Nov 1, 1991

GATT MISSING ANOTHER DEADLINE?

GENEVA, OCTOBER 31 (CHAKRAVARTHI RAGHAVAN) – GATT Director-General Arthur Dunkel and the chairmen of the various groups in Uruguay Round now appear have to missed another deadline, an informal one set by Dunkel for negotiating groups to complete their work by 31 October to enable them and the chairmen to produce a revised negotiating text.

Dunkel is now expected to convene early next week, possible Tuesday, a formal or informal official-level Greeting of the Trade Negotiations Committee which technically remains on call, and provide his assessment of the state of the process in various areas and his conclusions on the options facing the participants.

Late in September (when the negotiations resumed after the summer recess), and a little later when there was talk of the EC moving forward in agriculture, Dunkel had called in key negotiators and said they should accelerate their process and negotiate seriously by October 31, with the target producing a clean text in various negotiating areas.

After a green room consultations on September 20, participants in the negotiations had said that Dunkel had warned that the Uruguay Round "process cannot continue indefinitely" and if agreements in all areas were not reached by early November "appropriate conclusions" would have to be drawn.

At that time, other GATT sources had said that Dunkel had asked the chairmen of the market access, TRIPs and TRIMs, rules, institutional issues and dispute settlement and the services (he himself chairs the agriculture and textiles and clothing negotiating groups) to push the negotiations and if needed produce their own texts. He had ago indicated he might be doing the same in agriculture and textiles.

The stated intention was that the negotiators would narrow down the gap, and the chairmen could then produce what in their view would be a compromise that all sides could accept and live with, and that all these could be put into a new revised Draft Final Act and presented to governments so that they could take decisions and politically conclude the Round before end of the year.

In this scenario, only bilateral and plurilateral market access negotiations and those on initial commitments in services would continue to be completed in the early weeks of the new year and the entire package signed and sealed by end February or early March.

But at an informal meeting with key delegations wednesday night, Dunkel would appear to have conceded that the differences among protagonists on various issues was so far apart that no chairmen would be in a position to produce a new revised text and that neither he nor any of the chairmen.

While in the six weeks of negotiations since September he had expected the Chairmen to be able to narrow down the differences and produce a revised text with very few or no square brackets (indicating differences), the chairmen had now advised him that they were not in a position to do this as "the participants are not negotiating" and the negotiators could not expect Dunkel or the other chairmen to take decisions on their behalf.

Dunkel would also appear to have confirmed his assessment that no negotiations had been taking place in the textiles and clothing or the agriculture groups either.

Much of the optimism that GATT officials have been privately exuding over the last few weeks have been based on the premise that the EC is now ready to do a deal on agriculture and that the U.S. and EC are having direct bilateral talks on this that would be reflected in the negotiations here, and that on this basis or hope, others particularly the Third World countries would yield in the various areas (TRIPs, TRIMs, Rules, etc.) where the US and EC have demands on them.

But while the U.S. and EC still appear to be talking on agriculture, and a meeting is expected over the next few days in London amongst the U.S., EC, Japan (three of the four Quad members) and Australia as chair of the Cairns Group, intense consultations over the last 2-3 three weeks in Geneva have shown a widening of the gap amongst the major industrial countries as well as between them and the Third World countries.

On Wednesday, at a meeting of the "market access" group, Third World delegations individually complained that there had been no negotiations on their "offers" - for reduction of tariff and other barriers - and that the responsibility lay squarely with the major trading partners. Both the U.S. and EC have made the market access negotiations conditional on the outcome in agriculture and textiles and this itself has blocked progress.

Even the so-called sectoral negotiations have been deadlocked, with negotiations blocked by the major trading partners, the Third World delegations complained.

The Chairman of the negotiating group, German Denis, would appear to have told the participants that the market access negotiations were a bilateral process and while he could try to put pressure on all participants to negotiate, he could not negotiate for them or bring about an agreed package.

In Agriculture, where there have been discussions on some of the "technical issues" including the issue of special safeguards, Japan reportedly made clear that it had not agreed to the "tariffication" of existing quantitative restrictions on "all products" and that it could not accept tariffication of sensitive imports such as rice. Tariffication of all products was not acceptable and as far as rice was concerned was "impossible", Japan reportedly said.

South Korea would also appear to have made clear that while it was discussing the tariffication and safeguards issues (which are based on tariffication concept), it had not accepted the tariffication approach on some of its sensitive imports in this area.

One participant later said that while Japan and South Korea's position had been well-known and had not changed, perhaps the GATT officials and others had been assuming that once the U.S. and EC agreed upon something, others would have to fall in line.

Some Japanese sources also noted that agriculture and rice was not the only issue of concern to Japan where there were differences with the U.S. and EC. There were also other important issues such as in rules over anti-dumping and countervailing measures, the subsidies and some other questions, as also in issues relating to TRIPs, TRIMs and Services.

In the "rules" area, while there have been discussions, there have been no negotiations and parties have not come closer on any issue, one of the participants said.

In "safeguards" the EC, which at Brussels had indicated it might be ready to give up its demand for "selectivity" principle in safeguards but did not specify its own formulation for the Brussels text, appears to have formulated a modification that in affect would introduce "selectivity". The EC would appear to have said that while in applying safeguards there could be "global quotas", the importing country should have the right to allocate or restrict the quota of the country or countries imports from which were causing the problem.

This appeared to many as no different from the "market disruption" concept used for over 30 years in applying individual quotas and discriminatory restrictions in the textiles and clothing trade.

That the U.S. and EC are in fact hardening their stances vis-à-vis the Third World countries have come in other reports.

In India, the EC vice-president and external relations Commissioner, Franz Andriessen has been quoted as demanding that India should cut its tariffs even more than it has done (from an average of about 100 percent or more India under the IMF loan conditionalities has already cut it to 30 %), should yield in TRIPs by agreeing to all the demands in patents, and agree to all the agreements in the Round being put in a single package as a single undertaking to enable cross-retaliation over failure of countries to give adequate protection on patents. Andriessen was also reported in the press as having expressed EC's inability to provide more benefits to India in textiles and clothing exports or in the Uruguay Round agreement on this.

From Washington a report in the Financial Times quoted leading congressmen and business lobbies as making clear they were not ready to give up the "Section 30l" card enabling the U.S. to retaliate against its trading partners if they do not concede U.S. demands. The report also said the message from academic think tanks to the elegant offices of lobbyists to trade agencies was "a unanimous call for a wide package of reforms (through the Round) offering immediate commercial value".

At a time when neo-classical economists enshrined in the IMF/World Bank/GATT are pushing developing countries not to take "mercantilist" approaches to the negotiations, but undertake liberalisation and free trade and its benefits for all because of the its universal harmony of interests of sellers and buyers, the views from Washington as well as Andriessen's remarks in Delhi could leave little doubt about the mercantilist approaches of the two major trading blocs.