KEY THIRD WORLD COUNTRIES REITERATE THEIR CONCERNS.

Nov 29, 1990

KEY THIRD WORLD COUNTRIES REITERATE THEIR CONCERNS.

GENEVA, NOVEMBER 26 (BY CHAKRAVARTHI RAGHAVAN)— A number of Third World countries took the floor at Monday night's formal TNC meeting to reiterate their concerns over a balanced package emerging out of Brussels and reserving their positions on some of the proposals as well as the one for the Final Act to end the Brussels meet.

While several of them made no further comment, an intervention by India suggested that it might consider some organisational structure for various agreements to be administered independently, but would not accept any requirement that each participant would have to sign and accept the Uruguay Round package as a whole.

The draft of the Final Act included in the documentation with a number of square brackets, has provisions for acceptance of the Uruguay Round agreements "as a whole". It also would involve participants agreeing to set in motion a process for an agreement on the EC idea of a multilateral trade Organisation.

However unlike in an earlier draft, several of the formulations about "basic elements" of an organisational agreement are no longer in the annex. There is now only a square bracketed heading about "basic elements of an organisational agreement" and the square-bracketed text says that "the Organisational Agreement should include provisions on the establishment of a permanent institutional structure along the lines of the structure established for the negotiations; etc.".

But the "etc" could enable anything to be brought in at the stage of work for drafting an agreement through a committee to be named by the GATT Director-General - if the proposal is accepted.

The European Community was apparently the only industrialised country to speak at the meeting, which ended around midnight, but did not refer to this at all.

On the issue of the Final Act, Philippines for the Asian and Brazil in effect said that they would consider and take a decision on the Final Act on the basis of their assessments of a satisfactory outcome, from their points of view, of the round.

India did not deal with the "final act", as such but objected to its content and said that the suggestion that the negotiations should be accepted as a single package was "totally unacceptable".

At Punta del Este the services negotiations were put in separate track outside of the GATT juridical framework because it was necessary, when an independent economic treaty was being negotiated, to demonstrate to each participant that it was in its interest to join the agreement. At the mid-term review India had also agreed to expand the scope of TRIPs negotiations on express condition that its lodgement would be addressed at end of the negotiations.

"Free consent and good faith", India said, "are universally recognised principles of treaty-making. The concept of acceptance of the package as a whole clearly violates these principles. Therefore it cannot be acceptable to India".

Brazil said on the basis of an assessment of the concessions received and timeframe for implementation in traditional areas like agriculture and textiles, it would determine first whether a proper balance had been reached in substance. Only thereafter it would assess whether the Final Act reflected the interests and objectives of all participants.

Tanzania said it was for Ministers to decide at Brussels whether what they had before them a set of results that they could accept as final results and take back to their governments for due consideration or whether some of the issues needed further negotiations. "The description 'final act' carried no meaning for us", the Tanzanian delegate declared.

In terms of the Punta del Este declaration, it was for Ministers to decide at the appropriate time and place to convey their Government's position as to which results they found acceptable and how they should be implemented in the GATT framework, and which issues fell outside GATT to be accommodated, as appropriate, in other institutional arrangements whether existing ones or new specialised framework as in the case of Services, the delegate added.

In comments on other issues, Amb. Mrs. Narcisa Escaler of Philippines speaking for the Asian countries said that fears that the Round might not conclude successfully in Brussels had grown more real and they could no longer have the "illusions of formally concluding the Round in Brussels", but only hope by final hours of 7 December to "have the basis to proceed in assembling the sequential and technical decisions to wrap up the Uruguay Round package".

For the Asian an "acceptable basis" of a package would require meaningful results in market access, including key products of interest to them, especially tropical products, and elimination on tariff escalation and peaks.

In Textiles a political decision had to be made on the "numbers" that would be credible on the rate of integration and growth rates. The integration process which now lacked predictability and certainty and under which most of the products under restraint could be expected to be left unintegrated in the last phase of the transition period, had to be rectified. The transition period would have to end around 2000 and transitional safeguards must be fair and not open to abuse.

In Agriculture, Ministers would have to resolve difficult key issues in a way that would fulfil the Punta del Este objectives. There would have to specific and separate, substantial and progressive, reduction commitments on internal support, border protection and export subsidies. There could be no rebalancing.

In Anti-dumping, there should be a fair balance between interests of exporting and importing countries. Greater disciplines would be needed in methodology of calculation of constructed values and more precision in determination of injury.

In subsidies and countervailing measures disciplines were expected from them on industrial subsidies when others were refusing to undertake them in agriculture. There could be no prohibition of domestic subsidies contingent on export performance and use of local goods nor use of quantitative criteria for presumption of serious prejudice. Subsidy disciplines would also have to apply to, all levels of government - state, provincial and local levels.

Asian also had serious difficulties in accepting graduation concepts unrelated to economic, social and development objectives.

Asian was concerned at attempts to reopen the BOP issue. There was no need to clarify the provisions.

As for safeguards, it should only be on an unconditional and non-discriminatory MFN basis.

The TRIPs text was "peppered" with square brackets, but the issues were "sensitive" for Third World countries. For the Asian it was necessary to curb unilateral interpretation of "effective" IPR protection and a multilateral resolution of disputes was the only alternative. However, they were opposed to any provision disregarding public interest or undermining the integrity of their legal systems and imposed unreasonable and extremely burdensome demands on enforcement, Philippines said.

In the area of TRIMs, Asian could not accept expansion of coverage to include investment incentives nor prohibition of TRIMs on their presumed trade effects.

In Services, there should be a MFN general obligation and no sector should be excluded from coverage. Any derogation from MFN should be temporary in nature and exceptions from the framework should be allowed to safeguard national security and public order.

India's Bal Krishan Zutshi said for India a substantial degree of liberalisation would have to be achieved in textiles and clothing trade and rate of liberalisation from outset should give confidence that the process would not be halted by protectionist forces. India was also concerned with the Annex two of the text (which lists all categories, both restrained and unrestrained).

In Agriculture, while India supported the general thrust of liberalisation, full consideration should be given in the new rules to the wide gap between levels of subsidisation in ICs and the Third World countries and the large variation in dependence of their economies on agriculture.

In the rule-making areas India attached great importance to substantial results in Safeguards, Subsidies and Countervailing Duties and Anti-dumping duties. India would reject any proposal for selectivity even in a limited form now being sought. In antidumping it was necessary to eliminate the trade harassing effect of procedures on small suppliers. In Subsidies and Countervailing duties, apart from the issue of subsidies being an efficient way of neutralising distortions and market imperfections, the illustrative list of export subsides should be scrutinised to remove manifest inequities. In GATT articles India was concerned at attempts to block any results on issue of customs unions and free trade areas. The proposals on Art XXXV (non-application clause where the modification would enable non-application, not as now for failure to enter into negotiations, but if the concessions granted are seen as inadequate) would fundamentally upset the balance between MFN and reciprocity inherent in GATT.

As for BOP, India was going to Brussels on the assumption that there would be no further attempt to reopen this issue there.

In TRIMs nothing should be done to restrict freedom of CPs to determine their investment policies and Third World countries could not be expected to be hosts to enterprises which were in the nature of "screwdriver technology" operations that would worsen a country's BOP. Investment measures were the only means for harmonising corporate interests with development objectives of the Third World countries.

In TRIPs, India had agreed to expansion of scope of negotiations but with a reserve on the lodgement of the results. India was far from convinced on appropriateness of dealing with norms and standards in the GATT context. But the outcome of the negotiations would have to be lodged in WIPO or in a "new international organisation" on which thinking had advanced to some extent. India had also serious concerns on some of the norms and standards particularly relating to patents and a way would have to be found to accommodate India’s specific concerns.

In Services, for any agreement to be of interest to India the multilateral framework and initial commitments by trading partners would have to provide adequately for "relocation of labour over a spectrum of skills". Any agreement to be truly multilateral would have to fully incorporate the MFN principle and provide for symmetrical treatment to factors of production.

As for dispute settlement machinery in TRIPs and Services, these were new areas where disciplines were being undertaken for the first time and it would be necessary to proceed cautiously. It would be unwise to extend to these areas the GATT machinery, which had developed into a highly adjudicatory system.

Tanzania’s Amb. Amir Jamal said that the existing (Tokyo Round) codes to which Tanzania had not acceded would remain outside the purview of the final results as far as Tanzania was concerned and if any new code, such as for pre-shipment inspection, were to be evolved, Tanzania had no mandate to become a priori a party to them.

As for LDCs time-derogation was not justifiable or defensible on grounds of logic or equity. LDCs had been recognised as such by the UN and would remain as such until the criteria were reviewed.

If the international trading environment and financial and monetary system would permit these countries to have sustained net domestic capital formation leading to sustained reinvestment and thus raising level of their economies when they could be cease to be least developed, it would be incumbent upon them to undertake commitments which would be progressively comparable with those undertaken by other Third World countries within the overall imperative of special and differential treatment to such countries.

To ask these countries to accept commitments on the basis of arbitrary fixed period of time was to impose on the weak conditions, which they could not comply with.

During the negotiations, TRIPs and TRIMs had been given dimensions beyond those clearly intended at Punta del Este and their Ministers at Brussels should not be expected to negotiate questions which fell outside the purview of the declaration.

"Nothing will be gained by the international trading system", Jamal added, "if our Ministers - more than just a few - are placed in a situation in which you are damned if you do, and you are damned if you don't. We too occupy space and need time in this world to be productive, constructive members of the international trading system. Brussels or its aftermath should not make our tasks, formidable as they are, call for even more Herculean efforts in future".

Brazil’s Amb. Rubens Ricupero said the Brussels meeting must concentrate primarily on those issues directly responsible for the impasse, with a view to breaking the deadlock in the first days of the negotiations.

These issues, he said, mostly coincided with the backlog of unfinished GATT business of the past, affecting the trading interests of major partners - the global aspects of market access, with emphasis on those related to agriculture and textiles.

The solutions, which could be found for three areas, would set the pace and tone for solutions to the other areas and "we will not come safely to the end of this journey if an attempt is made to force an unbalanced result".

Quoting President Collor's letter to the President of the EC that chances of an agreement being accepted by the Brazilian Congress would be rendered impossible if Brazil suffered a net loss in market access (as by rebalancing in agriculture support), Ricupero added that it would be a mistake to assume that the only outcome at Brussels would be total failure or absolute success. It was necessary to achieve a balanced result covering all areas and meeting objective criteria. The decisive criteria would be extent of concessions and the timeframe for implementation in traditional areas like agriculture and textiles.

Hugo Paemen speaking for the EC said the three areas where there were no texts were also the areas where "extreme positions" had made it impossible to reach a basis for negotiations.

In anti-dumping those with most open economies and were largest importers, and thus likely targets for dumping, had been confronted with exporters who questioned the need for effective antidumping provisions.

In TRIMs, Australia and the Third World countries had questioned the justification of any prohibitive actions, with some questioning even the existence of a mandate.

In Agriculture, the EC had been "under vociferous pressure" to eliminate the main elements of its double price system - variable levies, internal support and export restitution (subsidies). From the beginning the EC had made clear this was a non-starter, but that it was ready to negotiate without dismantling the basis of its present system. "In this as in others, all-or-nothing attitudes, which are the negation of real negotiations, have weighed heavily on the negotiating process".

The success or failure of the Ministerial meeting would depend upon ability of Ministers to reach political breakthroughs in the main areas of the negotiations.

In agriculture, where no real negotiations had taken place, while there were important disagreements, there was also agreement that the reforms should address the three main areas - internal support, market access and export competition as well as sanitary and phyto-sanitary regulations. "Our disagreement is over the depth and speed of the reform", Paemen said.

In market access, the EC had resisted pressures to reduce its offer based on an across-the-board reduction but a readjustment would be inevitable on the basis of present counter-proposals.

Third World countries could not escape responsibility for success of the Round and they like the ICs must agree to play by "all the rules". Within the limits of their economic development, the EC expected them to contribute to market opening.

In Textiles, which had never been effectively integrated into the multilateral rules, what was needed was concrete evidence of market opening for textile products worldwide, accompanied by clear GATT rules in key sectors - anti-dumping, subsidies and counterfeiting - so that integration could proceed and could be achieved.

The Services text was "extremely unsatisfactory" since it contained no substantive contribution to possible provisions on Financial Services. There was an "ocean of brackets" in the text, which it would be well nigh impossible for Ministers or even senior officials to distinguish substantive political options from technicalities. Ministers at Brussels would have to find rapidly a means to address the real issues.

The proposal over MFN (U.S. formulation for conditional MFN and perpetual derogation) would fundamentally undermine the prospects of a balanced outcome acceptable to all.

There was a collective responsibility to bring to fruition at political level the best of four years of work. It was not easy.

But the alternative and foreseeable consequences of failure of the Round "oblige us to extend our efforts and imagination to the limit in order to achieve the indispensable political breakthroughs in Brussels".