GATT MEETING AT ITS USUAL CLIFF-HANGER STAGE.

Dec 12, 1988

GATT MEETING AT ITS USUAL CLIFF-HANGER STAGE.

MONTREAL, DECEMBER 6 (IFDA/CHAKRAVARTHI RAGHAVAN) – On the third day of the ministerial level mid-term review meeting of the "Uruguay round", the informal consultations and negotiations in small groups were at their usual cliff-hanger stage, but with too many people near the edge too often to be able to impress others.

With the negotiations involving 15 separate areas in trade in goods, and a separate one an trade in services, and with many participants establishing their own "linkages" within and across the board, there was no clear picture available as of 23.00 GMT Wednesday as to any possible outcome.

Some of the key protagonists like the United States, the EEC and GATT officials were already trying to project that the success or failure of the Montreal meeting could not be judged by any outcome or yardstick, that the Montreal meeting is-only a "mid-term review" and thus not structured for "decisions".

The U.S. GATT representative, Michael Samuels, even went so far as to advise reporters that whether Montreal is a success or failure can be determined only in 1990 at the end of the "Uruguay round".

Given that it was the United States and some of its supporters, as well as the GATT secretariat that had placed so much emphasis on the Montreal meeting as an event, and had been raising so much expectations all around, the latest U.S. stance was somewhat puzzling to most other delegates Wednesday night.

"If the Americans are now lowering their sights, and want to close the meeting without a blow-up, and have something vague to enable them to call this progress, we will have no objection", the delegate of one third world country remarked. "But we cannot agree to our being asked to pay a "price" -- whether in services or in intellectual property rights -- in order to hide the serious differences between the U.S. and the EEC", he added.

On the principal point of contention between the United States and the EEC, agriculture, the U.S. delegate and agriculture negotiator, Daniel Amstutz, told reporters, that so far there has been no narrowing of the gap between the two sides over the issue of long-term orientation -- "elimination" or "reduction" of government support and subsidies.

Other U.S. delegates also said that in the services area, there were some serious differences, adding that the EEC had been telling the third world countries that if they would "go easy" on agriculture vis-a-vis the EEC, the EEC would go easy on "services" and "intellectual property".

Both EEC and third world delegates involved in these "consultations" said the United States was seeking to present "too simplistic" a view of the situation on these and other key areas of contention here.

Some third world delegates said that despite the United States and the EEC squaring off against each other in public on agriculture, there would be a compromise reached outside the normal conference negotiating structures. However, they added, the two would probably present it to the rest of the conference here at the very last minute on a "take-it-or-leave-it" basis, and give little time to others to consider it carefully.

In the area of services, Swedish Trade Minister Anita Gradin put forward a paper of her own Wednesday morning, but this has been found to be insufficient to enable a consensus about the future orientation of negotiations. Both third world countries and the EEC have found the Gradin text to be full of gaps and leaning to the other side.

EEC sources explained that the paper had not paid particular attention to the views of third world countries about the "development" dimension of the services issue, which the Punta del Este mandate required had to be an integral part of the framework and not an afterthought or merely an exception for special and differential treatment to third world countries (as in the case of GATT).

With an eye on the practices of Japan, and of the United States where several service sectors are under the control of the constituent states and not the federal centre, the EEC is also reportedly insisting that the GATT concepts of "national treatment" (being pushed by the United States) would not be enough to ensure progress towards liberalisation, and there might even be need for something more. The EEC is also insisting on "reciprocity" -- any benefits to U.S. enterprises, for example, would have to be matched by the United States, vis-a-vis EEC enterprises in the United States, including actions by the states and other local authorities.

In the area of Intellectual Property Rights (IPRS), a very contentious issue at this meeting, and one where a large number of third world countries are resisting U.S. demands, participants said that negotiators are still trying to evolve a text that could attract some consensus.

In this regard, India has reportedly put forward some "ideas" that received support from a number of other third world countries.

In effect India is reportedly suggesting that the negotiations in this area should strike an appropriate balance between effective and adequate protection of "IPRS", and the developmental, technological and public interest needs of countries, particularly third world countries.

Also, "abusive" practises relating to "IPRS" should be curbed, and measures and procedures to enforce IPRS should not themselves become barriers to legitimate international trade.

In this view, the Indian suggestions backed by several other third world countries reportedly would have the world intellectual property Organisation ("WIPO".), UNESCO and UNCTAD -- long involved in this area -- study and determine the adequacy or otherwise of existing international norms and standards, and if found inadequate, evolve additional norms and standards.

Also, WIPO, UNESCO and UNCTAD should also pay particular attention to devising effective enforcement and dispute settlement mechanisms, and complete this work within two years -- the remaining portion of the "Uruguay round".

As of Wednesday evening it was not clear whether a compromise acceptable to the Americans (and other major industrialised countries) and the third world would evolve or whether there would be some confrontation.

In other areas -- tariffs, textiles and clothing, safeguards, dispute settlement and functioning of the GATT system (FOGS) -- participants said that while there had been some progress in restricted informal consultations, in each of these areas major points of contention remained unresolved.

In the area of "FOGS" third world participants said, the GATT secretariat appears to have developed a vested interest of its own asking some industrialised nations to pressure third world countries and not yield. Several third world delegations expressed resentment in corridors, and some of them said that they had conveyed views to the GATT secretariat.

In official-level consultations chaired by the Canadian Minister, there was a "blow-up" on this issue and some unpleasantness, according to third world sources.

There had been some six or seven points of difference on the issue, relating to a trade-policy review mechanism (TPRM), involvement of Ministers in GATT activities and other issues.

While in night-long "negotiations" in a small group chaired by a Swiss official, several of the points were reportedly resolved, there were serious differences on three points -- pressed by the GATT secretariat.

These were the idea of a GATT visiting team going to capitals to examine trade policies of countries, of the examination being conducted by "discussants" chosen in their personal capacities, and the establishment of a small ministerial steering group in GATT. While the last is opposed by several third world and industrialised countries (but pressed by the united states), a large number of third world countries have been opposed to the idea of GATT teams visiting their countries, and of discussants to examine their policies and cross-examine their officials.

In overnight consultations, these three issues were left in square brackets. But in presenting the outcome Wednesday morning to a larger informal group, the Swiss chairman reportedly had knocked out the square bracket around these three issues.

This was reportedly objected to by a Brazilian delegate, who had been involved in the small drafting group, who charged that the action of the chairman was contrary to GATT practices and showed lack of "good faith" negotiations.

After further exchanges, the Brazilian delegate to GATT, Amb. Rubens Ricupero, reportedly said that brazil and other third world countries had made considerable compromises and over 80 percent of the proposals and ideas for a trade policy review mechanism had been agreed to, but the objections to the balance were not "tactical" but fundamental, and could not be accepted by Brazil. If there were efforts to thrust down the contentious 20 percent as well, the chances were that a consensus could be denied for the entire scheme, including the agreeable portions.

Also, the Montreal meeting could not be asked to direct negotiators to continue to negotiate over the idea of a small ministerial group, when so many of the GATT participants were opposed to this.

The issue reportedly is to be further considered, at ministerial level, Wednesday night.

In the area of dispute settlement, the united states was adamant that it could not agree to give up its domestic law, particularly the S. 301, which enabled unilateral retaliation for purported "unfair" trading practices, with united states having the right to decide this.

At a press conference, one U.S. delegate flourished a copy of the U.S. constitution to argue that the U.S. right to take unilateral action in violation of international commitment was a constitutional right and part of the theory of separation of branches. The way the delegate flourished a copy of the U.S. constitution, it appeared that in the U.S. view, its constitution, was more important even for other countries than GATT obligations, and contracting parties have to pay greater respect to the U.S. constitution and not to the international obligations in the general agreement.

On textiles and clothing, EEC member countries were objecting to any idea of negotiating a phase-out of the multifibre arrangement and setting a timeframe for this within the "Uruguay round". Before this could be done, they wanted agreements to be reached on such issues as a safeguards agreement (meaning the EEC would be able to resort to "selective" or discriminatory safeguards), and other "connected" issues like protection of intellectual property rights (for designer clothes, etc.).

There has also been little progress on the other issues like safeguards and tariffs. On the last, the industrialised countries want third world countries to commit themselves here to a particular course of action to reduce their tariffs. In other areas of negotiations however, the industrialised countries oppose any direction to the negotiators on the grounds that this would prejudice the negotiating process -- an example of double standards.

As of Wednesday evening, the expectations here are for all-night negotiations and consultations, with the ministerial meeting winding up in one way or another sometime Thursday.