MONTREAL MID-TERM REVIEW MEETING ENDS IN FAILURE.

Dec 12, 1988

MONTREAL MID-TERM REVIEW MEETING ENDS IN FAILURE.

MONTREAL, DECEMBER 9 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Montreal mid-term review meeting of the "Uruguay round" Trade Negotiations Committee ended in complete failure thursday night, but a procedural resolution enabled the GATT secretariat and leading western nations to pretend that the negotiating process was continuing and the "Uruguay round" negotiations themselves had not collapsed.

In the four days of talks here, some tentative accords had been reached in about six of the 10 major areas where the ministers had been provided with alternative texts and asked to provide further guidance or give decisions.

But there were four difficult areas -- agriculture, textiles and clothing, safeguards, and Trade-Related Intellectual Property Rights (TRIPS') -- where no consensus had been achieved, and negotiations were continuing Thursday evening, when the whole exercise here collapsed.

The collapse of the talks was precipitated by the failure of the united states and the EEC to resolve their differences over agriculture and change their mutually contradictory rigid stands, thus blocking any accords here on short-term measures to arrest the subsidy war in agricultural trade unleashed by the united states and the EEC.

Despite the failure in agriculture, and agreement to disagree, the industrialised nations wanted to proceed on other issues and reach accords, particularly on "TRIPS" where they basically sought a new mandate to enable intellectual property rights issues to be discussed and settled in GATT, a course opposed by a large number of third world nations.

But in the wake of the failure of the agricultural talks, a group of Latin American countries -- Argentina, Brazil, Colombia, Uruguay and Chile -- made it known in the "green room consultations" that had been resumed thursday afternoon, that they would be forced to block a consensus on all other issues and items before the "TNC".

The Latin American move to block consensus, which was viewed with sympathy and understanding by other third world countries, was not merely in protest over the failure of the two majors to be less rigid and more forthcoming in seeking compromises. It was also to protest the general attitude of the industrialised nations who tried to run GATT and the "Uruguay round" in their own selfish interests and without concern for the effects on the rest of the world.

Right from the official start of the TNC meeting here on december 5, and in the informal private talks over the previous weekend, both the EEC and the United States seemed to play brinkmanship over the agricultural issue -- with the united states insisting on commitments here to eliminate domestic and other agricultural subsidies, and the EEC refusing to eliminate such aids and viewing the American demands as a challenge to the European Community's common agricultural policy (CAP).

In this situation, the efforts of others to promote some compromises became impossible. And even as the two giants were quarrelling with each other in public over the agricultural issue, and indulging in brinkmanship, the two had also joined hands in other areas in trying to pressure third world countries and attempting steamroller tactics to gain advantages vis-a-vis the third world.

It was this combined resentment that culminated in the Latin American group highlighting the responsibility of the two major trading partners for failure of the talks here and their high-handed way of dealing with problems that affected the entire world community.

It was ironic that the talks here, which had been promoted for over -15 months now by the United States and the GATT secretariat, and later joined by the EEC, failed precisely due to the tactics of all three.

While the immediate causes of failure lay in the U.S. - EEC fights over agriculture, and the efforts to push through issues of interest to the two and the GATT secretariat in other areas, the Montreal mid-term meeting was doomed to failure from the start.

In any multilateral trade negotiations, it was impossible for any participant to make any serious concessions in the middle of the talks, and find itself in the position of having to make further concessions and contributions also at the end.

No one engaged in serious negotiations would be willing to settle part of the problems midway.

But in disregard of this simple political logic, this was precisely what was attempted when the United States began broaching the idea of a mid-term review, and soon found support from the GATT secretariat as well as other countries of the Organisation for Economic Cooperation and Development (OECD) and the EEC, all of which wanted to influence the U.S. elections and ensure republican victory because of fears that a democratic administration would be more protective.

Secondly, even when the mid-term review meeting was broached and reluctantly agreed to by others, there were some questions, including from France within the community, about the wisdom of holding the meeting in Montreal, and in December, immediately after the U.S. elections. The critics noted that irrespective of whoever won the elections, the new administration would-not be in office and a lame duck administration would be involved and no one would seriously negotiate.

Bearing all this in mind, France suggested a meeting sometime in March or April, after the new administration had settled and decided on its priorities. But this was turned down even within the EEC.

A number of third world countries had also expressed some hesitation over the meeting, arguing that this kind of "event planning" distracted from the negotiating process.

All these were brushed aside, and the mid-term meeting was not only planned in December, but the activities of the various negotiating groups were related to the mid-term meeting.

For at least the last two months, work in all the negotiating groups had been geared to producing reports and recommendations for the Montreal meeting, with an effort to adopt "decisions", even though the meeting itself was only a review meeting and merely aimed at providing further political impetus.

On top of it, while from day one, and even previously, the United States and the EEC brawled publicly over the agricultural policies, they joined hands in pressuring third world countries to yield an Intellectual Property Rights (IPRS), and for adoption of mechanisms land measures that would bring about the backdoor conversion of GATT from a contract to a trade policy institution. There was also visible secretariat partisanship on some of these matters, as in Functioning Of the GATT System (FOGS).

In the talks here, much too often the viewpoints of third world countries were not only rejected in advance, but their viewpoints and formulations never even found their way to the negotiating table.

In intense night-long "green room consultations" Wednesday, some tentative accords were negotiated in tariffs, services, dispute settlement and "FOGS".

Consultations in small drafting groups were continued Thursday on textiles, safeguards and the "TRIPS" issue.

On the first two, while no consensus was achieved, the differences were narrowed down and solutions were in sight to move the negotiations forward. But in "TRIPS" there was a major deadlock between the industrialised nations that virtually wanted to rewrite the mandate to enable the establishment of substantial norms in these areas in GATT, and the third world countries that rejected such an approach and insisted an these issues being dealt with in competent multilateral fora including the World Intellectual Property Organisation (WIPO) and UNCTAD.

Repeated efforts meanwhile to seek solutions in the area of agriculture however failed in the face of the rigid U.S. and EEC stands, much to the frustration particularly of members of the "Cairns group", who had hoped for some "cease-fire" in the agricultural trade war and commitment to some standstill.

When the failure of the agriculture talks became clear in the "green room consultations", and the idea was mooted that negotiations should resume in Geneva an the basis of the report of the chairman with square brackets that had been remitted to Montreal, the Latin American nations announced that they would block consensus an every papers were to be other issue, except tropical products and if any remitted back to Geneva they must be an the basis of the original texts remitted to Montreal by the Group of Negotiations on Goods (GNG) and the Group of Negotiations on Services (GNS).

The consultations were immediately suspended while efforts began to find a procedural way out of the tangle and provide a somewhat more optimistic picture of the outcome here.

Ultimately, a four-part decision was evolved, which is to be formally put to the full meeting of the "TNC" Friday morning for adoption.

This provided that:

1. A meeting of the trade negotiations committee at the level of high officials should be held in Geneva in the first week of April 1989.

2. The results achieved at the TNC held at ministerial level at Montreal should be put on hold until that meeting.

3. During the period up to April -1989, Arthur Dunkel (GATT director general) in his capacity as chairman of the "TNC" at official level should conduct high level consultations on the four items (agriculture, textiles, "TRIPS" and safeguards) which require further consultations.

4. The entire package of subjects -- results achieved at Montreal on other items -- should be reviewed at the "TNC" meeting of April 1989.

Participants in the "green room consultations" said that in areas where there has been no accord, holy the papers and recommendations that came from Geneva for the Montreal meeting would be returned to Geneva, and not the papers on which there had been some different formulations but without agreement.

Third world participants said the net result of the exercise, which perhaps has cost the Canadian government some 10-15 million dollars, and the over 1,500 participants (ministers, delegates, media and business lobbies) perhaps another four million, in reality would put back the negotiations by at least six months.

While negotiating groups have scheduled meetings from february, in this present situation no real movement can be expected until all the differences are resolved in the consultations to be held by Dunkel, and until their adoption at the april meeting of the "TNC".

And this will have its inevitable impacts on business. But perhaps if it helps to bring about some changes in the attitudes of the majors, it might be some gain for the GATT and the world trading community, third world participants here said.

Perhaps a brighter feature of the Montreal meeting has been that the general unity that had developed in Geneva, and which ended in basic rewriting of the reports and recommendations in individual negotiation areas on the contentious issues in the "GNG", continued here.

While there was no joint third world front, there were no divisions, and on many issues the third world countries acted in tandem in resisting attacks on their autonomy.

At the start of the Montreal meeting, several of the officials had been genuinely concerned that their ministers, who are not too accustomed to such negotiations unlike their counterparts from the north, would be at a disadvantage and would yield without full grasp of the technical details. And in one or two areas this did happen.

But the collapse of the talks, and the chances for review, would mean that the third world might even attempt a recovery in these areas. As one participant put it, if the United States can ignore Punta del Este and continue to press in the talks so far its own vision, there is no reason why we should not adopt similar tactics.

With the failure of the Montreal meeting and its inability to take decisions, the meeting of the GATT council convened at Montreal to take place immediately after the "TNC was also put off. The council had been convened to enable ministerial decisions of the "TNC" to be formally adopted within the GATT framework.

There were also two or three other disputes that had come onto the agenda in this process of convening a meeting here, including the dispute over drug patents.

It was agreed thursday night that in the light of the collapse of the "TNC" meeting, the meeting of the council too should be put off and held in Geneva later in Geneva, when all the other pending items could also be taken up.