7:18 AM Nov 16, 1994


Geneva 15 Nov (Chakravarthi Raghavan) -- A senior European Union trade official expressed confidence Tuesday that the ratification processes in the major trading nations would be completed before end of the year and the World Trade Organization could be in place, as targeted, by 1 January 1995 and that some 'transition arrangements' for a year's co-existence of the GATT 1947 and the WTO would be found.

This assessment came after a meeting of the Quad countries (Canada, European Union, Japan and United States) in Geneva attended by US Deputy trade Representative, Rufus Yerxa, EU's Hugo Paemen and in the wake of the European Court's ruling that in the area of trade, the EC Commission shared responsibility with member-States in areas like intellectual property rights and several services sectors.

A senior GATT official said Tuesday evening that the expectations at the GATT is that the WTO will get under way on 1 January with about 70-80 members (so far only about 30 have actually ratified) and hoped that a transitional co-existence formula would be found to provide some multilateral cover for those who would need a little more time to ratify, after the majors do so.

"Even if the others are ready with their ratifications," they will still need time to get the formalities of setting their seals and signatures on the documents and sending it to Geneva for deposit with the GATT Director-General, another official pointed out, noting that "not all countries have some speedy courier services from their capitals to Geneva".

The EU official said that though the Americans have said they would withdraw from GATT 1947 simultaneously with their membership of WTO, they were hopeful that solutions would be found after the US congressional votes.

The US withdrawal decision is not in the implementing legislation, but part of the understanding between White House and Congress and is in letters from Clinton to Congress, other sources said.

The EU Court ruling is expected, in the immediate, to ensure quick EU ratification of the Marrakesh agreements -- with Parliaments of 12 member-countries having to ratify the deal, the European Parliament giving its advice and okay to it, and the EU Council of Ministers in turn ratifying the accords at their meetings on 19-20 December.

Though none of the EU countries say they have a 'substantive' problem over the agreement and its ratification, the tight time-table is easily susceptible to any one of several political upsets and problems, not connected with the issue, in national parliaments, one trade official noted.

Both houses of the US Congress are due to assemble and vote on the deal, by adopting the implementing legislation, by 2 December and the US officials, and President Clinton, are continuing to talk of all this being on hand and likely to be completed in time for the implementation conference.

The 'Implementation Conference' at the GATT is due to meet on 7 December, to set a date for entry into force of the WTO -- and would presumably be doing so only if the US votes 'yes' and the likelihood then of 'yesses' from the EU, Canada and Japan.

But some of the statements from Republican senators who would lead in the new Congress, and who have to supply the votes necessary in the lame duck session, for waiving the budget requirements and adopting the implementation bills have been far from reassuring to the very trade officials who publicly talk of everything being ready to go.

Stressing the need for a transitional co-existence of GATT 1947 and the WTO (an issue on which the US is isolated in opposition), the senior EU official said "It is not reasonable that we the majors take so much time to ratify -- the EU itself would be able to complete the process only before Xmas -- and expect others who necessarily had to wait for what the majors do, to complete their processes in a few days time under pain of otherwise losing their multilateral covers".

There may be some conflicts between the obligations of the GATT 1947 and WTO and its GATT 1994, but they are not insurmountable, he said. For one thing, the EU would make clear, and it expected other WTO members to do the same, that in the event of a conflict between the WTO and GATT 1947 obligations, the WTO obligations would prevail.

The only snag about the GATT 1947 dispute settlement system, and the possible forum shopping, was not really an issue since in any event the Montreal mid-term accord procedures in the GATT 1947 (of an automatic process in dispute settlement at all stages except the end process of adoption of rulings) would come to an end with entry into force of the WTO. Any member of both WTO and GATT 1947 could hence always block panel reference in the GATT 1947.

But trade observers note that the price being paid in the US and EU for quick ratifications might over the medium to long-run make the negotiating process in the future WTO more complicated and make the socalled rule-based WTO system, underpinned by its Dispute Settlement Understanding, providing much less 'security' than being trumpeted about.

The Republican Senate minority leader (who would become majority leader in the new Congress) Senator Bob Dole has made clear that the implementing bill would be adopted in the vote in the lame duck Senate only on the basis of a side legislation that despite the automaticity of the DSU rulings, US sovereignty "would remain intact". President Clinton appears to be going along with it.

(According to a Washington agency report, three other influential Republican senators (Jesse Helms, Larry Craig and Strom Thurmond who don't want the WTO institutional arrangements) are pushing Dole to put off action till the new Congress meets, and sets its own conditions.

While the view that there is no 'automaticity' of enforcing WTO agreements or dispute panel rulings, until a country agrees and adopts legislation was always implicit -- and hence WTO procedures providing for authorized retaliation if a country losing the case in a dispute refuses to implement it -- such a stark reiteration would destroy the basis of arguments being used in many developing countries of the benefits of the WTO, even if there are no material immediate trade benefits.

It also raises questions about the continuing negotiations in the area of financial services and movement of natural persons -- two areas of complementarity and possible trade-offs envisioned by some of the developing countries -- where the US ratifications of any deal would be in question if there is no fast track authority, and so would the EU process given the Court ruling on retention of jurisdiction by member-States.

The Quad meeting at this stage (when there are so many uncertainties, including the positions of some of the Republicans in Washington), and its purpose, was not entirely clear even to some members of the Quad delegations and others.

One view was it was essentially an official level meeting, with the US and EU using that occasion to try to settle the various 'jobs' and offices that will be going once the WTO comes into being.

Among these are heads of the WTO General Council, Councils on goods, intellectual property and services, the Dispute Settlement Body, the membership of the Appellate body, the Textile Monitoring Body etc -- some that will be filled by the GATT ambassadors and others on a whole-time basis with some current ambassadors involved in delicate negotiations seeking such posts too.

The EU trade official also talked of the Quad discussions about ensuring 'transparency' and 'derestriction' of documents being pushed by the US and said that the EU also agreed that the GATT had so far functioned in too much secrecy and the WTO should be more transparent.

Most documents should be routinely available to the public, and so should positions of parties before the Dispute Settlement Body, if the party concerned chooses to make its own position public. But actual DSB deliberative process should remain confidential until the ruling is given, when it should be available to everyone. But negotiations would need some confidentiality, he said.

The very process of Quad meetings to discuss and decide these things, for action by the generality of members, however suggest that the two majors will push, not for the substance of 'transparency', but rather some 'gimmicks' to satisfy their domestic NGO lobbies.