Nov 26, 1990

BUT FOR SOME FORMALITIES, SHOW IS OVER IN GENEVA FOR NOW.

GENEVA, NOVEMBER 24 (BY CHAKRAVARTHI RAGHAVAN)— Uruguay Round negotiations are practically over at Geneva, except for formal actions to forward a formal package of various texts and issues for Ministers to consider and take decisions at Brussels December 3-7.

Whatever the outcome at Brussels, it is now fairly clear that many of the areas of negotiations would have no results and even for those where Ministers could take some clear-cut decisions the Round in fact would not end at Brussels and that further negotiations would have to be continued in Geneva.

Behind the tensions and public fights over agriculture, services and other areas - between the major trading partners and between them and the Third World - efforts are still continuing for an outcome that could be seen as a modest success, and not a failure that would precipitate a trade war.

The contours of such a mini-package would probably have to include some agreements on Agriculture, Services, TRIPs, market access (tariff, non-tariff, tropical products and textiles) and on moves towards a multilateral trade Organisation.

On the last, the U.S., EEC and other ICs want some clear commitments for such an Organisation and decisions in principle at least regarding its membership, common dispute settlement mechanisms and principles (which would in fact enable cross-retaliations). Third World countries appear to be willing to accept the establishment of an interim Committee to conduct further negotiations.

The U.S., EEC and other ICs also want whatever package is evolved at Brussels (and some further carryover in Geneva early in New Year) to be incorporated in a single protocol that would have to be accepted as a package. There is still some resistance from the Third World some of whom see the single protocol or Final Act to involve no more than what its usage means elsewhere - an instrument incorporating all the agreements reached and whose signature implies no more than that the ministers and other plenipotentiaries accept it as authentic for presentation to governments for final approval or otherwise.

The Trade Negotiations Committee is to meet Friday evening to consider and agree informally on the reports to be forwarded to Ministers at Brussels. The Report will have the package of texts in many areas (with many unresolved issues in most shown within brackets) which have been "cleared" through the "green room" during the last few days. In those areas where there are no texts the report will outline the points and issues, to be forwarded to the Ministerial meeting at Brussels for decisions. The report will be adopted at a formal meeting of the TNC on monday.

As of Friday morning, there are no draft texts, to be forwarded to Brussels as a basis for Ministerial negotiations, in the areas of TRIMs, Subsidies and Anti-dumping and Agriculture.

On the last, and most contentious issue between Europe and the United States and the Cairns group, it was agreed at consultations held on Thursday night by the GATT Director-General, Arthur Dunkel, that a report would be placed before the Ministers and this would include all the "offers" on the table, the paper presented last July by the Chairman of the Negotiating Group (Aart de Zheew of Netherlands) and a series of "political questions" to be posed to the Ministers for their decisions.

The questions are to be formulated by Dunkel on the basis of points submitted to him by the various protagonists.

On Thursday, the Group of Negotiations on Services (GNS) adopted a draft text for a framework agreement, with some nine sectoral annexes of annotations, to be presented to Brussels meeting, but the outlook for an agreement is now very dim.

Any agreement or even decisions that could result in an agreement emerging in services at Brussels would appear to depend on whether the U.S. can retreat from its last-minute stand against an unconditional most-favoured-nation clause in the framework. Nine years ago when the U.S. launched its services initiative, the rest of the world was either opposed or cool to the idea of a services agreement or liberalisation of trade.

By the time the Uruguay Round was launched at Punta del Este in September 1986, the EEC and other Industrial Countries were fully behind the U.S. drive, and the Third World countries had reluctantly come on board.

In the four years of negotiations since then, much progress was made and a multilateral framework based on a process for gradual liberalisation was evolved, and while there were still serious differences to be resolved, almost everyone was on board.

Suddenly this week the picture changed, and it is now once again the U.S. vs. Rest of the world (105 against one, as several speakers said at the GNS meeting), with the U.S. now being accused of adopting a position of protectionism for its service sectors.

As one of the negotiators explained at the end outside the GNS room, the U.S. pushed for a services agreement in the belief it would be the gainer and would not have to concede anything. Now that a balanced agreement encompassing both U.S. areas of strength and weakness have emerged, and the U.S. would have to "give" as well as "take", the U.S. negotiators are crying foul and have changed.

In the draft text, with nine annexes, which the GNS agreed to forward to Brussels one of the sectoral annexes, that on Financial services, is just a blank piece of paper with a footnote by the chairman that while there is agreement on the need for an annex to address the specificities of the financial services sector, there is no agreement on the scope and contents of the annex.

A group of treasury experts from the Industrial Counties and some Third World countries had prepared a text, virtually a separate agreement though garbed as an annex and providing for signatories to agree immediately to "national treatment", "market access" and liberalisation commitments (unlike in the general framework where all these have to be negotiated in future rounds).

But this had been turned down by other Third World delegations with the result that unlike in other sectors where there are at least square bracketed texts, there is none in financial services.

The other service sectors with some texts in the annexes are four in the transport area (one each for maritime transport services, inland waterway transport services, road, transport services, air transport services), two in telecommunications (one for basic telecommunication services and other for telecommunication services), labour mobility and audio-visual (broadcasting, sound recording and publishing).

The attempt of some Industrialised Countries, like Switzerland, to suggest that the GATT Director-General should formulate or forward the text on financial services formulated by a small group did not fly in "green room" consultations - Dunkel apparently ending consultations on services in a couple of minutes after obtaining agreement to forward the GNS text to the Ministers.

In other "green room" consultations thursday, there was no agreement on forwarding any text on Trade-related-Investment Measures (TRIMs) to Brussels.

In earlier consultations a text prepared by the chairman of the negotiating group Tomohiko Kobayashi of Japan, which had adopted an approach based on prohibiting of several TRIMs and disciplining others had been rejected as any basis for consultations.

A new text prepared by Hong Kong's K. Broadbridge, but adopting the same approach, was also rejected thursday by a number of Third World countries. Besides Brazil, Egypt, India and Philippines, the opposition also came from Argentina and Uruguay in the Cairns Group (whose opposition was seen largely as tactical) as also from Australia which also from the beginning has been opposed to a prohibition of TRIMs per se. The Broadbridge text was commended for its "clarity and crispness", but its contents were found unacceptable, Third World sources said.

There was also no agreement to officially forward, even as annexes, to Brussels the Kobayashi and Broadbridge texts - a suggestion that was pressed by the U.S., Sweden and Japan. Dunkel is to merely pose five or six questions needing political decisions or guidance from Ministers.

In the area of Trade-related Intellectual Property Rights a text prepared (and revised several times) by its chairman, Lars Anell of Sweden, and which has been used in the negotiations, is to be forwarded, but making clear there was no agreement that this could be the basis for Ministerial negotiations at Brussels.

Third World countries also asked Anell at the meeting of the TRIPs negotiating group thursday, in the text to be sent to Brussels on his own authority, to clearly demarcate in an understandable way in the text the issues where there are no agreements or differences. This, the Third World countries said, should be by using the accepted way in such texts, namely by use of square brackets.

In the Anell texts so far some areas (of disagreement among the ICs have been shown in square brackets) and others involving some fundamentally different approach as between the ICs and the Third World countries by identifying some clauses and sub-clauses (as part of the text) through use of symbols "A" (for formulation of ICs) and "B" for those of the Third World.

This is pretty confusing even for the experts who have been battling each other in the group over the last several months, but it would be incomprehensible for Ministers at Brussels.

Mr. Anell reportedly only agreed to do this in a "judicious" way - a remark that some observers interpreted as "subjective".

The TRIPs draft text is one that is expected to be pushed at Brussels by the U.S., EEC and Nordics. It is one where they are all united against the countries of the South, and an agreement which the U.S. has said is "vital" part of any mini-package that could be evolved in Brussels - and nothing more than such a mini-package seems likely. Only a mini-package with a TRIPs agreement, the U.S. negotiators have been saying, could be sent up to Capitol Hill by the administration and get Congress acceptance under fast-track authority, and with a mandate to carry over negotiations on all other pending issues and "fast track" authority obtained for it as part of the administration mandate to negotiate a U.S.-Mexico pact. The TRIPs text and negotiations is also one that has been largely handled by experts in industrial and intellectual property regimes, but with less knowledge both of GATT law and practice.

The text as it has emerged, unless Ministers from the Third World take some clear-cut positions - and refuse for example to accept any minimum standards-setting that does not provide them flexibilities for exclusions - is one that would probably cause most damage to the Third World observers in Geneva agree.

This is also an area where the Third World countries have been under tremendous bilateral pressures here and in capitals. Some of them have been trying to ensure a multilateral framework in this rather than be forced to yield the same bilaterally in negotiations with the U.S. Others having yielded are acquiescing in a multilateral framework, which would apply to others too.