7:57 AM Dec 17, 1993


Geneva 17 Dec (Chakravarthi Raghavan) -- As GATT negotiators began clearing their tables before the year-end vacation and preparing for the work ahead, it is becoming clearer that a balance-sheet of the gains and losses for the developing countries, individually or collectively, would be impossible to strike now, and a clear view would not be easy before the middle of the next decade.

In briefing newsmen in Brussels (according to an IPS report), an EC Commission top official reportedly said that in the short-term the industrial countries would increase their market share and developing countries would suffer, though they would benefit in the longer-term, when their industries become "more competitive" and the protected northern markets are prised open by the phase-out of the MFA.

This appeared to bear out the assessment by the Indian delegate, Amb. B.K.Zutshi who said "we have concluded the negotiations, but whether its outcome is going to be good or bad only time can tell".

Though the negotiations on texts have been concluded, and sealed, in fact there are negotiations continuing or slated to before the Uruguay Round accords enter into force in 1995 -- 1 January or 1 July.

For one thing, while the negotiations were brought to a close on 15 December by the GATT Director-General Peter Sutherland, a large number of the developing countries have not been able to conduct or complete their own bilateral market access negotiations in goods with the majors.

While any "offers" these countries had made before, and not taken back, will remain and the benefits would become available to the two majors, the two on the last day, while tabling their own "offers" reportedly have revised or withdrawn their earlier "offers" relating to one or the other developing country -- intending to use them to extract more concessions from the developing countries.

According to the current time-table (the Uruguay Round timetables have been so constantly changing that even this could be 'elastic'), the participants have to file their "schedules" -- tariff and non-tariff concessions, commitments in agriculture, and initial commitments in services -- by 15 February.

Between now and that date, when technically it is to be the process of "rectification" of the schedules at the end of every GATT Round, in terms of the Uruguay Round it will be available to be used to "add" concessions.

In sending his message to Congress about his intention to sign the Uruguay Round agreement, US President Bill Clinton made clear that his negotiators would continue to work to expand access on audio-visual and financial services, and on market access.

Before the negotiations were brought to a close in Geneva, EC negotiators had also said they would not be able to complete the product-by-product tariff line negotiations with all the participants, except for some 20-25 major trading partners, and that they would "sweep up" the rest after 15 December.

With the tariff cuts that would be provided by the two majors likely to stretch over 5-10 years, the real effect in terms of increased trade and exports would not be seen for a while by most of the developing countries. And in many cases where the tariff itself is not at the peak double-digit levels, the annual cuts could easily be negated by the exchange rate movements.

In agriculture, there is a built-in special safeguard clause to take account of exchange rate changes!

Agriculture and its products, while technically covered by the GATT, have actually escaped its disciplines since inception, and more so after the US first obtained its waiver, several of the Europeans and Japan had similar concessions in their protocols of accession, and the Europeans excepted themselves through the Rome treaty and the CAP.

One major benefit to many of the developing countries in the Southern hemisphere who export temperate zone products and have been priced out of their export markets because of subsidised exports of the US and EC, is that at long last there will be a change of direction, but at an even slower pace than they had bargained for even at the beginning of this month.

But the integration of the agriculture sector, though under its own disciplines, and though not as a derogation from the GATT, would begin in 1995 and be spread over six years.

The US-EC Brussels modification of the Blair House accord also means that in terms of subsidised exports the EC would have some flexibility in the earlier part of the implementation period of six years, so that any benefit in the reduction commitment of 36 percent of value of export subsidy and 21 percent in volume would be reflected in the market prices only in 2000.

While at the end of the six-year reform process, there will still be massive subsidisation of domestic production and exports by the countries of the North, and a high degree of protection into their markets, the agricultural reform process is to be continued, though its terms and conditions are to be periodically negotiated.

In that year though, the initial review process for the continuation of the agriculture reform programme will start (to be completed by 2001) and, unless the developing countries, organize and coordinate differently, it would still be a US-EC process whose results would be sought to be thrust down on the others.

In the Textiles and Clothing sector -- whose integration was seen by the EC official as a major benefit to the developing world, and was totted up by the GATT in its evaluation exercise of the benefits to the developing world -- would in fact be completed, and all the restrictions under it removed only in 2006 - January or July depending on when the Uruguay Round agreements enter into force in 1995.

With in fact 49 percent of the restrictions in place, in 'sensitive' and 'very sensitive' products due to be removed overnight only, the US and EC textiles and clothing industry could be expected to make another diehard attempt at retaining and perpetuating the MFA or MFA-type restrictions.

In the Services area, by agreeing to the US-EC last minute 'agreement' to allow the negotiations for initial commitments in financial services to continue for another 18-24 months, and in effect separating these negotiations from the overall Uruguay Round "horse trading", developing countries, particularly the larger ones among them -- Korea, Hong Kong, the Asean, India, Pakistan, Egypt, Nigeria, Brazil (all mentioned by the US as its targets for full liberalization) -- would be under pressure bilaterally to make more "concessions" which would mean more losses to them.

The only other services sector, where too negotiations are to continue for the same period, is in respect of "movement of personnel", one of the modes of delivery where the industrialized countries, and even some of the more prosperous developing ones, have either tentatively put limitations or made no offers.

But it would not be easy to make a tradeoff.

And in many developing countries, the Treasury officials will be involved in the financial services questions and, in some of them at least, those in power now and pursuing a liberalization policy under the tutelage of the Fund and the Bank, would be "tempted" to lock in their successors by making their current autonomous liberalization into a GATS/WTO commitment.

Even the Europeans who have prided themselves in having kept the audio-visual sector out, by entering several MFN exemptions in this sector, would not really be "free" for ever.

The GATS itself requires periodic rounds of negotiations for further liberalization, and the next such exercise five years from the entry into force -- so that in 2000 a new GATS round would have to begin and areas where no concessions have been made or limitations have been entered would all be the subject of negotiations.

In the area of rules, where the developing countries have made some gains -- in terms of the current situation -- negotiations are to continue in the Anti-Dumping Committee, "as soon as possible" (after the Marrakesh Ministerial meeting adopts a decision to this effect, as part of the Final Act) over the issue of "circumvention" where no agreement could be reached and was left out of the text finally approved.

Both the US and EC, which have been using anti-dumping investigations as an instrument of selective trade protection, and in the US where enterprises can start the process and use it to harass their competitors, can be expected to come back and press their views again, while (unlike in the Round), there will be nothing for developing countries to "trade off".

While the antidumping text is an improvement over the current anti-dumping code (of the Tokyo Round), whose benefits are available only to its signatories, it is still one where during the course of investigation the importing country authorities have considerable leeway and discretion in decisions.

While the US failed to make the WTO dispute settlement process on this a "formality" to accept what they decide, complainants before panels would still have a hard time to get their view against the decisions of authorities accepted - both on facts and on their interpretation as well as on interpretation of rules where they are ambiguous.

The "standard of review" provision regarding the panels' jurisdiction in anti-dumping is to be reviewed after five years, when it is also to be decided whether it should be extended across the board to the work of other panels.

The extension of this also to the subsidies agreement and the investigations and decisions of domestic authorities in this was just narrowly prevented on the very last day. But the US and EC and other industrial countries can be expected to come back to it.

In other areas of rules, the developing world has made some gains -- including in the safeguards agreement spelling out clear rules in use of Art XIX of the GATT, and for an end to the grey area measures, which have to be either brought under the GATT disciplines and in conformity with them or phased out.

But the agriculture agreement has its own safeguards arrangements, and the textiles one too during the transition period - so that the real benefit may be in the future, and could even prove a handicap when developing countries try to have recourse to it.

One area of fairly clear and tight rules, that would work to the detriment of the developing world, are the rules on intellectual property -- where there will be global norms and standards and their enforcement, domestically and failing that resolution via the WTO dispute settlement mechanisms.

The norms and standards are in many cases higher than the prevailing international norms under the various agreements of the World Intellectual Property Union, and the TRIPs agreement itself is one that will be more difficult to amend than some others.

Within that agreement, the provisions that enable countries not to apply patent protection to biological processes, provided they give sui generis system for plant varieties protection, is to be reviewed after five years.

If by then, as the bio-tech industry in Europe is hoping there are revisions in the European Patent treaty provisions to enable protection of plants and animals (now not allowed under the present interpretations of that treaty), there would be pressures for others to fall in line.

The United States already has some very tight patent protection in this area -- and the only thing standing in the way of "patenting" of human beings is the Constitutional prohibition against slavery, but one that could be got around through constructive interpretations by the Supreme Court.

In Services, where the GATS text in some ways is an improvement on the present GATT, and with specific provisions about developing countries, translating these into practice and for example ensuring access of countries from the developing world to technology on commercial terms (often denied to them even now) or access to markets and networks, would again depend on future course of negotiations.

If they be as it happened in the final days of the Uruguay Round -- and there is no reason to think that history will not be repeated -- they may again be bystanders.

One thing is certain though.

In its media blitz to put pressure on negotiators, the GATT and its economists and head, have been talking of the benefits in income added to the world economy and of the jobs created.

The Uruguay Round and its detailed and complex texts, and its dispute settlement mechanisms and processes, as well as the several quasi-judicial processes that governments of the participating countries have to put in place in their own countries, would need an army of lawyers, accountants and specialists to "assist" the courts.

In those professions at least, the WTO and its annexed agreements, will create jobs and expand the numbers of these professionals.

The State, in classical Marxian view, might wither away from the economy, but would have an expanding and intrusive presence in the enforcement of the international rules for a national laissez faire.