3:22 PM Dec 16, 1994


Geneva 16 Dec (Chakravarthi Raghavan) -- With the process for selection of a candidate to head the World Trade Organization in a stalemate, informal consultations at the GATT now appear to center on asking GATT Director-General Peter Sutherland to continue in the New Year.

The 50th session of the GATT Contracting Parties, which has been suspended, is now expected to meet next week, on 21 December, to formalise this, GATT delegations said Friday.

Last week, at the CPs session, the heads of delegations were advised at an informal meeting by the CPs Chair, Amb. Andras Szepesi of Hungary, that there was a stalemate in the selection process.

Szepesi who began meeting individual delegations again this week, and has also been meeting key delegations together, appears to be confining it to making some interim arrangements, namely for asking the GATT Director-General Peter Sutherland to continue.

There is now general agreement that there is no other solution feasible in the next few days before Xmas holiday breakup, and the consultations appear to be on for how long Sutherland should be requested to continue -- just ad hoc without any time-period stipulated or a fixed period.

The WTO agreement (Art XVI:2) provides for the Director-General of the GATT 1947 to serve as the Director-General of the WTO, until such time as the Ministerial Conference of the WTO has appointed a Director-General of the WTO.

Sutherland, when he took over in July 1993 as the Director-General to the CPs of the GATT (the GATT 1947 which will now co-exist with WTO in 1995), it was for a two-year period that will run till July next.

At that time it was envisaged that the WTO would enter into force from 1 July 1995 and while it would have been for the WTO to decide, the general view was that Sutherland would be named (if he wanted) for a four-year period.

It was Sutherland who at Marrakesh wanted the WTO to be brought into being from 1 January next, and announced that he would not be interested to continue as head of the WTO.

But with his original term due to run till July 1995, in terms of the WTO's Art XVI:2, he would automatically be heading the WTO temporarily from 1 January without any further action.

However, with the process for selecting a GATT head, and implicitly the head of the WTO, having been started (and stalemated), there is a general view that Sutherland should be formally requested to continue in office for a term -- and not on an ad hoc basis.

While most delegations appear to favour a 3-month period, during which they hope there could be renewed efforts to find a candidate to head the WTO, the European Union seems to be reluctant, and wants to set a month's limit for Sutherland continuance.

The EU continues to argue, and push for, its candidate Renato Ruggiero being chosen to head the WTO on the ground that among the three in the race, Ruggiero commands a majority support of the 126 GATT CPs and that it extends beyond Europe to other parts of the world.

However, in reality, Ruggiero's support is drawn from the EU and those associated with it (like ACP countries or in Europe etc).

The EU's hopes that Japan and some other Asians could be persuaded to get the South Korean Trade Minister, Dr. Kim Chul-Su to withdraw (on the ground that he has not got the backing of either the US or the EU), and for his supporters to throw their weight behind Ruggiero has not materialised.

Nor has Mexico's Carlos Salinas de Gottari -- who earlier this month visited India, Egypt, South Africa and Namibia -- appear to have progressed very far in getting support from outside his own region.

The EU however is against Sutherland being asked to continue for any fixed period. This is partly because of concerns that there might be an erosion of support for Ruggiero or result in a decision for the process to be restarted with new candidates, and the EU's efforts to "stamp" its right to have an European to head the WTO might fail.

The US diplomats are saying that Washington has begun its push for Salinas and would win, but privately some of them know it is difficult and think a consensus compromise would need to be on a new personality.

Most Third World diplomats seem to be agreed that a consensus is possible only on the basis of a high-level political understanding between the US and EU.

But there are some who feel that the WTO would start off on a wrong foot, if it were to be a continuation of the GATT process -- where the US and European Community met, cut deals and decided, and others passively accepted and fell in line.

Meanwhile, on some of the other outstanding questions, service negotiations have been unable to agree on the "scope" of the General Agreement on Trade in Services (GATS) -- an issue that could not be decided when the negotiations ended on 14 December 1993, and left open for further consultations.

The problem relates to whether the any bilateral or plurilateral agreements on social security, investment guarantees etc would or would not be covered by the definition of 'trade in services' and whether 'measures by Members' which would be covered by the disciplines of the GATS would apply in this area.

The EU has been pushing for an agreement or clarification that bilateral or plurilateral agreements on social security, and any 'service supplied in the exercise of governmental authority', either on a commercial basis or in competition with one or more service suppliers, would be exempt from the scope of the GATS.

While the EU has been seeking a decision on the ground of 'need for legal certainty', some of the developing countries like India, Egypt and others have opposed any such 'blanket' exemptions.

They note that in many other areas, developing countries have to live with many 'uncertainties' and this was no reason for blanket exemptions.

India and others have argued that the 'scope' issue and its applicability to social security agreements was a matter that had to be judged on merits on a case-by-case basis.

In their view, before there could be any dispute or question about a particular government supplied service or measure, it would have to be seen whether it has an effect on 'trade in service', and whether in this effect there is a discrimination as between different service providers in violation of the most-favoured-nation article or the national treatment requirements.

The WTO Preparatory Committee's Subcommittee on Services question has been unable to find a consensus solution and the issue is now expected to be left to the GATS Council to take up and decide.