MORE DIVERGENCES ON RECOMMENDATIONS FOR MONTREAL.

Nov 18, 1988

MORE DIVERGENCES ON RECOMMENDATIONS FOR MONTREAL.

GENEVA, NOVEMBER 18 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Montreal Ministerial mid-term review meeting of the Uruguay round seems now likely to be faced in most of the negotiating areas with choices an substance, put in square brackets, to enable Ministers to take political decisions, participants in the Uruguay round reported friday morning.

The U.S.-led strategy of industrial countries had so far been to force such choices an Ministers in areas of primary concern to them, and where Ministers could be committed to "an irreversible process" in the orientations for the rest of the Uruguay round negotiations.

These negotiations are to be completed by 1990.

But third world countries, at least for the moment, would appear to have countered this strategy, and have ensured Ministers being presented with choices on most of the issues so that no one could say at Montreal that they did not have clear choices to decide upon in each of the areas.

The legal issue forced by Jamaica - about "decisions" on GATT issues being finally in the jurisdiction of a session of GATT contracting parties and not of the Trade Negotiations Committee (TNC) of the Uruguay round - would also mean that such a session would have to be convened in Geneva sometime in January, if at Montreal Ministers do agree on these issues.

Negotiations on recommendations to be put to ministers entered an intensive phase this week, with practically day and night negotiations in GATT this week.

On Thursday negotiators worked through the night.

Key negotiators in GATT had been up till four local time friday, looking at reports in each of the 14 negotiating subjects on agenda of the Uruguay round Negotiations on Trade in Goods, which is under the overall jurisdiction of the Group of Negotiations on Goods (GNG).

They were due to resume again at eleven this morning.

But some of the negotiators were back at the GATT even at nine, for the separate informal consultations on the issue of services, where negotiations are outside the GATT framework and run by the Group of Negotiations on Services (GNS), chaired by Colombia’s Felipe Jaramillo.

The informal negotiations among key negotiators an the issues covered by the Uruguay round's GATT negotiations on trade in goods are in the so-called "green room" consultations in GATT, so named after the wall colouring of the conference room of the GATT director-general, where such negotiations among key delegates take place.

These consultations on GNG issues are chaired by GATT director-general Arthur Dunkel.

A GATT spokesman would not comment on the substance of these talks, but merely said that the consultations under Dunkel covered the 14 negotiating areas under GNG, except for agriculture and tropical products.

The agriculture negotiations, he said, were "not yet ripe" for the consultations, while tropical products was a separate and special case involving a different bargaining process, being handled separately.

The consultations by Dunkel, he added, were attempting to identify areas of conference and divergence on the texts presented so far, and that the divergences were being narrowed down to leave only substantial and political issues to be decided by Ministers at Montreal.

One participant said Friday morning that the "substantial" and "political' issues in each of the negotiating areas were increasing to the point that "a square bracket may as well be put around Montreal".

He explained that at an early stage, during and immediately after the informal meeting of some trade ministers at Islamabad early in act, there had been a near consensus view that the Montreal meeting should not "attempt to secure any enforced consensus", and that only issues of convergence should be taken to Montreal for ministers to put their political imprimatur.

However, this participant said, later the U.S. began pushing for some "forced consensus" on issues of interest to the outgoing administration - TRIPS, services, GATT institutional mechanisms, etc., as also agriculture.

This had forced other participants, including third world countries, to insist on Ministers considering and deciding on issues of interest to them also.

As a result, they said, the ministers would now have to consider some substantive issues on the areas of tariffs, safeguards, textiles and clothing, dispute settlement problems within GATT, the institutional issues figuring under the rubric of "the functioning of the GATT system", the problems of agriculture, trade-related intellectual property issues, and the trade in services questions.

Any effort by any participant to insist through Montreal to give a definite orientation on the future course of negotiations, or get commitments or "nail down" the principles on which agreements would be reached, could result in others also insisting on this.

In the area of tariffs, industrialised countries have made the tariff regimes of third world countries their targets of attack, and want third world countries to "bind" their existing tariffs, and negotiate to reduce them.

Third world countries are resisting this.

Also involved are the third world objectives, at the end of the Uruguay round, to lower or eliminate tariff peaks in the tariff regimes of industrialised countries that inhibit third world exports, as well as dealing with escalation of tariffs at each stage of processing.

In the area of safeguards, the basic issue is whether the GATT’s most-favoured-nation or non-discrimination principle should apply when a country takes emergency actions to protect its domestic producers, or whether such actions could be taken against some sources of imparts (third world countries) and not all.

Some third world countries like India have said ministers at Montreal should take a decision, in view of these doubts and demands from industrialised nations, that safeguards actions should be of "limited duration", should be "non-discriminatory", and that "grey area measures which result in selective safeguards should be proscribed".

"Grey area measures" are bilateral agreements for voluntary export restraints, orderly marketing arrangements, and pricing of exports. Usually, these are forced on weaker trading partners by the major trading nations to protect their domestic industry or business.

In the case of textiles, all the textile exporting countries from the third world have insisted an ministers considering and taking decisions on the future orientation of negotiations in this area - which have been stalled by the U.S., EEC, Japan and others - and among other things ask negotiators to agree an a timeframe for phasing out the Multifibre Arrangements, and the modalities for integration of the trade into GATT.

The U.S. has been stoutly opposed to the textiles issue even figuring on the Montreal agenda.

While third world proposals in this area would be presented, so would be those of the EEC - linking progress in this sector to other sectors, and also for the phasing out of the MFA to be carried out along with liberalisation of textile import regimes of third world countries.

In agriculture, the negotiations and informal consultations by the chairman of the negotiating group are continuing, and will depend upon next week's meeting of the EEC Ministers.

But the negotiations could have been helped by President Reagan’s announcement that the U.S. would no longer insist on all agricultural domestic programmes being eliminated within ten years, but would be agreeable to extending the time-period.

However other participants said that the real issue or demand of the U.S. would still remain - namely commitments that the long-time framework on agriculture would be an the basis of "free trade" and elimination of "government support", and that apart from the EEC third world countries too would have different views an this approach.