URUGUAY ROUND BALANCE TILTED FURTHER TO NORTH

Jul 27, 1989

URUGUAY ROUND BALANCE TILTED FURTHER TO NORTH

GENEVA JULY 25 (BY CHAKRAVARTHI RAGHAVAN)— As the Uruguay round negotiators take a summer recess at the end of this week, after the first semester of negotiations in individual negotiating groups since the April mid-term review, an overall picture of further accentuation of asymmetries has begun to emerge.

The group of negotiations on goods (GNG), which runs and supervises the work of the 13 individual negotiating groups in the area of goods, is meeting on Thursday, while the trade negotiations committee (TNC), the overall body that supervises both the goods negotiations and the separate one on services, is meeting Friday.

In agreeing to launch the round, and putting new themes, particularly trade-related intellectual property rights (TRIPS), trade-related investment measures (TRIMS) and services on the agenda, the third world countries made a considerable compromise and accommodated their industrial partners.

This was on the premise that the round would address their longstanding problems in GATT, that the industrialised countries (ICS) would carry out their commitments and promises in earlier GATT rounds, ministerial meetings and declarations, and work programmes, as also the Punta del Este standstill and rollback commitments.

But this has proved to be another example in south-north relations of hope prevailing over experience.

Over the first two years of negotiations, little progress was made on traditional GATT issues of priority and concern to the third world, and there have been widespread breaches of standstill.

Even more, the ICS have pressed ahead with negotiations in new areas, and are reopening compromises reached on them at Punta del Este in regard to the mandate for negotiations.

As a result of pressures, including from the-GATT secretariat, the third world countries again gave way during the mid-term process and, at Montreal in December 1988 and Geneva April 1989, they countries compromised further and allowed the expansion of the carefully crafted original mandates in new areas.

In the three months of negotiations since then, not only has the third world found no progress in traditional areas or any move from the ICS to implement their long-standing commitments, but is also finding "demands" on it in these very areas for "concessions" to the industrial world.

Over and above these, they are now being cajoled and pressured into agreeing to further "event planning" - setting the November - December 1990 as the date for the Brussels ministerial meeting of the TNC and of a GATT contracting parties to incorporate the results of the negotiations.

The European economic community, wants to set the dates and issue invitations now, and the GATT director-general is trying to persuade third world negotiators to agree to this, arguing that when they do so the ICS would be compelled to negotiate seriously and make concessions to the third world in areas of interest to the latter.

The argument for this appears to be that once the final date is set and other earlier deadlines towards this are also set, negotiators would be under greater pressure to negotiate seriously, place their offers on the table and clinch agreements with the director-general or his representatives "acting as midwives" in the "green room consultations".

But if the post-Tokyo round experience in GATT is any guide, through these restricted consultations the third world will once again be under pressure, with the secretariat producing a succession of compromise "non-papers" on individual issues that at every stage lean even more to the viewpoints of the major trading partners, as happened at the April TNC.

And in traditional areas third world countries may find themselves fobbed off with a few crumbs and cosmetic commitments, with details left for post-Uruguay round work programmes.

The only instrument they have against this, and provided they use it, is the provision in the Punta del Este mandate that in order to ensure effective application of differential and more favourable treatment the GNG shall, before the formal completion of negotiations, conduct an evaluation of the results attained therein in terms of the objectives and general principles governing negotiations ..., taking into account all issues of interest to less developed contracting parties".

This was put into the Punta declaration as a safeguard against what happened in the Tokyo round when the majors reached agreements in the final stage, decided to put all unresolved issues (mostly of concern to the third world on to a work programme, and presented the package to others on a take-it-or-leave it basis.

If this is to be avoided, and the GNG assessment is to be something more than a mere formality, clearly it would imply that it would have to be completed, after completion of negotiations in all areas, and well in time ahead of the final TNC meeting, to enable governments of participating countries to make their own assessments.

It would even imply that even the final ministerial meeting of the TNC and of the GATT contracting parties cannot be set before this assessment of the GNG is completed.

In the three months of negotiations, progress in negotiating groups in areas of concern to the third world have been either nil or retrogressive.

In tariffs, the mid-term accord called for establishment by 1 July 1989, of detailed procedures, approaches and methods for the negotiations.

This directive from ministers has not been implemented because of the U.S. stand (against any general formula approach to tariff reductions). Now the EEC has put forward a so-called formula approach whose real effect is to force third world countries to substantially reduce their own tariffs and "bind" them in GATT.

Issues of tariff escalation and tariff peaks, particularly in products of export interest to the third world (in tropical products, natural resource-based products, textiles and clothing, fruits, vegetables etc) continue to be ignored.

In the area of natural resource-based products, not only has there been no attention to reduction of barriers affecting third world exports, but there are demands on them on issues of access to supplies, export restrictions, dual pricing policies (prices at which their resources are available for domestic industry as compared to industries abroad relying on the raw material), subsidies (both domestic etc as well as on exports), and government ownership and practices in this sector.

In textiles and clothing, the third world has been looking (in the light of the Punta mandate and the April midterm review) for negotiations and agreement on modalities to integrate trade in this sector into GATT by phasing out the current discriminatory regime aimed at them.

Far from making progress in this direction, the major industrial partners are trying to put the current MFA regime, derogation from GATT, into the general agreement under the guise of writing strengthened GATT disciplines for integration of trade.

The EEC’s latest proposal in this area would have the effect of merging the crucial decisions to be taken in the Uruguay round on this into the mandated negotiations in the textiles committee of GATT on the future of MFA-4.

In the area of agriculture, where the U.S.-EEC compromises produced some agreement at the April TNC meeting, no serious multilateral negotiations have been held to pursue the work programme. Rather there is every evidence of the U.S. and EEC discussing and negotiating bilaterally to achieve some kind of a market-sharing arrangement, to be presented as a "liberalisation" of agricultural trade and for which other exporting countries, whether from the industrial or third world, would be asked to pay a "price" in other areas of negotiations.

The negotiations on safeguards, through a footnote to the chairman's text, has brought on to the negotiating table the idea of "selective safeguards" provisions to enable discriminatory safeguard actions to be taken by ICS against third world exports in return for multilateral "surveillance" of such actions.

In fact, the safeguards issue has now become an esoteric one. ICS for quite some time have not had recourse to the GATT provisions for emergency safeguard actions they now start harassment proceedings against third world exporters for purported dumping and subsidised exports.

In these proceedings they "persuade" third world exporters and exporting countries, under penalty otherwise of heavy duties, to accept voluntary export restraint, minimum price and other "grey area" measures.

GATT, with its "jungle - law" concept of retaliation by the injured party, after authorisation, has long proved itself incapable of upholding rights of the weak against the strong and the bully. But under the new proposals, coupled with the "multilateral surveillance" under functioning of the GATT system will join the IMF and World Bank in disciplining the weak.

Far from implementing the promises of the Tokyo round, and the decision of GATT contracting parties in putting the various codes into GATT, namely maintaining the unity of GATT and enabling accession of third world countries to these codes with special and less onerous obligations, the ICS are now trying to enhance these obligations and write them into GATT itself.

In the subsidies code, for example, a proposal by Canada (viewed by many third world negotiators as a stalking horse for the U.S.) seeks to do away with the concept of "material injury" to justify "actions against imports. Rather, a list of prohibited subsidies has been suggested which in effect would make GATT an instrument, not of trade, but of curbing autonomy of countries in production and production systems.

In the area of GATT articles, the effort to bring about changes in provisions favouring the third world and giving it some autonomy of decision-making and manoeuvre, as in the provisions for balance-of -payments (BOP) and infant industry protection, are sought to be drastically changed.

Side by side, in the normal GATT works, the surveillance process before the GATT BOP Committee has been drastically changed in practice.

With most third world delegations having only one or two bodies to field for two to three formal Uruguay round meetings and several informal every week, as well as for regular GATT work, the BOP Committee meetings are seldom attended by other third world delegations, only the country whose bop policies are being examined.

ICS, on the other hand, are present in full strength. In such an atmosphere, the individual third world countries defending their BOP actions are being "pressured" to accept more and more onerous obligations.

In the new areas, in TRIPS the few concessions to the third world at the april TNC meeting have been virtually ignored and there is a concerted front by all the industrial countries to force substantially higher standards and obligations on the third world via GATT, and for enforcement through GATT "retaliation" mechanisms.

The net effect of these would be to provide "reverse protection" in the third world for imported products - through patent monopolies, unrestrained cornering of markets through product differentiation based on trade marks, and in general an increase in prices for pharmaceuticals and food products, and perpetual rentier incomes.

In the area of TRIMS, where the mandate calls only for examination of operating of GATT articles and elaboration "as appropriate" of further provisions to "avoid adverse effects" of trade restrictive or restrictive TRIMS, a whole new effort is on to open the way for a GATT regime on investments that would guarantee rights of foreigners in countries at levels that could even be higher than those enjoyed by nationals of the country itself - a return to the international law of the colonial era.

In services, under the guise of "testing" concepts, principles and rules, some of the basic compromises at Punta del Este and Montreal - such as limiting factor movements (of capital and labour) to discreteness of transactions, thus ruling out right of establishment or commercial presence - are being sought to be eroded.

With fewer and fewer third world delegates participating, and some routinely "thanking" and complimenting the secretariat and delegations who table papers, there is a growing aura of unreality.

Casting a dark shadow over the entire negotiating process has been the recent unilateral S.301 actions of the U.S., initiated under its domestic trade law, threatening its negotiating partners with unilateral trade restrictions if they would not yield to U.S. demands in the MTNS.

While the U.S. has been subjected to a litany of verbal condemnations and rebukes from other trading partners, the U.S. threat is being advanced as the very reason why agreements should be concluded in the Uruguay round and negotiations continued on the very issues where the U.S. has held out threats - reminiscent of a certain European statesman's advice in the thirties to other European countries on the need to "satisfy" the aspirations of a certain chancellor in central Europe lest he be forced into military actions.