6:43 AM Nov 18, 1994


Geneva 18 Nov (Chakravarthi Raghavan) -- GATT diplomats are engaged these days in some low-profile negotiations -- sorting out relatively 'minor' problems of preparing for the WTO's entry into force while reassuring each other that the agreement will enter into force, despite the new noises from Washington and the new conservative Congressional leadership.

And while no one talks about it openly, the capacity of the new conservatives, as the Wall Street Journal calls it, is not being underestimated either.

But there is a consensus of sorts among diplomats and officials that it is best to say or do nothing that would provide a new handle for the WTO opponents in Washington.

As one diplomat put it, there are problems to be sorted out, but hopefully they can be sorted out after the US Congress votes the implementing bill. But if Congress does not vote yes, the whole thing will sink and there will be more serious problems than these.

Meanwhile, action on some of the difficult questions are being put off until after the US vote. These appear to include the problems of 'transition' between GATT 1947 and the WTO -- a very important one, but which it is hoped could be resolved -- and the relationships with the Fund-Bank institutions on one side and the United Nations on the other.

After the meeting earlier this week of senior Quad officials, an EC Commission senior official was confident that the transition problem would be resolved by agreement for a year's coexistence of the GATT 1947 and the WTO, and the US side would agree after the Congressional vote.

US officials have been privately sounding confident that the pressures being applied by the White House and the US business community (the major gainers out of the Round) on the leadership in the lame duck Congress, called back into session on 29 November, would prevail and that the implementing legislation would pass.

For, the new Republicans in their manoeuvres against Clinton, if they do manage to sink the WTO and the results of the 7-1/2 years of often tortuous negotiations, would be hitting the 'fat cats' that fund their Party. They would also be sinking one of the major initiatives of President Reagan, who through the Uruguay Round was seeking to rollback the South to a colonial-type economic relationship and reverse European agricultural protectionism.

The talk of Senator Robert Dole about side-legislation to assure the US being able to walk out of the WTO, if it does not like the binding rulings that might come out of the WTO's Dispute Settlement process, is seen by some as no more than a 'face-saving' way out for the Republicans -- whose other leaders like Sen. Helms want to use the 'sovereignty issue' to put off action into the new Congress where they could rewrite the whole thing and kill it.

The WTO, in Art XV.1, clearly provides for any WTO member to withdraw from the WTO, and all the Multilateral Trade Agreements annexed to it, after six month's notice.

Washington news reports have quoted US Trade Representative Mickey Kantor as saying that in the Senate (where the crucial vote is over the Budget waiver, needing 60 votes of the 100 Senate members) that they were short of three to five votes, but would make it up.

At a meeting Friday of the WTO Preparatory Committee's subcommittee on legal, institutional and procedural questions, some of the relatively non-controversial issues were due to be settled formally.

The Budget subcommittee was due to meet Friday afternoon, among other things to consider the report of outside consultants on the GATT staffing and manning tables and charts.

Among the questions expected to be agreed to in the institutional and legal subcommittee are the procedures for appointment of members of the Appellate Body in the Dispute Settlement Understanding which would hear appeals from parties on the legal issues that could arise.

With the 'automaticity' built into the system for the settlement of the disputes, the role of the Appellate body is seen as crucial.

The GATT so far, and the WTO in future too, does not function on the res judicata principle and panel decisions, and their adoption by the CPs does not mean that it would bind subsequent panels.

But with so many agreements, some of them with varying language and even contradictions, GATT officials and some diplomats hope that the DSB and Appellate body would impart some coherence into the system and its rules, which the negotiators did not provide.

At least in the initial stages, the majors hope and expect that the Appellate body would be 'sensitive' and not impart legalistic rulings, with very large commercial consequences, that would add fuel to the fire that opponents are lighting.

From this view, they want a mix of judicial and trade law personalities whose views would not be easily challenged. But too much of sensitivity of the personalities to Washington and Brussels would also reduce its credibility.

The Prepcom is expected to agree that the members of the Appellate body should be named by a committee consisting of the Chairman of the General Council of the WTO, the Chairman of the Dispute Settlement Body and the GATT/WTO Director-General. The candidates are to be chosen by the three from out of a slate of names put forward by governments (whether their nationals or others).

The Chairman is expected to be a whole-time officer, while others would be on 'retainers' (of $5000 a month) supplemented by payments while on actual work. They are expected to be staffed by a secretariat independent of the WTO secretariat.

On the WTO relationship with the Fund-Bank institutions, the secretariat and the two majors are pushing for 'closer links', with the WTO opening an office in Washington and the secretariat maintaining close coordination with the Fund and the Bank. The secretariat had promoted such a move even at the time of the Montreal mid-term review meeting, but was turned down.

Even names of some staff members to head the Washington bureau are being mentioned.

Some of the Prepcom members have been talking of GATT staff going with the Fund and Bank staff to country-missions. Other trade officials see in all these an increase in their own status.

Others though are chary. Given that the Fund and the Bank have no influence or leverage over the industrialized countries, such a close coordination, more than what has been suggested in the WTO or Marrakesh decision on 'coherence', would only bring the full weight of the three on the developing countries in pushing them even more in the direction of the neo-liberal laissez faire economics.

With the GATT economists, having taken the path of pointing to the 'welfare benefits' of monopolistic competition, and even now using the TPRM exercise or the country-reports for balance-of-payments consultations to act to open up Third World economies for TNCs, some of these Third World diplomats have some reservations.

Some industrialized country delegations though have some reserve, pointing to the wording in Art III.5 -- the WTO "shall, cooperate, as appropriate", with the IMF and the World Bank.

The words 'as appropriate', they suggest, covers various elements, including the differing decision-making and relationships -- the contractual relationships in WTO unlike in the Fund and Bank, where it is only a creditor-debtor relation.

But others, who use the same argument to reject any specialized agency relationships with the UN, don't find any contradiction in pushing for close relationships with the Fund and Bank.

The UN Secretary-General, Boutros Boutros-Ghali in his report to the General Assembly on the 'Agenda for Development', has modified the language he had used earlier about bringing the WTO into specialized agency relationship with the UN.

He has said (para 20 of the report): "Maintaining the integrity and comprehensive nature of the United Nations system should be a major, constant concern of the international community. In this context, the desirability of bringing new organizations such as the World Trade Organization, endowed with wide international responsibilities in fields of international economic and social cooperation, into relationship with the United Nations, deserves priority attention."

But whether this new language will win the UN 'friends' among the trade diplomats is not very clear.