7:58 AM Dec 17, 1993


Geneva 17 Dec (Chakravarthi Raghavan) -- An US attempt to get one of the agreements in the Uruguay Round package to be put into effect immediately through an agreed interpretation of the relevant GATT article has been postponed for "further consultations".

At the meeting of the GATT Council on Friday, the US brought up a proposal for an agreed interpretation of Art XXXV of the General Agreement -- along the same lines as the Uruguay Round agreement (in the Final Act) for an Understanding on the interpretation of this article.

Art XXXV. 1 of the GATT, the so-called "non-application" provision, enables a contracting party not to apply the General Agreement as a whole or Art II (schedule of concessions) to any other contracting party, but under two conditions:

* the two contracting parties have not entered into tariff negotiations with each other, and

* either of the contracting parties at the time either becomes a cp does not consent to such application.

The purpose of this was to ensure that any country seeking to join, negotiates with all the existing cps to exchange concessions, and at the same time protect the weak against the strong by not allowing the strong to exercise this power and extract more concessions than the applicant seeks to obtain.

The WTO provisions now, Art XIII. Para 1, stipulates "This Agreement and the Multilateral Trade Agreements in Annexes 1 and 2 shall not apply as between any Member and any other Member if either of the two Members, at the time either becomes a Member, does not consent to such application".

Para two makes clear this may not be invoked as between original members of the WTO (namely, those GATT members, with schedules, who become WTO members at inception) unless Art XXXV had been invoked as between the two.

In the case of China, whose accession is before a working party, and in parallel, as well as part of the Uruguay Round, China has been seeking to exchange tariff concessions or negotiate on offers, there has been no negotiations with the United States.

The US clearly wants to negotiate from a position where it would be able to deny China the benefits of the tariff concessions made and bound by the US in the GATT, if the US is unable in bilateral bargaining to extract large market access concessions from China.

But if China completes its negotiations with others, and holds tariff negotiations with the US, with Chinese entry assured by two-thirds vote in any event, the US would find itself unable to exclude China and use the threat of it as a weapon to get more concessions -- something it would be able to do if the Chinese are not able to become a GATT cp before the WTO comes into being.

When the US proposal for interpretation of Art XXXV (on the same lines as the understanding in the WTO) issue came up in the Council, and when members wanted to speak, the Chairman announced that the United States wanted to hold further consultations and the issue would hence come up before the meeting of the GATT Contracting Parties.

This annual meeting, normally held in December, has now been put off to 25 January.

Earlier, the Council accepted the requests for accession from Armenia, Latvia, Moldova and Ukraine and set up working parties to examine these requests. There are currently 15 other countries also seeking accession, and whose requests are at various stages before separate working parties. These 15 include: Albania, Algeria, Belarus, Bulgaria, China, Croatia, Ecuador, Honduras, Mongolia, Nepal, Panama, Russia, Saudi Arabia, Slovania and Chinese Taipei.

In other items on the agenda, the adoption of the first banana panel report against the EC was again blocked - with the EC withholding its consensus, and Jamaica and some of the Caribbean exporters wanting the issue to be taken off the agenda altogether, while earlier, Costa Rica and other Latin American banana exporters pressed for its adoption, and this was supported by the United States.

The report of the second banana panel, one looking into the EC's Single market regime in force since 1 July, is expected to be in the hands of all Contracting Parties in January.

But the EC, as part of the Uruguay Round tariff negotiations, is negotiating with Latin American exporters where it hopes to trade off some more tariff quotas for these countries in return for the case itself to be withdrawn from the panel before its ruling is made known.

Brazil, on behalf of itself and Chile, Colombia, El Salvador, Guatemala, Thailand and Zimbabwe sought the establishment of a panel against the US legislation restricting the use of imported tobacco by its cigarette manufacturing firms.

The issue had come up at the last session of the Council.

Brazil said that the consultations held by it, and other complainants, with the US had produced no solution and sought a panel to be set up.

The Brazilian request got also the support of Argentina, Canada, India, Singapore, Nicaragua.

The United States did not give its consent -- arguing that it was still gathering information sought from it in the questionnaire during the consultations and the administration was also consulting Congress.

Under the procedures, the issue when it comes up at the 25 January Cps session, the establishment of a panel would be automatic.