Dec 12, 1990

URUGUAY ROUND: AT BRUSSELS THE STAGE RAN AWAY FROM ITS MANAGERS.

BY CHAKRAVARTHI RAGHAVAN. THIRD WORLD NETWORK SPECIAL FEATURE. GENEVA, DECEMBER 11 (TWN) When the Uruguay Round of Multilateral Trade Negotiations collapsed at Brussels and the "final" Ministerial session of the Trade Negotiations Committee was adjourned indefinitely in the early afternoon of 7 December, perhaps the only people to whom it came as a surprise were the general public, familiar with "cliff-hanger" situations and last-minute "deals" of the Community where clocks are stopped to get over deadlines.

But even the GATT secretariat and the major trading partners had not bargained for the way the drama was played out.

Each of them for weeks had been planning to stage a crisis and use it to work out a solution in small behind-the-scene caucuses.

But, when the crisis actually came, the "stage-managers" found they were no longer in control and "the stage" had run away from them acquiring a momentum of its own.

Never in GATT's history, nor for that matter in any international economic negotiations, had such scenes of milling and angry delegates venting their frustrations with each other and to newsmen and for TV cameras been witnessed as in the cavernous hall at the exhibition grounds at Hazel in Brussels on December 5 and 6.

Officials of the EC, the U.S. and GATT secretariat seemed just dazed, and unable to predict the future.

When the European Community a couple of years ago offered to host the final meeting and planned the Brussels venue, it believed that it would thus be able to control the process and the outcome.

The EC invitation had come and had been accepted as part of the deal under which Canada was enabled to host the mid-term review meeting at Montreal. Neither of the meetings had been envisaged at Punta del Este when the Round was launched.

But the first spanner was thrown into the works when it was decided that Uruguay, whose Foreign Minister had chaired the Punta del Este meeting, should continue to chair the TNC Ministerial meetings and neither the Canadians at Montreal nor any of the EC countries at Brussels would chair the meetings and thus control it.

Thus, while successive Uruguayan Foreign Ministers have been technically in control of the Ministerial meetings, the actual control through the "chair" passed to the GATT secretariat, whose Director-General Arthur Dunkel in his personal capacity chairs official-level meetings of the TNC.

Under the GATT's way of doing business, in theory decisions are by consensus and all contracting parties are equal.

The GATT, not being an Organisation, its secretariat has less role than those of international organisations, but exercises considerable influence behind the scenes.

The real power lies with the major trading partners (who meet periodically among themselves - in U.S.-EC and U.S.-Japan bilateral talks and in quadrilateral talks of U.S., EEC, Canada and Japan).

Once they decide, their decisions are pushed through in very non-transparent processes. The GATT Director-General consults first with a small group over working dinners hosted by him, and then this is taken up in "green room" consultations, and the result is presented to others at formal GATT bodies for acceptance.

Early in 1990, when the dates for the Brussels meeting were set, the TNC had called for the profile of a global package of agreements in all areas to be readied by July.

But when the majors decided that they would not show their hands and would rather put off everything till the Brussels meeting, Dunkel went along with them, and only procedural, decisions were taken - for intensive negotiations from September.

Even in September, when so-called pre-Ministerial phase of negotiations began in Geneva, the majors continued to stall the negotiations - the EEC was unable to get its act together on agriculture and the U.S. and the EEC were unready to give away any substance in textiles and clothing or even in such minor areas like rules of origin or preshipment inspection.

As a result, at end of November a 391-page document of drafts in each of the negotiating areas, bristling with square brackets, was prepared and forwarded to Brussels for the consideration of Ministers and their "political decision". It was a "horrendous" task as many negotiators had noted even in Geneva, and the performance of some of the Ministers, who chaired the working groups, at press conferences showed that many of them had little grasp of the details and the secretariat was really trying to run the process behind them.

It was also a "high-risk" strategy, as many of them had cautioned Dunkel but were ignored, in which the downside risks of failure were much greater than any gains for individual countries.

From the time the dates of the Brussels rendezvous for the "final" session of the Uruguay Round Trade Negotiations Committee were set, especially from September, there had always been the talk of a crisis being created, enabling some hard negotiations, and a package of agreements emerging in such an atmosphere.

The negotiating styles and processes of the U.S. and EC did not allow for any high-level decisions either.

The U.S. administration was negotiating constantly seeking advice and support of its domestic lobbies and the Congress. Hordes of U.S. business lobby representatives and Congressional aides were present in Brussels and the U.S. delegates were constantly running to them for their okay even on small issues, newsmen noted.

In the EC, the Brussels bureaucracy (the EC Commission) negotiates but its mandate is given by the Council of Ministers and the cumbersome process meant that the EC negotiators were carrying on three sets of negotiations - one within the Commissioners, the second with the Council of Ministers and the third with the various participating countries.

The EC Commission was deeply divided between External Relations Commissioner Frans Andriessen and Agriculture Commissioner Ray MacSharry. This was manifest in press briefings and corridor conversations of their respective spokesmen. At Brussels, MacSharry and his spokesman and other officials sported lapel badges of "I love CAP" and made combative comments to delegates and newsmen.

The Council of Ministers were unable to agree to a process of fundamental changes in the CAP and put on the table an "offer" covering all the areas for agreement in agriculture outlined in the Montreal mid-term review and the negotiating elements outlined by the chairman of the negotiating group.

It was against this background that the U.S., EC Commission and the GATT secretariat had been planning for a crisis.

However the scripts of each differed from that of the other on the timing of the crisis as well as its use for bringing about pre-determined results that also varied. But all seemed to be working towards a scenario of substantive Ministerial decisions at the week-long meeting at Brussels, with perhaps details and texts to be worked out in Geneva by early February, and the various crisis scenarios were tailored to this.

There was also an unseated appreciation that agreements might not be possible in all areas but any "mini-package" should be such as could be "sold" to the U.S. Congress.

Some weeks ahead of the Brussels meeting, the U.S. had been talking to the Cairns Group members, particularly its Latin American members, as well as other Third World countries, in an effort to encourage them to force negotiations on Agriculture from day one and threaten a walkout if no satisfactory outcome was reached.

At pre-Ministerial meetings between the U.S. and the Latin American countries (in Geneva, Washington and some capitals), there was general understanding on the need to force the EC to yield on agriculture. However, the Latin Americans were not so enthusiastic about the U.S. view that in order to gain on agriculture, the Latin Americans and Third World should be willing to make "concessions".

As one of them put it afterwards, for the U.S. to win concessions on agriculture from the EC, and for any benefits that may flow from it for others, the U.S. was asking the Third World to pay the price in the form of concessions on TRIPs, TRIMs, and Services and in market access areas like Textiles and Clothing in the transitional provisions and its term.

None of the Latin Americans would appear to have committed themselves, though some like Argentina had been hinting publicly of their readiness to move on these issues if they had meaningful results in Agriculture.

None of them would also appear to have indicated to the U.S. their own thinking on strategies and tactics at Brussels and whether they would threaten to walk-out.

Talk among GATT officials in Geneva suggested that Dunkel too felt that without a solution to the agriculture issue, and without the EC moving away from its position, there could be no agreement at Brussels and hence agriculture should be the first priority in negotiations at Brussels.

Towards this end, there had been some talk of Dunkel putting forward at Geneva, at the "green room" TNC consultations, his own "compromise" text on Agriculture. But the EC would not agree to and was only agreeable to his sending to the Ministers specific questions on the issues for Ministerial answers.

(The secretariat nevertheless kept a text ready and this emerged as the Hellstrom "non-paper" on Thursday night at Brussels)

Also, given the "colossal" task (as he put it at a press conference) facing Ministers in dealing with the technical and political issues, the GATT Secretariat was planning on a Montreal-type outcome at Brussels - with ministers giving broad political decisions - and mandating Dunkel with senior negotiators to work out details and draw up clean texts and adopt them at Geneva.

The EC for its part had only been willing to make some last minute compromises on Agriculture, providing sufficient (in short-term monetary terms) market openings for some of the Cairns Group members, but as part of an overall package and thus insisted on "parallel negotiations" in all the areas.

This was both to gain agreements if possible or shift the blame for failure on others, rather than on its agriculture stance.

As predated the "crisis" came, but with too many "managers" having written varying scripts for both the creation and solution of the crisis, all of them suddenly discovered that the crisis was no longer the "stage-managed" one each had planned but a real one they could not control and the stage had run away from them.

Though the Uruguay Round collapsed as a result of the interactions of the stage-managed crises, some life-support systems have been attached to keep it alive for a short period, during which Dunkel, as official-level Chairman is to hold intensive consultations and promote agreements.

But it is no longer a technical task but a high political task. Early reports suggest that even now the idea is of U.S.-EC political, perhaps summit-level discussions to evolve compromises reach agreements and force it on others.

But this scenario appears predicated on the EC yielding on agriculture to the extent acceptable to the U.S., and Third World countries paying the price in other areas by "moderating" their demands (as in Textiles etc) without any "moderation" by the U.S. and EC in the new themes and areas.

This was the same power approach that Dunkel had used after Montreal and unofficial speculation of GATT officials suggest that the same would again be tried now.

However, Third World countries have also become suspicious, and insisted that in his closing statement Gross Espiell should make clear that he himself would be involved in the "Dunkel" process.

If and when a sober appraisal is made of the failures at Brussels and lessons are sought to be drawn, the conclusion would perhaps emerge that the failure was written into the script from the word go because the negotiators and the international civil servants had taken on their plates more than they could chew.

All of them might be experts on "trade", but none of them seemed to grasp the wider social, economic and political dimensions.

The major trading partners had got the Round launched and had drummed up political support by always talking of the gains for their countries but no one had ever done any appraisal of the losses or sacrifices of each.

The GATT secretariat too had paid attention only to the views of its "clients" - never clearly spelt out but always understood by everyone to mean the business community and the TNCs and their lobbies - and had paid little heed to the wider public and consumers.

It would also be seen as a management crisis in failing to understand the colossal nature of the tasks much ahead, to realise that with so many interests affected by the fundamental changes in economic and social policies of countries, only full public debate and discussions would produce the broad support needed and that GATT's usual methods of non-transparent back-room deals would just not work in this task.

(The above is the first in a series of articles analysing the Brussels outcome and the future prospects).