8:32 AM Nov 24, 1994


Geneva Nov 24 (Chakravarthi Raghavan) -- Trade diplomats and GATT officials generally appeared to play down implications of the reports of the deal between President Clinton and Republican leader Senator Bob Dole to secure US ratification of the World Trade Agreement, by suggesting this was a 'national decision to deal with national concerns' with no implications for the WTO.

This view though appeared to be more of a public one, though privately and speaking on non-attributable basis several Third World diplomats did express concern about the likely impact on the credibility of the rule-based WTO multilateral trading system.

News reports from out of Washington spoke of the Clinton-Dole accord to have a US judicial panel to review the rulings of the WTO's Dispute Settlement panels (and appellate body decisions) and which could trigger a Congressional process to withdraw from the WTO if the panel were to find three rulings in a row against the US to be arbitrary, capricious and exceeding the WTO authority or involving misconduct.

Many diplomats and officials cautioned against judgements based on news reports and wanted to see the actual wording of any national legislation, but making the point that this can't change or amend or interpret in any way the WTO agreement itself.

Brazil's Amb. Felipe Lampreia said that it was "a national decision to meet national concerns".

"But we in Brazil are quite confident that the multilateral trading system and the DSU are in good shape," he added.

Chile's Amb. Ernesto Tironi, another diplomat who spoke on record, said that it was not "encouraging, but we can live with it".

"It is an internal affair of each country as to how it is going to meet the domestic concerns arising out of this treaty," he said.

Asked what credibility the DSU would now carry, when it would be functioning with an eye to the possible US reactions and need to keep the US on board, and how other nations would view its rulings if it was in favour of the US, Tironi said "I don't think it will any way affect the DSU... The US position and its weight and importance is a fact of life we all have to live with," he said.

But most others whose views were sought did not want to say anything at this delicate stage. It was as if there was some tacit understanding among GATT diplomats not to say anything either way, but view it as one of US domestic politics with no international effect.

Speaking in private, and on condition of anonymity, several of them were less sanguine, and many agreed that they were all setting out on a wrong foot in terms of establishing the WTO as a rule-based system, with a credible, impartial, automatically binding dispute settlement mechanism.

Some noted that the agreement itself provided that any WTO member had the sovereign right to give six months notice and withdraw from the WTO and its annexed multilateral agreements.

"But it won't be like the US walking out of the ILO or UNESCO and then rejoining it," one noted. Any nation walking out would find the costs high, and for the US it will be highest in that it will collapse the system, and trigger reactions elsewhere.

A provision in an agreement is one thing, but it is quite another to rub this in. "It is like a couple announcing, even before a marriage is solemnised and consummated, that they have a right and will exercise the right to divorce," another said.

The DSU, the panellists and the Appellate body members would be in an impossible situation to begin with, the diplomat said.

While they might still shrug their shoulders and act in complete impartiality, they would always be looking over their shoulders so to say. If their ruling went in favour of the US, however meritorious, outsiders will say it was motivated by anxiety not to trigger reactions in the US. If it went against, the next one or the one after would be trying to make sure there were "no three strikes in a row". Either way, it will take a long time before the DSU rulings can acquire the reputation for impartiality and for the system's credibility to be established in the public mind.

Speaking in Washington, at the White House 'ceremony' where the Clinton-Dole deal was announced, the US Trade Representative Mickey Kantor had said it meant that the US "had put suspenders on with our belt" to protect trade sovereignty.

And when a reporter suggested it was just a 'fig leaf', Kantor (according to the Wall Street Journal) reportedly added "If it's a fig leaf, it's a giant one. This is real, it's substantial, it makes sure there's no misconduct or arbitrary or capricious behaviour."

Commented a trade official in Geneva: "It is more of a case of the Emperor (the WTO claims to a rule-based system) being seen as one without clothes".

If other nations find, for their own domestic reasons, to enact similar laws or make similar announcements, instead of a system up and running as a credible multilateral system capable of protecting the rights of the smaller trading nations, it will start with several handicaps, he said.

He referred in this connection to the reports out of Paris, earlier this week, of former French President Giscard d'Estang, who heads a French Parliamentary committee, reportedly commenting (after meeting GATT Director-General Peter Sutherland) that if the US made such a provision for a national judicial review of WTO rulings, others too might fell obliged to do the same.

Some GATT officials try to look at the 'brighter side' and see such a US judicial review process as helping acceptance and implementation of adverse rulings and thus supportive of the system.