(THIS IS THE THIRD AND FINAL PART OF A SERIES ON URUGUAY ROUND MONTREAL MEETING AND OUTLOOK SINCE THEN. THE FIRST TWO APPEARED IN SUNS NOS. 2070 AND 2071)

Dec 23, 1988

(THIS IS THE THIRD AND FINAL PART OF A SERIES ON URUGUAY ROUND MONTREAL MEETING AND OUTLOOK SINCE THEN. THE FIRST TWO APPEARED IN SUNS NOS. 2070 AND 2071)

GATT COULD BENEFIT FROM SOME GLASSNOT AND PERESTROIKA.

AN IFDA SPECIAL FEATURE

BY CHAKRAVARTHI RAGHAVAN

GENEVA, DECEMBER 21 (IFDA)— Transparency was a word that was frequently in use at the Montreal mid-term review meeting of the Uruguay round Trade Negotiations Committee (TNC) - in the proposals and papers of industrialised countries in areas like "services" and "intellectual property rights", and in the corridors relation to trade policies of other countries.

"But there is no transparency here, and GATT needs some glassnot and perestroika," was the comment of several third world delegation who were kept out of the "consultations" in the green room or in the drafting groups.

The TNC was faced with alternative and even contradictory optics and formulations in eight areas under "trade in goods", and the separate one on "trade in services".

Besides these, while recommendations on further work in tropical products group was unanimous, it was subject to "results" in negotiations so far in the shape of trade liberalisation concessions from the major trading partners.

After some marathon negotiations on December 4 night, a package of concessions exchanged was announced, and was hailed by the secretariat as "a major breakthrough" and involving "trade-coverall" of some 25 billion dollars.

When the fine print of concessions actually exchanged, a 2-cm thick "restricted document" of schedules, became available on December 9, it was clear that the actual concessions was much less, and TV very small reductions in customs duties in some major markets would probably be absorbed by the importing trade with exporting countries gaining little benefit immediately.

The ministerial meeting managed to agree on the four informal groups to tackle the outstanding issues only on evening of December 5 each of the working groups were chaired by a Minister - three to tackle one subject each, respectively agriculture, Trade-Related Intellectual Property Rights (TRIPS), and services, and the four "a basket group" to tackle all the others.

After preliminary exchange of views on December 5, each of the issues and problems in the basket group were remitted to smaller drafting groups. These groups often met in some hotel rooms outside, and became even less transparent -- with other interested delegations chasing journalists to find out what was going on and where.

Agreements of sorts were reached on tariffs, dispute settlement and the functioning of the GATT system - the last only after the secretariat gave up its proposals for GATT visiting teams to national capitals and "independent discussants" to examine government officials an their country's trade and economic policies.

In the services group, some compromises with some square brackets were worked out in small drafting groups, but ran into considerable difficulties in the "green room" consultations with the U.S. trade representative Clayton Yeutter pressing for commitments or acceptance of ideas like "transparency" of national regulations and laws before implementation, and for "national treatment" to foreign capital.

Much of the debate and arguments in the "green room" on this, some participants said, were between U.S. and Brazil and India, and occasionally one or two other third world participants.

Some other Ministers, including some who had delivered "brave speeches" in the plenary, not only did not voice the same views inside, but even said they could go along with the U.S. formulations.

The compromise ultimately evolved, and annexed to the TNC’s procedural decision at Montreal, was viewed by some of the third world participants as "something we can live with".

Though there was no mention of the issue of "labour" or "labour intensive" services nor specifically of the "right of establishment" for capital, the compromise provided for negotiations on these issues, though by adopting different formulations.

Work an "definition", it was agreed, should be on the basis that the proposed multilateral framework may include trade in services, involving "cross-border movement" of services, of consumers, and of "factors of production" (a term which includes both capital and labour), where such movement is essential to suppliers.

There was also agreement that work should proceed "without excluding any sector of trade in services an a priori basis", that coverage should permit "a balance of interests for all participants, that sectors of interest to developing countries should be included, that certain sectors could be excluded in whole or in part for certain over-riding considerations, and that the framework should provide for the broadest possible coverage of sectors of interest to participants".

But the U.S. stoutly opposed the inclusion of a specific concept about "development compatibility" of the multilateral framework, and the third world countries apparently gave way.

However some third world sources said this would not and need not be the end of the story, and countries who had specifically tabled proposals in the group of negotiations on services in this behalf would not be bound by the "green room agreements".

In the GNS report to Montreal, the "development" issue had been placed in formulations within square brackets signifying lack of consensus.

This said:

"The agreement shall be compatible with the objectives of promoting the economic growth of all trading partners and the development of developing countries, including the improvement of signatories' technological capacities and their capacity to attract and generate higher levels of investment".

"It is understood that the negotiations shall proceed on the basis that individual developing countries might open fewer sectors or liberalise fewer types of transactions than other signatories, in line with their level of development, or that market access might be phased in over a longer period."

The U.S. trade representative, Clayton Yeutter, was reported by some participants, as having openly scoffed at the "development" and "technological capacity" issues, dismissing them as rhetoric.

The couple of third world delegates, who were fighting the issue, one participant said, ultimately gave up when others inside either remained silent or did not seem to care either way.

At Punta del Este, where it had pushed the services issue, the U.S. had seen its major target as the major third world countries like Brazil, India, Egypt etc.

But at Montreal it appeared that the U.S. is now more worried vis-a-vis services with the EEC’s 1992 single market concept and its consequences for U.S. banks and other such service-enterprises.

Along with Japan and other OECD countries, the U.S. now wants to put in place a multilateral framework that would restrain the EEC. The latter for its part appeared to be playing for time.

In agriculture, beyond the "negotiations" via press conferences and public statements between the U.S. and EEC, and that too confined to the "elimination" vs. "reduction" concept on government subsidies, none of the other problems were addressed or discussed.

And when the U.S. and EEC finally "agreed to disagree", there were no further negotiations.

On TRIPS, consultations chaired by the Turkish Minister of State, Yusuf Ozal, saw sharp division between the U.S. and other industrialised countries on one side and the third world on the other.

The third world countries were opposed to the U.S. effort to establish in GATT substantive new or enhanced norms on a wide variety of "intellectual property rights", including those where there could be no patents at all (like undisclosed trade secrets).

Ozal's formulations, drafted with a view to meeting the U.S. demands, were rejected by third world countries - with India countering with its own proposals for the issue to be pursued outside GATT, jointly by UNCTAD, WIPO and UNESCO.

On textiles and clothing the third world countries continued to insist that the modalities for integration of the trade in this sector (governed by the Multifibre Arrangement, MFA) into GATT should include modalities for phasing out the MFA, and starting this process in 1991 when the current MFA-4 expires.

The EEC and other industrial nations however are opposed to this, with U.S., EEC, etc., foreseeing continuance of the MFA well into the 21st century.

On the safeguards issue too there was no meeting ground. Brazil, India and other third world countries insisted that the negotiations for a safeguards agreement must be based on non-discrimination, and must cover all "grey area" measures.

The EEC and some others continued to insist on "selectivity".

When the negotiations on agriculture collapsed, the Latin American members of the Cairns group, blocked the efforts of U.S. and EEC to continue negotiations at Montreal on TRIPS and force a new negotiating mandate, and have mere procedural decisions on textiles and safeguards.

In all these four areas, it was decided, consultations should resume at Geneva on the basis of the proposals originally remitted to Montreal by the group of negotiations on goods, and not on the basis of any of the "non-papers" that were being worked on at Montreal.

The agreements, both those forged at Montreal in the green room and those on other issues that merely called for continuance of negotiations, were put "on hold" until solutions could be found through consultations in agriculture, textiles and clothing, safeguards and TRIPS, and the TNC could meet in first week of april and make an overall assessment.

Since return of GATT diplomats to Geneva from Montreal, there have been some efforts by the U.S. and other industrialised countries (and the GATT secretariat) to get the various negotiating groups to start their work as originally scheduled from february 1.

But this has met with opposition from third world participants who underscore the "on hold" decision of the TNC.

At Dunkel’s "green room" consultations on December 19, these differences reportedly came to the forefront.

Dunkel is to resume his consultations in mid-January.

Some third world participants later said that any effort to get other negotiating groups to meet and carry on their work would further complicate the process, and may only result in unravelling the agreements reached ad interim in the green room.

Also, they said, to improve the "transparency", Dunkel should hold his "consultations" in the four areas and report regularly to the GNG. However the secretariat and-major industrialised nations do not want this to happen.

There is some talk that Dunkel would concentrate on unblocking the U.S.-EEC agricultural deadlock through some "cosmetic" accords, and then use it to press third world countries to yield to the U.S. and EEC on TRIPS.

But this would result in repetition of Montreal, some third world sources say.