Apr 12, 1990

UNILATERALISM CAN'T BE FOUGHT BY LEGITIMISING IT IN GATT.

GENEVA, APRIL 10 (BY CHAKRAVARTHI RAGHAVAN) -- Third World countries in the Uruguay Round talks renewed their complaints at the GATT Tuesday of lack of progress in areas of particular interest to them and of mounting pressures for rapid results in new areas and warned that if the present imbalances persisted the Round would end in a failure for which they would bear no responsibility.

But judged by the responses of the major Industrial Countries, and the plans for programme of negotiations over the next three months, their pleas fell on deaf years:

The collective Third World assessment and warning was presented Tuesday at the meeting of the Trade Negotiations Committee, the overall Uruguay Round body running the round. The joint position was read out at the TNC meeting by the chairman of the informal Third World group, Amb. Rubens Ricupero of Brazil, who read out the statement of the group which, was later distributed as an official document of the TNC.

A separate statement, supporting this view, and voicing the special concerns of African countries was also later presented by Kenya’s Amb. Prof. Thomas Ariba Ogada, on behalf of the African country-participants.

Individual Third World delegations also took the floor to support the joint statement, but with varying nuances to convey their particular concerns. But the diplomatic courtesies in such speeches and assurances of constructive cooperation in many statements left the ICs with the impression that except for a couple of countries the rest would fall in line once pressures are applied in capitals.

The U.S. and EEC spoke of their own views of the "imbalances" - lack of progress in new areas and in negotiations for changes in GATT BOP provisions. The EEC spoke of the need for agreements in these areas to ward off U.S. unilateralism, while the U.S. advised those unwilling "to give up some sovereignty" over trade policies and change their regulations on agriculture, services, textiles, intellectual property and investment to "stand aside while the rest of us get on with the work".

The clarifications (or lack of it) by GATT Director-General Arthur Dunkel, who chairs the official level meetings of the TNC, as to how the negotiating work would be run till July, suggested that Third World countries would face the same power ploy approach in key areas as they did at the time of the mid-term review in Montreal and in Geneva.

For the Montreal mid-term review, a number of negotiating groups had agreed texts (on procedure), while in others, which were very near, and agreements were reached at Montreal. In all agreements could be reached in 11 groups but not in four others (Agriculture, Safeguards, Textiles and TRIPs), and pending agreement these were put on hold. Subsequently, Dunkel promoted understanding between U.S. and EEC over agriculture, and then forced accords unfavourable to the Third World in the other three areas, through the GATT green room consultation processes, which he apparently plans to use from May.

Immediately after Ricupero had read out the six-page statement of the Third World group, EEC delegate Amb. Tran Van-Thinh in an hour long lecture took note of the messages (the one presented in early March, the second one now, as also the "message" out of the March New Delhi meeting of some 18 Third World countries) but questioned the idea of a common treatment for the Third World, arguing there was nothing in common between Burundi and South Korea.

He then referred to the various unilateral measures being taken by the U.S. in the shape of S.301, "special 301" and "super 301", and said this route taken by the U.S. Congress and business was from their perception that multilateral system was not serving U.S. trade interests and its trade partners had not lived up to their obligations. It was necessary to show to the U.S. that the multilateral system did work and for this it was necessary to find results in the Round in two broad areas - dispute settlement and the new areas, he argued.

"This is too high a price to pay", Tran agreed. "But without establishing credibility in the multilateral system we cannot fight unilateralism".

Responding to this, Ricupero said that he was disturbed by the analysis that the only answer to unilateralism was "to give in" to the U.S. in the Uruguay Round. "Unilateralism cannot be fought by introducing it into GATT and making it legal", he said.

On the claim of Tran that the EEC was seriously negotiating and wanted results in all areas and by July, Ricupero asked how this could be reconciled with the view of EEC Commissioner Andriessen (who had said in an interview in the Financial Times) that Europe would not be ready to trade off for a successful conclusion of the Round until much closer to its end in December and that the EEC did not regard agreement to cut farm support as a possible trade-off for achieving other more important priorities.

Tran could only say that whatever the reported remarks, the instructions to the delegation in Geneva were very clear and it would negotiate in all areas, but that the concept of "globality" was a matter for the end of the round.

Commenting for Brazil on the services, Ricupero emphasised the need for flexibility for Third World countries so as to encourage these countries to take part in the process of liberalisation. It was also necessary to address the issue of "definition" of trade in services and provide symmetry in coverage to all the factors of production (capital and labour).

Earlier, the Chairman of the surveillance body, GATT deputy director-general Madhan Mathur told the TNC that there had been "minimal consultations" on rollback and no agreed results either.

A number of participants - New Zealand, Chile, Uruguay, India, Brazil and Nigeria among them - took the floor to underscore the need for more effort being expended in meeting the rollback commitments undertaken at Punta del Este.

The Brazilian delegate also sought clarifications from Dunkel about his statement at the GNG Monday evening about conditional agreements emerging from the negotiating groups by July.

Ricupero wanted to know what Dunkel had in mind when he had told the GNG at the end that by July they should have a clear profile with conditional agreements. Did he mean agreement on elements in each group with some not settled or did he mean that agreements would be reached in some areas but remain conditional on final results while results in others would be reached only at the end of the round?

Dunkel, participants said, merely repeated his remarks without clarifying them. Ricupero however said that they would like to see Dunkel's remarks in writing and reflect on it.

But participants said this exchange left little doubt that the GATT Director-General planned to adopt the same power ploy that he adopted for the mid-term process, and that the net result would be greater damage to interests of Third World countries and the furtherance of the interests of the major trading partners.

In other comments, Switzerland said it was time to stop making speeches and get to negotiations, while Canada said that the negotiating processes should be accelerated to get as close as possible to final agreements by July since otherwise the system would be overloaded.

Korea stressed that it was essential to turn political will into concrete results in the negotiating process.

India’s Amb. Bal Krishan Zutshi said that hopes that the Uruguay Round would provide an opportunity to preserve and strengthen the multilateral trading system and secure further liberalisation of world trade in areas of interest to the Third World and that the development dimension would be fully incorporated had been belied.

In the name of pragmatism and realism selectivity, was being sought to be legitimised and scope of antidumping and countervailing actions was being enlarged. Flexibility of Third World countries in using commercial policy instruments was sought to be curbed and cross-linkages sought between multilaterally agreed concessions on trade and new areas of economic policy, which lay in the domain of sovereign decision-making. The development dimension was being totally ignored in TRIPs and TRIMs, while in Services despite the agreement on the importance of the development dimension and need to provide for it in the framework, the positions remained far apart.

Referring to the comments of the U.S. and the EEC in the GNG, Zutshi said "sanctity of the multilateral trading system and its rules is not a matter for sarcasm or expediency dressed in the garb of ‘trade realities’, nor could imaginative or innovative solutions disguise the true nature of what was being sought".

"Selectivity", in safeguards was simply a device to penalise the most efficient producers and this put GATT on its head. It was no consolation to argue that "grey area" measures would proliferate without conceding some "selectivity".

"We cannot buy selectivity in any shape or form, for any reason whatsoever", Zutshi declared. "The challenge in this area is to curb and curtail grey area measures with the full application of MFN principles. This did not require imaginative solution but political will to affirm commitment to the fundamental principles of GATT".

Reiterating India’s opposition to changes in the GATT BOP provisions, he said since there was no agreement in the negotiating group on the need for changes "the question of entering into substantive negotiations does not arise".

On Services, Zutshi reiterated the need to incorporate the development dimension into effective and operational provisions in the framework and rejected the view of some (U.S. and EEC) that this should be in preambular part of the objectives, and that the interests of Third World countries in securing a balance of interests should be a function of negotiations for liberalisation.

"This is no different from saying that relative bilateral bargaining power should be the sole determinant of the outcome. What we are seeking is an agreement which will incorporate the development dimension in its very structure and prevent bilateral and unilateral pressures for concessions".

No negotiations were possible for concessions on market access in Services before the framework was fully settled and became operational for a period of time. The notion of entering into commitments at existing levels of access and binding existing regulations as between Industrialised and Third World countries was "the surest way of introducing a permanent inequity and imbalance in rights and obligations".

The services sector was far too vital for growth, development and diversification of economies to permit Third World countries to negotiate market access concessions without understanding the full implications of the commitments being sought, without information and statistics on trade flows, and without securing for themselves possibilities of increasing participation in this trade. In this context sectors of special interest to the Third World like labour and labour-intensive sectors should receive highest priority.

The principal purpose of the Uruguay Round was not for introducing GATT agreements in new areas but an exercise to tackle meaningfully traditional issues of market access. Forward movements in traditional areas could not be the basis for demands on Third World countries in new areas, which would undermine their capacity to access modern technology, to direct and channelise investments or to develop their services sectors. The trade-offs between traditional and new areas would mean that "the ‘give’ would be so much that the ‘take’ would be worthless".

Referring to what he called suggestions for "radical transformation of GATT", Zutshi said India could not accept any moves for changes in basic principles or to lodge in the GATT system disciplines as on Services, Investments or Intellectual Property Rights. Attempts to link disciplines through a unified dispute settlement machinery was a transparent attempt to impose new rules on Third World countries through the leverage of market access in the ICs.

"We are firmly opposed to these attempts", Zutshi said. "The adherence of developing countries to the outcome in the areas of intellectual property and services will depend on the extent to which they assess the new disciplines to be responding to their essential interests. In this context we believe that the proposal to establish an International Trade Organisation as presented by some ICs is not mandated by Part III of the Punta del Este Declaration".

U.S. delegate, Warren Lavorel said U.S. was committed to completing the negotiations on time and to achieve the "profile" of a package by July. For the U.S. it was also imperative to have a "big result" with significant agreements in all areas of negotiations. It would not accept "modest or mediocre" results.

As for the complaints of "balance", Lavorel said that this was "in the eye of the beholder" and each could conclude that the negotiations was unbalanced against its interests. The U.S. could argue it was unbalanced against it because an important player was dragging its feet on agriculture, or that countries which had not even a consolidated GATT tariff schedule were complaining about lack of progress in market access or that some countries were placing a high priority on improved disciplines on safeguards, antidumping and countervailing duties but refusing categorically to negotiate similar disciplines on BOP restraints.

The negotiations on BOP, Lavorel insisted, should begin in earnest since the U.S. was serious about having a "satisfactory agreement" on this.

The intellectual property issue was a high priority one for the U.S., Lavorel said, and charged some countries with raising artificial procedural barriers" in refusing agreement to the secretariat producing papers to facilitate negotiations. "These amateurish manoeuvres should be put behind us", he declared.

The U.S. was concerned that services negotiations had not progressed sufficiently to permit negotiations on commitments of liberalisation, and an agreement without liberalisation commitments was not sufficient for the U.S.

Similarly TRIMs was another area of priority where several delegations were refusing to negotiate meaningfully on disciplines on trade distorting practices.

Balance, Lavorel said, was important but the balance that mattered was the one in December.

Referring to what he called the "exciting changes" taking place in Eastern Europe, Brazil, Mexico and Colombia and the recent talks of these Ministers with the USTR, Lavorel suggested that the bureaucracies of these countries had not caught up with these changes and the rhetoric in Geneva reflected last year's perceptions rather these realities.

The negotiations, the U.S. delegate added, had to do "with political will to give up some of your sovereignty" over trade policies in favour of multilateral disciplines and rules.

"It means many of us will need to change the way we regulate agriculture, services, textiles, intellectual property and investment. It means we may need to change policies with respect to subsidies, how we take protective action, whether for injurious unfair trade practices, for safeguards or balance of payments reasons".

"If there are those who believe that they can come out of these negotiations without making such changes, while the rest of us do they are mistaken and I suggest that they stand aside while the rest of us get on with the work".