7:19 AM Dec 22, 1994


Geneva 22 Dec (Chakravarthi Raghavan) -- The World Trade Organization will be ushered into the international system on New Year's day without any formal ceremony and won't even be up and running from then on unless some more pre-natal problems are resolved.

At the final meeting of the WTO's Preparatory Committee Wednesday, the date for the first meeting of the General Council of the WTO was set for 31 January, to be devoted to its most immediate and pressing "housekeeping" tasks to get the WTO "off to as prompt and efficient a start as possible", in the words of Prepcom Chair, Peter Sutherland.

But the unfinished business of the Prepcom means that some pre-natal problems have to be solved after 1 January, before that General Council can meet and deal with the house-keeping tasks.

Symbolic of the state of affairs was a brief "photo-opportunity ceremony" at the headquarters of the GATT Wednesday when, GATT Director-General Peter Sutherland unveiled the name-plate of the new organization at the entrance to the GATT building on Centre William Rappard.

Sutherland did the 'unveiling' after he was formally requested to continue in office and be the first WTO Director-General for 74 days (till 15 March) and he had agreed to do so.

The assembled GATT delegates, staff and some selected media persons who had been told privately about the ceremony and were on hand, clinked glasses and drank champagne.

Sutherland won't be around in Geneva on 1 January or even on 2: he will be away for the xmas/new year holidays.

Excepting for a small skeleton staff to service the depositing by countries of their ratifications of the WTO, the secretariat would begin to function only from the second week.

And since 1 January is a holiday anyway, and there would be no ceremony on inauguration day, Sutherland unveiled the new name plate -- with the still and television pictures embargoed for 1 January.

Later in the evening the new name-plates were removed, but the old was not put back and the GATT building on Thursday morning was name-plateless! But behind the front reception desk at the entrance hall the new organization's lettering in three official languages is already up.

On starting day, the WTO's will not have its own new logo.

Having apparently spent nearly 200,000 swiss francs on getting a logo designed among a short-list of competitors (from among a preliminary 10 or 12 chosen, not by public invitation or tender, but a private selection process of by the media office and secretariat officials) -- logo drawn up by two designers, one from Germany and another from Canada, were both turned down.

Though no official explanations or reasons were being given out by the GATT officials -- reportedly the designs were too near to those of some leading TNCs. Unlike in the case of the WTO acronym, where the "owner", World Tourist Organization was persuaded to allow the use of the same acronym by the World Trade Organization, similar logos to that of private enterprises could be both embarrassing and an infringement.

And the WTO, which will start functioning as an independent international organization without any formal link to the United Nations (or under its shadow as the GATT was, since legally GATT secretariat was the secretariat of the United Nation's Interim Committee for the International Trade Organization, and thus covered by the UN's personality, and immunity and privileges) will be in Geneva without a headquarters agreement with the host country assuring it, its staff and missions accredited to it, with all these accoutrements of international diplomacy.

The negotiations between the Prepcom and the Swiss authorities have run into problems, with the diplomatic community accusing the Swiss of going back on their promises. The Swiss had called off a 12 December meeting, saying they were not yet ready and no further meetings are set before year end. The same Prepcom team is now to continue the negotiations with the Swiss in the New Year (on 12 January).

On Wednesday afternoon, the Preparatory Committee, met and heard reports from its sub-committees about the unfinished work and mandate, set a 31 January date for the first meeting of the WTO's General Council, and adjourned after approving its report to the Prepcom.

Some weeks ago, the Prepcom, particularly its Institutional, Procedural and Legal (IPL) Sub-committee, chaired by Amb. Kesavapani of Singapore, had decided that it would tackle and complete only those questions, including notifications and other formalities under various agreements of the WTO, which had to be settled to get the WTO going on 1 January.

But as the Prepcom wound up Wednesday, even some of these had not been settled.

The report by Kesavapani showed that the most important among them is the constitution of the 10-member Textile Monitoring Body, with an independent Chairman, which is to supervise and monitor the Agreement on Textiles and Clothing.

Without the TMB, the Textiles and Clothing Agreement cannot be operational, and for developing countries this is a very important sector -- perhaps the only one with some promise of some benefits in the next century.

Without an agreement on the TMB (both the membership and the constituencies to be represented as well as the Chairmanship), the other "offices" (Chairmanship of the WTO General Council, and the Councils on GATT, Services and TRIPs) can't be settled either, developing countries have said.

Equally important perhaps as the TMB, is the difference over the "scope" of the General Agreement on Trade in Services and whether or not the GATS applies to bilateral and plurilateral agreements on social security, dispute settlement under bilateral investment treaties and the temporary movement of natural persons pursuant to bilateral agreements.

These may sound arcane, esoteric and nit-picking problems in the wider picture being sought to be presented of a "powerful" WTO, up and running from 1 January, binding nations "in a global cooperative endeavour to raise incomes and create good jobs through fair and open trade" -- to quote Peter Sutherland's words in a GATT secretariat's media blurb about the WTO.

But lurking behind arcane procedural disputes in any international system are issues of substance.

On both these issues, while it is generally a North-South divide, it is more particularly one pitching the European Union and the Europeans against the developing world.

If anyone had any illusion that these questions could be kept pending and debated endlessly (and decisions reached by consensus through exhaustion of developing country delegates in voicing objections), even as the WTO begins functioning in areas of primary benefit to the North, the interventions from developing country delegations, including India's, should have removed them.

Sutherland, the former Attorney-General of Ireland, who took on the job of GATT D.G. in July 1993 to do some push and pull to complete the Uruguay Round negotiations and had been speaking repeatedly about the "powerful" WTO and the rule-based system, has been speaking for sometime now about all this being dependent on the majors abiding by the WTO in "letter and spirit".

And while much of this last (in the literal sense) would flow over the holiday and the New Year celebrations, bets on the WTO observance in spirit are at best in the realm of conjecture and hope, with the odds tilted against it in terms of the actual implementing legislations and rules in the United States and the less-transparent European Union processes.

As of Wednesday evening, 71 governments have either formally ratified the WTO or have concluded their domestic process, and by 1 January some 100 members are expected to be on board.

The four Quad members (Canada, EU, Japan and US) have not yet deposited their instruments, and will jointly do so before the year-end.

In terms of pending applications for accessions, working parties are to examine requests for accession to WTO from Cambodia, the former Yugoslav Republic of Macedonia and Uzbekistan. This will bring to five working parties dealing with WTO accession. Such working parties have been already established from Croatia and Sudan.

The GATT accession working parties named to deal with applications of the Russian Federation and the Ukraine will now become WTO working parties to deal with their accession to the WTO.

A number of countries who have become GATT CPs but have not yet completed their Uruguay Round market access and services schedules and have them verified have been given time to do so.

On the work of the IPL subcommittee, Amb. Kesavapani reported that among the issues not resolved was the one relating to the TMB.

The developing countries had wanted six seats on the 10-member board, with four going to the industrialized countries. The industrialized countries, and particularly the EU had sought a 5-5 balance (as in the told Textile Surveillance body of the Multifibre Agreement with its more limited membership). As a compromise, Sutherland put forward a take-it-or-leave-it formula of six-four, with the constituency of the six so split that alteratively it would go to a country from the Third World and one of the non-EU members of Europe.

But the EU, particularly some of its members (Portugal, Italy and France) have reportedly not accepted this, and the EU has been holding to a 5-5 split resulting in a deadlock on this.

A number of developing countries took the floor after Kesavapani's report to protest the "selective implementation" of the WTO's annexed agreements and said the WTO was a single undertaking and one agreement, and the WTO would not be in a position to move ahead smoothly on 1 January without implementing all the agreements. Hong Kong, India, Brazil, Pakistan, Malaysia (for the Asean), Turkey, Morocco, Korea, Uruguay, Egypt and Mexico were among those who spoke.

Amb. Lang for the EU, to which these comments were addressed, said the EU fully understood the importance of the textiles and clothing agreement, that the EU was not yet convinced why the previous TSB's balance should be changed, but was willing to hold further consultations. For the US, Amb. Booth Gardner also said his delegation too was ready to renew consultations in January for a speedy resolution of the problem.

On the services issue, Amb. Manhusen, the Services sub-committee Chairman, in a statement on his own responsibility, said that no agreement had been reached in the discussions on the scope issue. Of the five areas dealt with, there was no longer a controversy on the scope of GATS relating to agreements on governmental measures relating to entry and stay of natural persons (where the issue was what constituted 'temporary' stay envisaged in the GATS and what constituted 'permanent' stay) and on measures relating to judicial and administrative systems and assistance among governments.

But there was no agreement on bilateral and plurilateral agreements and measures under them on social security, dispute settlement under bilateral investment protection treaties and measures relating to temporary stay of natural persons pursuant to a sectoral services agreement or annex.

On the social security issue, Manhusen said that some delegations believed the GATS agreement and its definition covered these questions, while others felt it was outside the scope.

But India, Pakistan and Egypt thereupon made clear that it was a Chairman's statement on his own responsibility, and not on agreed report binding on them. There was little doubt they said either on the work entrusted to the subcommittee or that the definition in GATS covered these agreements.

The EU, Canada, Switzerland and Australia spoke to present the opposite view, namely, that in the absence of an agreement these were excluded. Canada argued that "only a small group of countries had blocked an agreement".

India's Amb. Narayanan then intervened to say that the disagreement related to one sentence, and all five alternatives suggested in the subcommittee were rejected by the EU. It was open to any member to raise any issue in the Council of the GATS. But the Prepcom, he said, was not continuing the discussions that had taken place in the Services Sub-committee whose work was over."Governments must assume their responsibilities under the agreements," he added.

The Prepcom took no decisions, merely noting the report and the discussions.