But in safeguards or the emergency protective actions that countries are able to take under article XIX in specified circumstances, and where the EEC and others want to apply "selective" or "discriminatory" safeguards, Dunkel has been unable in his paper to spell out as the basic principle "most-favoured-nation" treatment or "non-discrimination", which is the fundamental GATT provision that can be changed only by consensus and unanimity.

According to third world participants when a group of third world delegates had met him earlier this week about their concerns over textiles and safeguards, Dunkel told them they were not to negotiate with him but with other participants.

But in putting forward his "working paper", Dunkel has made the task of third world negotiators more difficult, one participant commented Wednesday night.

Textiles:

Dunkel’s text has merely quoted the Punta del Este declaration and has called for agreement to begin substantive negotiations in April 1989, and participants are "invited" to put forward additional proposals as soon as possible and not later than June 30, 1989.

Under the original negotiating plan adopted in 1987, substantive negotiations were to have begun in January 1989. Thus this is no concession to the third world.

In respect of third world demand for freeze on further restrictions to the access levels, Dunkel has suggested participants should "avoid actions" that adversely affect "trade flows", a term that favours the importing countries.

On the third world demand that the negotiators should agree that the phase-out of MFA should begin at the end of the MFA-4 in July 1991, Dunkel merely suggests these to be among the matters to be addressed under "modalities" for integration of trade into GATT.

While the only real direction for further negotiations, namely by repeating the mandate at Punta del Este is couched in terms of "will", the issues about MFA is put as "should".

This latter reads: "the modalities for the process of integration should cover such matters as the phasing out of restrictions under the Multifibre arrangement and other restrictions on textiles and clothing not consistent with GATT rules and disciplines, the time-span for the process of integration into GATT and the progressive character of this process which should begin as early as possible after the conclusion of the negotiations in 1990".

Safeguards:

Of the three issues on which specific directions had been sought by third world countries at Montreal, the issue that any safeguards agreement must be based on the fundamental GATT principle of non-discrimination and MFN treatment has been avoided or fudged in the Dunkel paper.

It is in a preambular statement that provides no specific direction to the course of negotiations and merely stresses the importance of a comprehensive safeguard agreement "based on the basic principles of the general agreement".

The second issue, namely that safeguards agreement should proscribe "grey area" measures have been similarly dealt with.

Only the degressivity and time-bound character of safeguards measures, demanded by the third world countries, has been sought to be accommodated in the further directions for negotiations.

On TRIPS, the Dunkel paper calls for negotiations during the remainder of the Uruguay round on a number of specific issues listed by him.

These are:

--Clarification of GATT provisions,

--Application of such basic principles as national treatment, non-discrimination and transparency,

--Standards and/or principles concerning availability and scope of intellectual property rights,

--Rules and disciplines concerning exercise of IPRS,

--Effective and appropriate means for enforcement under national laws of such rights,

--Effective procedure for multilateral settlement of disputes between governments.

On the third world complaints about the unilateral recourse to trade retaliation and coercion by the U.S. in this area, the Dunkel paper emphasises the importance of reducing bilateral tensions by reaching strengthened commitments to resolve disputes through multilateral procedures.

In effect the Dunkel paper tells the third world that the way to avoid unilateral actions by U.S. and other industrial countries is to agree to what they want multilaterally.

In what may appear to be deference to third world viewpoints, the Dunkel paper also calls for negotiations to reduce distortions and impediments to international trade, giving due consideration to such policy objectives of intellectual property legislation as economic growth, promotion of research and development and diffusion of technology.

But the way this is formulated, it could even be taken to be a further argument for enhanced IPRS and export monopolies for those holding such rights.

Agriculture:

The Dunkel paper on this, running into six pages, provides a complete framework approach, using often language that the U.S. has used in presenting its proposals to the EEC in bilateral talks, particularly on long-term elements, and harmonisation of sanitary and phytosanitary regulations.

The long-term elements and guidelines for reform call for substantial progressive reductions" in agricultural support and protection "sustained over an agreed period of time".

The goal is to be realised through negotiations on specific policies and measures, commitments on aggregate measurement of support and a combination of approaches. The terms of aggregate measurement of support are to be negotiated.

Credit is also to be given to measures taken by countries, since the Punta del Este declaration, in the area of reforms and reductions of support.

The long-term commitments are also to involve import access, subsidies and export competition.

The Ministers are asked to specifically agree that in third world countries government measures to encourage agricultural and rural development are an integral part of the development programmes and that such measures might involve direct or indirect government support.

In terms of long-term measures, ministers are asked to agree that due account shall be taken of possible negative effects on net food importing developing countries.

The negotiations on strengthened GATT regime of rules and disciplines and on terms of aggregate measurement of support are to be completed by December 31, 1989.

In the area of short-term measures, where the cairns group of members have called for freeze on existing levels of support and a cutback over the next two years, the Dunkel paper is somewhat vague.

Participants are asked to undertake within the scope of their existing legislation "to ensure that current support levels ... are not exceeded, and are reduced under conditions to be determined".

In terms of market access, the freeze is to ensure that tariff and non-tariff market access barriers "at the date of the decision" are not subsequently intensified nor extended to additional products.

Participants would be deemed to be in compliance of this freeze requirement if quantities permitted to be imported in 1989 and in 1990 are not less than average of imports in 1987 and 1988.

In respect of export competition, participants are asked to ensure that budgetary outlays on direct assistance to agricultural exports do not exceed levels of the base period (annual average of the two most recent fiscal years) and is not to be extended to additional products.

Where prices to domestic producers are administered or set by governments or their agencies, they are not to be raised above levels at date of the decision.

There are also to be no relaxation of governmental measures in force at date of decision to retraction production, whether implemented by land set-aside programmes, limitations on factors of production or other requirements.

Third world countries are not expected to subscribe to these commitments in respect of short-term measures.