Dec 20, 1988
(THIS IS THE SECOND IN A SERIES ON MONTREAL GATT MEETING AND ITS AFTERMATH. THE FIRST APPEARED IN SUNS 2070).
MONTREAL - A "FAIL MECHANISM" BUILT INTO THE SCRIPT.
BY CHAKRAVARTHI RAGHAVANAN IFDA SPECIAL FEATURE GENEVA, DECEMBER 19 (IFDA)— After the fiasco at Montreal of the ministerial mid-term review meeting of the Trade Negotiations Committee (TNC) of the Uruguay round, diplomats of industrial countries agreed that the timing was inappropriate. U.S. officials however said it would have been impossible to hold such a meeting till the elections, and a meeting with a new administration would not have been possible before april-may, 1989. The U.S. media, citing sources in the incoming Bush Administration, have been writing that it was "unwise" to have planned a critical review meeting at a time when the Reagan Administration's trade bargains would be lame ducks. The lame-duck nature of Yeutter and negotiators at Montreal was made clear when President-elect Bush announced his nominee for the office of U.S. trade representative (Mrs Carla Hills), right in the midst of the Montreal talks. U.S. columnist Hobart Rowen has cited "trade experts close to the Bush Administration" for the view that "it was the wrong time for everything to be held hostage to everything," that U.S. trade representative Clayton Yeutter had anticipated that even if there was an impasse with EEC an subsidies, "there would be enough gains on other issues to call Montreal a success", but that "third world countries did not behave according to plan." Third world diplomats in GATT however note that all the warning signals about "a built-in fail mechanism" for Montreal had been there at inception, but that the GATT secretariat, the U.S. and EEC, and the western media had just ignored them. When the Uruguay round MTNS were being planned, Yeutter had only four issues on his agenda: services, intellectual property rights and investment issues, pushed by big U.S. TNCS, and agriculture (against EEC) pushed by congressmen from farming states and agricultural trade TNCS. From the outset Yeutter had been pushing for "early harvest" in agriculture. But in face of EEC opposition, he had to give up this idea, and agree at Punta del Este to the "fudging" of language as to whether food subsidies were to be "eliminated" or "reduced". He also had to agree to compromise mandates in services, TRIPS and TRIMS, in the compromises forged with India and Brazil, as the price for their support. While a number of traditional GATT issues too were on the agenda, neither the U.S. nor the EEC were serious about them. In the result, the ministerial declaration while envisaging "early accords" in the GATT MTNS on goods and their provisional implementation, specifically mentioned only one of the 14 items on the agenda in goods, namely tropical products, and by implication the issue of "safeguards". The declaration also specifically affirmed the GATT MTNS as a "single undertaking", and set a 1990 deadline for the completion of the Uruguay round (involving both the GATT MTNS in goods and the separate exercise on services). But immediately after Punta del Este, the U.S. forgot the compromises and began interpreting the mandates according to its original demands, and began talking of a midterm review. U.S. officials began canvassing for the review meeting to reach early accords in agriculture and for ministers to clarify the mandate on the new themes. After the collapse of the Montreal meeting, several third world diplomats noted that everything that had happened had been predicted by them. Their warnings against the mid-term review idea had been ignored. They had pointed out that in such negotiations intended to last four years, and before even the modalities of negotiations in each area had been settled and negotiations had begun, it was a bad idea to have a mid-term review aiming at early accords, since not one would compromise and make concessions. Yeutter pushed the mid-term review idea at the informal meeting of some trade ministers at Lausanne in 1987, just before the 40th anniversary celebrations of GATT. The EEC Commission and other industrialised countries supported the idea - partly in the hope that this would help "republicans" to win and block the protectionist minded Congress. Third world delegations had also questioned the "timing" of the meeting in December 1988, but their views had been brushed aside. Only the French Trade Minister at Lausanne, they said, had voiced similar doubts on the timing - so soon after the U.S. elections and before the new administration would take over - and had suggested a march-april date. But others within the EEC disagreed with the French, and the EEC Commission privately justified a December meeting as a way of ensuring that the new administration and Congress would be "locked into the process." The mid-term review, its timing and place, were formally endorsed only some months later in 1988, but planning began immediately after Lausanne. The U.S., EEC, and GATT secretariat began immediately planning for a pre-determined result through the mid-term review meeting at Montreal, and the chairmen of the various negotiating groups, particularly on the new themes, began working towards this end. A number of third world delegations cautioned against this kind of "event planning", but their views were ignored. While the U.S. and EEC had differences on agriculture, they wanted to use the Montreal meeting against the third world - to rewrite the mandates on new themes and ensure negotiations to change GATT rules to eliminate the limited protection for third world countries (as in respect of import restrictions for balance-of-payments reasons), and open up third world economies to transnational enterprises and their activities (through new rules on investment and services). The U.S. and other industrialised countries also wanted to pre-met emerging third world competition in manufacturing industries - by creating GATT rules and norms in intellectual property rights. They wanted to prevent third world countries from following the same industrialisation paths - acquiring, adapting and improving technology, including through reverse engineering, or ensuring public. Good and public interest against import monopolies by securing working of patents on their territories. Same of the current industrialised countries who now talk of "piracy" had themselves in fact "stolen patents and technical know-how" in the late 18th and 19th centuries, and had denied patenting rights for chemicals and drugs till very recently. Third world warnings against efforts to rewrite the mandate went unheeded. The negotiating processes in various negotiating groups was linked to the review and need for "early accords" in as many groups as possible to provide "a balanced outcome". On the new themes, where there were sharp differences between much of the south and the north, there were efforts to create a momentum that would result in ministerial understandings to expand the mandates as in services, TRIPS, TRIMS or GATT articles, and the functioning of the GATT system. Through the last, and one in which the GATT secretariat acquired a vested interest and began pushing its ideas through the chairman, the aim was to bring about institutional changes to enable GATT, in conjunction with the IMF and world bank, to influence trade and macro-economic policies of the third world. The GATT secretariat acquired a vested interest in an outcome that would put the secretariat and its senior officials more or less on a par with the IMF-World Bank vis-a-vis third world countries. The secretariat pushed for a trade policy review mechanism (TPRM) with provision for GATT visiting teams and "discussants" to go to capitals and examine policy-makers and officials in countries an their trade and other policies in terms- of vague GATT-fund-bank philosophies, rather than commitments under GATT. On the eve of the Montreal meeting, GATT director-general put the objective as ensuring ministerial decisions " "for a non-reversible process in the negotiations", though perhaps he intended this vis-a-vis third world countries. It was only on the eve of Montreal, when it became clear that the U.S. and cairns group would try to isolate and push the EEC on agriculture and seek commitments over the long-term to eliminate all agricultural subsidies, that the EEC began talking about the Montreal meeting being a "mid-term review" and not for rewriting of the Punta del Este mandate, or for any "early accords" except on tropical products. But at Montreal, EEC Commissioner, Willy De Clercq was unable to explain at a press conference the contradiction in the EEC position about no opening up of the Punta del Este mandate on agriculture, while insisting (with the U.S.) on doing just that in regard to intellectual property rights and provide for GATT negotiations to establish substantive norms in these areas which are within the competence of WIPO and UNESCO. De Clercq merely claimed that the EEC position was quite "logical", but could not explain the logic. Third world diplomats said that it was the cumulative effect of these efforts that had resulted in the failure at Montreal, and if these were ignored in the mandated consultations by Arthur Dunkel, the Uruguay round process would be in trouble. Correction in suns 2070, para two, the third para from bottom, should read: Since the launching of the Uruguay round, Pakistan and Uruguay have also been present at green room consultations.