10:43 AM Jan 31, 1995

WTO CRANKS UP, READY FOR BUSINESS

Geneva 31 Jan (Chakravarthi Raghavan) -- The World Trade Organisation (WTO) which formally came into being on 1 January, became operational Tuesday with the first meeting of the WTO's General Council and the constitution of its various bodies and their officers.

The GATT secretariat which on 3 January had announced a membership of 81 as of 1 January, has now revised it downwards to 76 -- those who have actually completed their domestic formalities and deposited their instruments of acceptance or ratification etc of the WTO agreement.

There are 52 others who participated in the Uruguay Round and were members of the GATT and eligible to join the WTO, but are yet to complete these formalities, including the least developed countries who have been given additional time for submission of their schedules of commitments and their scrutiny and acceptance.

The Council Tuesday elected Amb. K. Kesavapany of Singapore as its Chairman and Amb. Donald Kenyon of Australia as the Chairman of the Dispute Settlement Body. The Chairman of the Trade Policy Review Body is yet to be named.

The invitation from Singapore to host the first Ministerial meeting of the WTO next year was also accepted. The dates of the meeting are to be set later, but is expected to be in the latter half of 1996.

A number of countries from Asia, Latin America and Europe spoke up in support of Singapore hosting the first meeting and this was approved by consensus.

The United States had been holding up a consensus on this at the time of the Marrakesh meeting because of Singapore's action in carrying out a "caning" sentence against an American youth, did not speak Tuesday.

A dispute between the major industrial countries (US and EU) and the developing countries over the composition of the Textiles Monitoring Body, which is to oversee the administration of the Textiles and Clothing Agreement had at one stage threatened to block the entire WTO process and the constitution of its various bodies.

This issue had been unresolved in the Preparatory Committee and was left for further consultations.

What was seemingly an arcane procedural issue and "fight" for membership on the TMB became essentially an issue of the majors trying to assert their dominance and authority over the WTO and the developing countries resisting such "diktats".

Resistance from the European Union and the United States to the compromise formula put forward last December by the GATT Director-General Peter Sutherland had led to the developing countries taking the position that there could be no "piece-meal implementation" of the Uruguay Round agreements and that the constitution of the other bodies was linked to the TMB issue.

The deadlock ended Monday afternoon when the EU accepted the Sutherland compromise on the composition of the TMB and formulations on references to China which is negotiating accession to WTO and a few others yet to become members of WTO.

The US had objected to mentioning China, yet to gain entry into the WTO, to be put (in the Sutherland compromise) with Pakistan in one of the constituencies (of exporting countries) for electing members of the TMB. The issue whether it was an "if" or a "when" of Chinese membership, was resolved by putting a double asterisks after China (in the formula for constituting the 10 members of the TMB), and with a footnote reference qualifying China being mentioned.

The footnote provided that "in the event that China does not become a member of the WTO by 31 December 1995, a WTO member is to be proposed by the WTO members who are members of the International Textiles and Clothing Bureau (whose membership is drawn from developing MFA exporting countries) shall be included in this constituency until such time as China becomes a WTO member". The decision as to who should replace "China", if it does not become a WTO member by end of the year, is thus left to the exporting developing countries.

Mention of others like Poland, Egypt, and Tunisia (eligible to WTO membership, but yet to complete their domestic formalities before ratification of the Marrakesh Agreement) were qualified for inclusion in constituencies for electing TMB members, with the words "upon WTO membership".

The TMB is to be headed by Andras Szepesi, currently Hungary's Representative to GATT. The appointment of Szepesi to this post, a whole-time office in the GATT secretariat, was announced by the GATT/WTO Director-General Peter Sutherland. GATT officials were unable to clarify at a press briefing whether Szepesi, who will be now a full-time GATT/WTO official, will be continuing his role of holding consultations with WTO membership on choosing a successor to Peter Sutherland -- a job he was entrusted with last year in his capacity as Chairman of the GATT CPs.

The GATT CPs are due to resume their "recessed" 50th annual session Wednesday when, among other things, they will name Egyptian Ambassador, Dr. Mounir Zahran as the new Chairman of CPs.

During the preparatory committee, it had been agreed that the Chairman of the TMB should have no other GATT responsibilities and will have no connection with any government of a member-State.

However, some GATT participants and GATT officials were suggesting Tuesday that in the interest of "continuity" and GATT "pragmatism", Szepesi could continue to complete the consultations on the choice of a new GATT/WTO head -- even if be anomalous for a subordinate official in the secretariat to conduct consultations and settle on the choice by consensus of a candidate to head the secretariat.

It was suggested that Szepesi could complete this work, before taking over as TMB chair.

Earlier, the Council heard reports from the Preparatory Committee and approved the various recommendations including the rules of procedure and other recommendations including the relationships with various international organizations.

The General Council was also advised about the state of the negotiations with Switzerland on the headquarters agreement. Szepesi, who as Chairman of the GATT CPs and of the Prepcom's Budget Sub-Committee had been heading from the GATT side the negotiations, reported progress in the negotiations with the Swiss on the physical facilities as well as the question of providing free office space for the least developed countries.

But there were still some differences over the issue of privileges and immunities of the WTO, its staff and of the missions.

The Council named Amb. Minoru Endo of Japan as Chairman of the Council for Trade in Goods, Amb. Christer Manhusen of Sweden to head the Council for Trade in Services and Amb. Stuart Harbinson of Hong Kong as the Chairman of the TRIPs Council.

The Goods and Services Councils were in turn due to elect various persons to chair a number of subordinate bodies, including the Independent Chairman of the TMB.

Amb. Andras Szepesy of Hungary (who is conducting the consultations to choose a successor to Sutherland to head the GATT/WTO) is to be named to that post.

Also elected Tuesday were Malaysia's Amb. Haron Siraj as Chairman of the WTO's Committee on Trade and Development, Amb. Juan Carlos Sanchez Arnau of Argentina as Chairman of the Committee on Trade and Environment.

France's Jean-Marie Metzger was named to chair the Committee on Budget, Finance and Administration, and Peter Witt of Germany to chair the Committee on Balance-of-Payments restrictions.

Colombia and Costa Rica, under any other business, voiced their concern over the US actions in starting investigations under S.301 of its domestic law in regard to the European Single Market banana regime and the export quotas and arrangements from the Latin American and Caribbean banana exporting nations.

Disputes on this or any other matter, the two delegations stressed, should be brought up and dealt with before the Dispute Settlement Body of the WTO, and not through unilateral actions.

The US did not reply.

Earlier, the General Council agreed to the establishment of a working party to look into the application of Vietnam to accede to the WTO. A working party is also to be set up to look into the enlargement of the European Union by the accession to it of Austria, Finland and Sweden.