MERCOSUR ISSUE TO REMAIN ON COUNCIL AGENDA.

GENEVA, 14 JULY (CHAKRAVARTHI RAGHAVAN) – After what was described as a sharp and heated exchange of views, the GATT Council Tuesday agreed to keep the U.S. request for a working party under Article XXIV to go into the MERCOSUR agreement on its agenda for the next meeting in September.

In the meanwhile, the chairman of the Committee on Trade and Development (CTD), Amb. Jesus Seada Kuri of Mexico, is expected to continue informal consultations to find a compromise on the lines suggested by the European Community.

This was for the setting up of a working party under the CTD to consider the MERCOSUR agreement and report to the CTD, which in turn would report to the GATT Council. Any Contracting Party would be free during the examination of the CTD's working party to refer to any GATT article or provision in relation to the MERCOSUR agreement.

At the CTD meeting on Monday Brazil and Argentina had made a presentation of the agreement and contended that it was one covered by the 1979 Enabling Clause and not under Article XXIV as contended by the United States.

The debate in the GATT Council Tuesday was basically a repeat of the same in the CTD with both sides expressing their views forcefully and sharply, one participant said.

With neither side giving way, the Council could reach no conclusion beyond taking note of the views expressed and keeping it on its agenda for the next meeting.

Even this, participant said, cam e only after another sharp exchange between Brazil's Amb. Celso Amorim and U.S. Amb. Rufus Yerxa who wanted the issue to be kept on the agenda. Amorim asked whether there was in fact a consensus for this when Yerxa reportedly intervened and said he was making a formal request for the issue to be put on the agenda.

Items are put on the agenda normally at the request of any member.

Earlier, the U.S. pressed for the setting up of a working party by the GATT Council to consider the agreement as one falling within the terms of Article XXIV relating to formation of customs unions and free trade agreements. Yerxa also insisted that the agreement should be notified by its signatories to GATT under Article XXIV, and not under the "Enabling Clause" as had been done by Argentina and Brazil.

Yerxa, said that the U.S. was not opposed to MERCOSUR and its objectives but that given the large economic stakes - 200 million people with half-a-trillion dollar gross, national product - it should be examined more carefully in terms of the Article XXIV vis-a-vis the interests of other Contracting Parties. In the U.S. view, the MERCOSUR was an agreement moving towards a customs union. The 1979 Enabling Clause was not intended to cover these cases, but rather arrangements leading to free trade areas among developing countries.

Brazil and Argentina however insisted that MERCOSUR was far away from a customs union and that it was completely covered by the Enabling Clause and its "development" dimension and the special and more favourable treatment to developing countries assured by it.

Given that even in terms of its consideration in the CTD, no "right" of the United States could be taken away, and given that no working party set up under Article XXIV had ever been able to come up with consensus recommendations, the U.S. insistence on the Article XXIV route for the consideration of the MERCOSUR issue was somewhat puzzling for Severn delegates.

Several Third World delegates however suggested that the U.S. position was rooted in its fundamental opposition to the concept of special and more favourable treatment to developing countries stipulated in the Enabling Clause and, its consistent attempt since the early 1980's to get rid of this and the Part IV of the General Agreement.

They noted in this connection that at UNCTAD-VIII as well as in other recent meetings, the U.S. has been opposing any formulations in relation to developing countries and their rights that resembled the language used in the Enabling Clause.

The way the U.S. and other industrialised countries viewed the Enabling Clause - a decision of the CONTRACTING PARTIES, having the same validity and scope as any provision of the General Agreement - was shown by them in the CTD on Monday over the issue of GSP benefits being granted by them to the east Europeans and former Soviet republics.

Any benefit by any GATT Contracting Party to any country has to be extended to all GATT Contracting Parties under Article I of the General Agreement. An exception is provided under the Enabling Clause only to tariff and other trade benefits that ICs might give to developing countries. In all other cases, the contracting party providing a benefit has to seek and obtain a waiver from the obligations of Article 1.

In not seeking any such waiver, and in extending GSP benefits to the east Europeans and former Soviet republics, the U.S. and others claimed they could act "autonomously" and "unilaterally" as donor countries and that the "enabling clause" had been decided in different conditions and circumstances, and that the east Europeans former Soviet republics were now in the same situation that developing countries were in 1979 or earlier when the GSP was introduced.