Dec 19, 1988

(THE MINISTERIAL MIDTERM REVIEW MEETING OF THE URUGUAY ROUND TNC COLLAPSED AT MONTREAL ON DECEMBER 9. THE FOLLOWING IS THE FIRST IN A SERIES ANALYSING THE OUTCOME AND ITS IMPLICATIONS)

HAVE MAJORS AND GATT LEARNT LESSONS OF MONTREAL?

BY CHAKRAVARTHI RAGHAVAN

AN IFDA SPECIAL FEATURE

GENEVA, DECEMBER 16 (IFDA)—Early in the night of December 8, at Montreal (Canada), with outside temperatures 20 below zero and inside temperatures at the Palais Des Congress 20 above, five Latin American countries (Argentina, Brazil, Chile, Colombia and Uruguay) said "no", and that was the end of the Montreal midterm review meeting of the Uruguay round.

It brought to a dead halt the U.S. - EEC - GATT secretariat juggernaut, which had been rolling forward since october - november 1987 when, at the instance of the U.S., it had been decided at a informal meeting of some Trade Ministers at Lausanne to hold a ministerial mid-term review meeting of the TNC at Montreal, and the entire Uruguay round processes were attuned to this "event".

The next few weeks will show whether the Uruguay round process can move forward in a manner that would be acceptable to all, or the old tactics of ignoring third world interests would be attempted by the U.S., EEC and other industrialised nations.

The "no" came at Montreal in the so-called "green room" consultations of the TNC, presided over by Uruguay’s Finance and Economy Minister Ricardo Zerbino, who chairs the TNC at ministerial level.

The "green room" consultations is the GATT code name for informal negotiations among a limited number of participants, so named after the wall-paper decor of the GATT director-general's conference room in the secretariat here at Geneva.

Participation in the "green room" consultations is by invitation, and the basis of the invitation is not transparent.

There is a predominance of industrialised nations: the United States, the EEC Commission (with its 12-member states sitting in), Canada, Australia, Japan, one of the Nordics, and Switzerland, and Hungary from eastern Europe. The third world nations invited include India, Brazil, the Asian (Malaysia and/or Singapore), Hong Kong, South Korea, Jamaica, Argentina, Colombia, Tanzania and Egypt.

At Montreal, Pakistan and Uruguay was also present, and China - a Uruguay round participant negotiating the "resumption" of its seat in GATT.

At Montreal, the delegate of a small third world nation who was sitting out in the corridors shrugged off the consultations as if he was not interested, but later confided that apart from the fact that others were never notified of the time and place, if he were to go into the room, he would be chased out.

But there was nothing "green" in these consultations at Montreal, EEC Commissioner Willy De Clercq commented an the penultimate night at a press conference. It had no "green decor" but is still called "green room consultations", De Clercq said after the U.S.-EEC agricultural negotiations had broken down.

Other participants said the room where the consultations were held had a greyish decor, but had a green cloth covering the table around which everyone sat.

When the five Latins said "no" at Montreal, it was the first time in GATT’s 41-year old history that third world countries had counted.

They in effect served notice that their interests could not be ignored, and their acquiescence with what "the big boys decide" taken for granted, and GATT can never be the same again, a veteran GATT diplomat later commented outside.

While GATT’s decision-making is based on consensus, and all contracting parties are equal, there has been an assumption that the privilege of saying "no", and blocking things belonged to the U.S. and EEC alone.

But here at Montreal, the diplomat said, the third world has "discovered" that it does count and, if the majors, the secretariat, and the capitals understand it, it will be a net gain for all.

"It is agriculture this time, where the concerned third world countries said ‘no’ to the U.S.-EEC ‘agreement to disagree’. Next time it could be textiles and clothing, safeguards, TRIPS, services or anything else," he said.

"Anyone who makes the mistake of not understanding this, would be forced to repeat history," the diplomat commented.

But even as he was making the comment, the final plenary of the TNC, thrown open to the press, heard some platitudinous speeches about the outcome at Montreal and the resumption of the Uruguay round processes in Geneva in the new year.

The western media portrayed the outcome as failure, blaming the breakdown on the U.S. and EEC differences over the issue of subsidisation of agricultural exports.

While there was some truth to it, the end of the meeting came when the U.S. and EEC "agreed to disagree" on agriculture, and wanted to move forward on other issues where they had a common position against the third world - textiles and clothing, safeguards, and Trade-Related Intellectual Property Rights (TRIPS).

But the third world nations from Latin America concerned over the agricultural issue said "no", and the Montreal meeting collapsed at that point.

Argentina had been warning for quite some time (both at Geneva and at Montreal too) about its intention to block consensus in all other areas if no consensus was reached on agriculture, but neither the western media nor the majors nor the secretariat had taken it seriously.

The statement issued in Geneva in November, after a meeting of the Latin American and Caribbean countries in SELA, had underlined the single undertaking and globality concepts of the round and their determination to assess the final outcome at Montreal before accepting it.

But this too had been dismissed as rhetoric.

When the U.S.-EEC agricultural negotiations finally broke down, argentine mooted at-the meeting of the Latin American and Caribbean countries its intention of blocking consensus in other areas.

The four other Latin members (Brazil, Chile, Colombia and Uruguay) supported it, but some others including Mexico, Jamaica and Peru, were unwilling. Some Latin American sources said that this had more to do with internal politics in the group, and the feeling of some against the efforts to line up the group behind what some thought was the Cairns group tactics.

In the green Rome consultations, when the decision was taken to refer the agricultural issue back to the negotiators in Geneva, remitting to them the recommendations and report of the chairman of the agriculture negotiating group (Aart De Zheew of Netherlands) with all the unresolved options in square brackets, the five Latin American countries said that if agriculture was to go back to Geneva on those terms, all other issues too would have to be remitted on the same basis.

Arthur Dunkel reportedly threw up his hands in despair, and spoke of the "gains" to the third world at Montreal that should be consolidated.

The U.S. trade representative, Clayton Yeutter (whose negotiating tactics had misfired) reportedly expressed surprise at the attitude of the five, particularly at a meeting chaired by a Latin American Minister.

This reportedly brought a sharp rebuke from Zerbino at the "insinuations" over his "impartiality", and Yeutter reportedly apologised.

Earlier, De Clercq too reportedly had been forced to apologise for his didactic tone on agriculture.

When Zerbino reportedly took up the issue and the De Zheew paper, and sought EEC views, De Clercq had reportedly asked Zerbino whether he had not been reading the papers or listening to the TV, since the EEC had made its position unmistakably clear since the Montreal meeting began.

Zerbino reportedly said that he was not going to take note of what the EEC told its media, but only what it said in the "green room", forcing De Clercq to apologise.

Despite the efforts of the secretariat, and the major industrial nations, the five Latin American countries would not budge.

Other third world nations present inside showed "understanding", even when they did not join the "no", other participants later said.

The consultations were suspended while Dunkel, and diplomats of U.S., EEC, Brazil and India, conferred on the what and how of salvaging the wreckage of Montreal.

This resulted in the procedural decision, which was first agreed to in the "green room consultations" thursday night, and adopted friday morning at a formal meeting of the TNC at level of heads of delegations - where Austria protested at the lack of transparency.

The TNC’s procedural decisions called for:

--A TNC meeting at high official level at Geneva in the first week of April 1989,

--For the "results achieved" at Montreal in various areas to be put "on hold",

--For GATT director-general Arthur Dunkel, in his capacity as chairman of the TNC at official level, to conduct high level consultations on the four items (textiles and clothing, agriculture, safeguards, and TRIPS, including trade in counterfeit goods) which required further consideration - the four areas where no consensus was reached at Montreal, and

--For the "entire package" (in these four areas), the results achieved at Montreal and other items, to be reviewed at the April meeting of the TNC.

The ministerial level meeting of the TNC at Montreal also declared "its determination to press forward and complete the negotiations as foreseen in 1990".

Participants said that in the areas of textiles, safeguards and TRIPS, there had been some efforts to remit back to Geneva, not the original texts with square brackets and a number of options, but the "non-papers" of the chairmen of these drafting groups, but this was rejected by third world nations.

When they arrived in Montreal on December 2 De Clercq and Yeutter had let it be known that they would have to leave Montreal by the afternoon of December 8, and this was the "deadline" to finish ministerial level negotiations.

It was a bid to pressure each other, as well as other trading partners. But when this information was conveyed by senior GATT officials to some third world ministers, they promptly said they too would depart Montreal by December 8 afternoon.

Ultimately, De Clercq and Yeutter stayed on, leaving only Friday evening, eroding their own credibility.

Dunkel went straight from Montreal to Washington to confer apparently with the trade experts and advisors of the incoming Bush administration, and has scheduled a "green room consultations" in Geneva on December 19.

At Montreal some of the GATT officials and major trading nations appeared to think that back in Geneva the various negotiating groups, who have scheduled meetings from end January or early february, could resume their work.

However, the terms of the TNC decision, and "putting Montreal results on hold" would appear to cast doubts on this.

In any event, the incoming Bush Administration which is already distancing itself from Reagan’s (but has Yeutter, the architect of the Reagan policy in foreign trade, as its agricultures secretary) and its new trade representative, Mrs. Carla Hills, would need "a cooling off period", as U.S. media reports suggest.