GATT MINISTERIAL: LAUNCHING THE NEW ROUND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000201370001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 25
• Document Creation Date: December 22, 2016
• Document Release Date: February 23, 2011
• Sequence Number: 1
• Publication Date: September 4, 1986
• Content Type: MEMO

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V iki un D c.IOSOS
DIRECTORATE OF INTELLIGENCE
4 SEP 1986
FROM: 25X1
Chief, Economics Division, OGI
SUBJECT: GATT Ministerial: Launching the New Round
Attached is a typescript produced by the Economics
Division. It examines the upcoming GATT ministerial in Punta
del Este, Uruguay, 15-19 September, and includes a matrix on key
country positions on main issues to be discussed. If you have
any questions or comments,
please contact
our Trade
25X1
25X1
25X1
Attachement:
GI M 86-20210C, September 1986
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a yr v JQ%.nrlI
SUBJECT: GATT Ministerial: Launching the New Round
OGI/ECD
(4 Sep 86)
Distribution:
Copy 1- Harvey Bale - USTR
2 - Charles Blum - USTR
3 - Douglas Newkirk - USTR
4 - Allen Lenz - Commerce
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H.P. Goldfield - Commerce
Henry Misisco - Commerce
Ralph Johnson - State
Ann Holliek - State
Alexander Platt - NSC
Tim Hauser - White House
Michael Smith - USTR
Robert Cornell - Treasury
Joseph Dennin - Commerce
Byron Jackson - Commerce
Ann Hughes - Commerce
Marjorie Searing - Commerce
Douglas McMinn - State
John Welking - State
William Barreda - Treasury
Douglas Mulholland - Treasury
Michael Driggs - White House
Stephen Danzansky - NSC
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Central Intelligence Agency
Washington. D. C. 20505
DIRBCItI ATE OF INtELLICJE
4 September 1986
GATT Ministerial: Launching the New Round
S niT ary
Trade ministers from the 92 GK1T member countries will have their hands
full when they meet in Punta del Este, Uruguay on 15 September to launch a new
round of multilateral trade negotiations. Conflicts over agriculture and the
treatment of new issues-services, Intellectual property rights, investment--
prevented the Preparatory Committee from agreeing an a single draft agenda for
the new round for the Ministers to approve. Instead, three prospective
agendas will be considered. The Ids' priorities in the new round are for
developed country concessions on tropical products, reduction in developed
country agricultural subsidies, and special and differential treatment for
Ids. Developed countries, an the other hand, stress the need to include new
Issues, particularly services, and to strengthen GATT procedures. Most
developed countries also favor a close look at agriculture, but the BC remains
committed to protecting its O own Agricultural Policy (CRP). Mb ezpact
agreement on agriculture will be difficult to reach given the inportanee of
liberalization to the Ids and the W's camnitmcnt to protect the CAP. I
hardliners, led by Brazil and India, have continued their efforts first to
block a round, and now to stall It and prevent the inclusion of new issues.
116 believe their intransigence has alienated many Ids and even other
handliners like Argentina, leaving then increasingly Isolated. Most (T
members support the launch of a round and are optimistic their efforts will be
successful. They will work to achieve a concensus draft without prejudicing
their positions In the negotiations, but disagreements are likely to surface
again once negotiations get underway.
This memorandum was prepared b the Trade Issues Branch, Office
of Global Issues
GI M 86-202100
September 1986
Dopy of
25X1
25X1
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GATT MINISTERIAL: LAUNCHING THE NEW ROUND
OBJECTIVES FOR THE NEW ROUND
Trade Ministers from the 92 GATT member countries will be meeting 15-19
September in Punta del Este, Uruguay to launch a new round of multilateral
trade negotiations. GATT members believe there has been a severe
deterioration in the trade environment since the Tokyo Round (1973-79) and
question whether GATT's structure and enforcement abilities adequately meet
today's trade needs. They criticize members' growing failure to adhere to
GATT rules, to meet past GATT commitments, and to resist new protectionist
measures. Developing countries have been particularly critical of actions
which they say restrict access to developed country markets.
In this environment, GATT members have ambitious, although often
divergent, objectives for the negotiations:
o Preventing new protectionist measures and dismantling existing trade
barriers;
o Increasing GATT-member discipline and responsibility in adhering to
GATT regulations,
o Reviewing the codes negotiated in the Tokyo Round such as import
licensing and government procurement;
o Bringing agriculture and textiles into the GATT system; and
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o Expanding GATT coverage into the areas of trade in services,
intellectual property rights (IPR), and foreign investment.
A Preparatory Committee (Prepcom) met from January to July of this year
to review the 28: specific issues members proposed for inclusion in the New
Round. Because GATT members hold fundamentally different views on how these
issues should be handled, progress has been difficult. For example, the EC,
led primarily by France, blocked acceptance of the agricultural language
because it specifically referred to subsidies; Australia, Argentina, and
many other LDCs, on the other hand, want strong language and the reference
to subsidies included. On the new issues, Brazil, India and the LDC
hardliners strongly oppose including them under GATT and have refused to
participate in the majority drafting process primarily for this reason.
Substantial disagreements over these issues prevented the Prepcom from
agreeing on one draft agenda--instead three alternative agendas will be
presented to the ministers at Punta del Este.
Many developing countries argue that the agenda is overloaded and that
previous commitments--specifically those from the 1982 Ministerial and
Tokyo Round--should be met before GATT is expanded to cover new issues.
However, they support a New Round as the best way to improve regulations
governing trade in agriculture, to focus on tropical and natural resource
products, and to enhance the special treatment afforded to LDCs. Most LDCs
are extremely wary of the new issues, although some plan not to block their
inclusion on the agenda in the hope of getting better treatment for LDC
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priority issues. The developing countries' main fear is that devloped
countries will seek to link increased liberalization in goods trade to an
agreement reducing LDC barriers to developed-country services like banking
or telecommunications. We believe many LDCs probably will not participate
Developed countries want the New Round primarily to improve the
functioning of the GATT system, strengthen requirements authorizing
temporary import restraints, increase the adherence to GATT rules by the
more advanced LDCs, and expand GATT to cover services, IPR and investment.
Even though there are few international standards and growing protectionism
in these new areas, we believe several developed countries would prefer to
in negotiations if such linkage is made.
Because of these divergent views, the ministers will be faced with the
task of distilling three draft agendas forwarded by the Prepcom:
o One is a compromise text negotiated among forty-eight developed and
developing country GATT members that contains unresolved language on
textiles, the three new issues and agriculture. (1)
o The second draft, supported by ten hardline LDCs led by Brazil,
excludes investment, services, and IPR because the sponsors believe
that GATT lacks the authority to handle these issues. (2)
o In an attempt to forge a compromise, Argentina, one hardline
co-sponsor, drafted a third agenda which is similar to Brazil's but
includes services.
limit negotiations until they are studied further.
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Most countries are optimistic that a round will be successfully launched.
Although GATT representatives are working informally to resolve differences
before the ministerial, many are convinced that the disputes now require a
political resolution by the ministers in Punta del Este. Even if the agenda
problem is resolved, we believe these issues will continue to cause
controversy throughout the New Round negotiations.
(1) Includes: Colombia, Switzerland, Australia, Austria, Canada, Finland,
Iceland, New Zealand, Norway, Sweden, EC (12), United States, Japan, Chile,
Hong Kong, South Korea, Jamaica, Pakistan, Romania, Hungary, Turkey,
Uruguay, Zaire, Thailand, Singapore, Malaysia, the Philippines, Indonesia,
Bangladesh, Ivory Coast, and Sri Lanka.
(2) Brazil, India, Egypt, Yugoslavia, Argentina, Peru, Cuba, Nicaragua
Nigeria, Tanzania.
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COMPARISON OF
KEY DRAFT DECLARATIONS
The Ministers in Punta del Este will consider three drafts forwarded by
the Preparatory Committee. The first was submitted by Colombia and
Switzerland and is the result of hard negotiating by a majority of GATT
members (G-48) in an effort to reach a consensus. The few topics not fully
agreed upon are in brackets. The second draft is sponsored by Brazil and
nine other hardline developing countries (G-10). It considers negotiations
only in goods. Argentina broke with the second group in an effort to reach
a compromise. The draft is similar to Brazil's but allows consideration of
services; Argentina has said it will withdraw its draft if a more
acceptable compromise is reached.
G-48 Draft Declaration G-10 Draft Declaration
Standstill/Rollback Standstill/Rollback
Safeguards Safeguards
Agriculture Agriculture
Tropical Products Tropical Products
Tariffs Tariffs
Natural Resource-based Products Natural Resource Products
Nontariff Measures Commodities
[High Technology Products] *Special Procedures for LDCs
[Textiles and Clothing] *Parallel Efforts in Monetary and
GATT Articles Financial Fields
Tokyo Round Agreements
Subsidies and Countervailing Measures
Dispute Settlement
[Trade Related Aspects of Intellectual Property Rights]
[Services]
[Trade Related Investment Measures]
Functioning of the GATT System
*Referred to in Objectives of G-48 text.
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KEY COUNTRY POSITIONS ON THE MAJOR ISSUES
In order for the GATT Round to get underway, let alone succeed,
compromises will have to be made by a number of countries on several issues
ranging from agriculture to intellectual property rights.
AGRICULTURE
The members of GATT remain polarized over the organization's continued
tolerance of protectionism and export subsidies in agriculture. The issue
has caused controversy in the past, but now LDCs are joined by several
developed counties in making liberalization a top priority. Argentina,
Uruguay, Canada and Australia have been most outspoken. On the other side,
Japan and the EC have agreed to include agriculture but want its "special
characteristics" recognized. Although there is an apparent disparity of
views among the EC members, most are probably simply letting France bear
the burden of protecting the CAP. The United States wants broad treatment
to phase agriculture into GATT disciplines.
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Aaiaultuss Services
maecpea. Supports broad Generally sup-
Oona?udtt negotiations con- ports US pro-
fined to CTA; posal, France
Francs highly in particular.
protective of CAP.
intellectual
Prspscty Rights
supports, but has
not elaborated
position, would
probably prefer
issue handled in
WM.
Supports broad Supports Us posi- Supports.
trsandsntI but tion; priorities
recognizing are finance,
'spacial char- insurance,
acteristics.I high teen.
Ober Canada and Canada, Sweden, Do not appose,
O= Australia strongly Australia, and but have not
support broad nego- Israel support elaborated
tiatians; Europeans Us proposal. position.
favor rarsw
interpretation with
regard to 'special
characteristics. I
Brasil High priority, Stc gly apposess Strongly apposes
broad trsatssnt; claim GET not claim GAIT!
negotiations competent; draft not competent;
confined to agenda only refers already covered
to Cm special to negotiation by ,RN.
and differ-n- an goods; may
tial treatment support separate
should apply. negotiation an
goads and aervioss.
Invemteent
Generally supports
TRIM only; has
not elaborated
position.
Supports TRDIS
only.
Generally support
TRDB only, have
not elaborated;
would prefer
further study.
Strongly apposes;
believ.s'inclu-
sion would
threaten notion-
al cove eighty;
GAIT not
competent to
handle issue.
India Supports negation- Strongly apposes; Supports Bramil's Supports Brasil';
tiers. aligned with position. position; belies..
Brazil. foreign irnastsnnt
is substitute
for trader should
be addressed
elswtars such
as Iiorld Bank.
ABa Highest priority, Gas priority;
supports booed wary of us
treatsant; neon-re- proposal, but
cipcacal canoes- will not block.
;ions; special
and differen-
tial trsatsskkt
for [DC's.
Other Support A~ Moderates Jamaica
IJOOs position, Argentina and Colabia s?
suppocta port AsfAIM posi-
Brasilian post- tion; hardliners
tion, but favors Y goslavia ad
even stronger Eavpt support
language. Brasil.
te+uvrll 'op priority;
conosrrsI with
US fans legisla-
tion and US/EC
disputes.
Us am" Supports broad
negotiations
including subsi-
dies ad non-
tariff berriere;
not confined
to CTA.
Flexible on
issue, but
is not a
priority.
Strongly sQpocts
negotiation of
usbr.lla code
with sector-
specific undse-
standings.
Ham not apposed, Not a priority but
but are wary of will not blocks
inclusion; Malaysia opposes.
Singapore
Hardliners Peru,
sgypt.b;goslavia
oppose; moderates
have not elabo-
rated position;
accept inclu-
sion but want
participation
optional.
Ian priority,
but is flexible;
prefers issue
loft to WIPO.
Are extrawly very
of lemma ad have
withheld positional
moderates not block,
but hardliners
Yugoslavia and
Egypt appose;
Kars supports
TRW only.
Leo priority, but
not blocking
in order to
play role of
conciliator.
supports GAIQ?
protection for
counterfeit
goods, patents
and copyrights.
hints GRIT to
expand rules to
cover g>,vesnmint
investment masures
that distort or
divert trade flaws.
Special and
Diffssntal
TksatieK
Supports, wants to
be seen as strong
supporter of LAC
interests.
Holds the sae
vicar as the W.
Believes VRA's
have merit,
should be recog-
nized as legiti-
mate safeguard
action.
Supports n ego-
tiations, but
opposes recog-
nition of gray
meaues.
Support as a Support nsgotia-
general objective tiara.
of the round.
Supports language
in all areas
of declaration;
pctposed davel-
aped countries
adhere to
props, results
quantified,
High priority,
negotiations in
first stags
implemented
i ne;
apposes recog-
nition of gray
a.amures.
non-recipcocol.
Supports Brazilian Supports
position. Brazilian
position.
Strongly supports
iaprouesents
in this area;
Singapore opposes
graduation.
High priority;
nit of
~
sesskres.
Standstill
Rollback
Supports cased imsent;
primarily inter-
ested in standstill
to halt US actions.
Supports, but opposes
including existing
grey measures
in rollback.
Switzerland
supports strong
camsitant, but
rollback should
be result of
negotiations,
US position
too strong.
Proposed standstill/
rollback as pro-
condition to
launch; developed
countries take action
in favor of LCC's.
Generally supports
Brazilian position.
Supports standstill
ssppcially for
developed coun-
tries, opposes
Brazilian
proposal.
Strongly supports High priority; Support very strong
believe past apposes inclusion comitant.
ca dtmnts have of grey measures.
not been nest.
eu c orts improve- supports L C
ants in this positions.
area.
supports as
objective, also
supports grades'
tion.
Supports early
agra ant to
reinforce and
clarify GATT
disciplines;
supports inclusion
of gray aasres.
Supports comdt-
ment, but apposes
Brazilian posi-
tion because it
delays launch.
Supports standstill/
rollback amsitment;
should apply to all
GATT nenbers.
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Positions:
o The developed countries are split in their support for agriculture
negotiations. The EC has made a general commitment to discuss agriculture
in the round, but the French are highly protective of CAP and refuse to
discuss subsidies. They also want discussions confined to the Committee
on Trade in Agriculture (CTA) in order to reduce exposure. The recent
disputes with the United States over Spanish and Portugese accession have
probably reduced France's inclination to be accommodating. On the other
R hand, Australia and Canada strongly support broad negotiations on
agriculture wherever appropriate and want strong language that
guarantees that certain issues such as subsidies will be negotiated.
o The hardline LDCs, for the most part, support agriculture negotiations.
Argentina has been the most outspoken, supporting negotiations confined
to the CTA and favoring the elimination of subsidies. Partly with the
hope of getting stronger language on agriculture, Argentina broke with
the hardline countries to become more flexible on new issues.
o Virtually all LDCs hold agriculture as their top priority. Several have
met with developed countries in a group of non-subsidizing agricultural
exporters to coordinate positions. The most recent meeting
of these countries included Canada, Australia, Argentina, Brazil,
Colombia, New Zealand, Uruguay, Chile, Hungary, and the ASEAN countries.
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Outlook:
We expect agriculture to be one of the most contentious issues
discussed
at the Ministerial as well as in the negotiations. Since GATT's inception,
efforts to liberalize agriculture along with other products have been
successfully resisted by the EC. French Trade Minister Moir has said that
France cannot accept language that mentions export subsidies because of its
domestic political sensitivities--even though he knows it will be taken up.
Because of this stance, the EC will probably find itself at loggerheads
with Australia, as well as numerous LDCs over the inclusion of subsidies.
SERVICES
Since GATT was created, services--telecommunications, banking,
insurance, construction--have become a significant portion of international
trade, particularly for developed countries. However, no international
regulatory framework for trade in services exists, and barriers to trade in
services have been- rising, particularly in LDCs. For example, Brazil
reserves part of its computer-related market for domestic producers only.
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The United States has proposed that GATT members negotiate a broad
framework, or umbrella agreement, of binding principles and procedures,
followed by sector-specific negotiations that address barriers in each
sector. Accession to a services code would be voluntary.
Positions:
o Most developed countries have endorsed the US proposal, although many
have not formulated a detailed position and plan to wait until the actual
negotiations to do so. The EC, and France in particular, believes that
its service industries are highly competitive and they would benefit from
the negotiations. Most countries would like to continue to protect
certain sensitive sectors.
o Hardline LDCs such as Brazil and India strongly oppose negotiations on
services, arguing that GATT is not competent to handle the issue. If
negotiations take place, they must be outside GATT and not in conjunction
with goods negotiations. They state that GATT rules must be formally
amended if such agreements are to be brought in.
o The moderate LDCs do not actively support services negotiations because
they have other priorities and do not understand what the talks would
entail. They will not block the negotiations, however, and hope to gain
more support for their key issues in return.
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INTELLECTUAL PROPERTY RIGHTS
Trade in counterfeit products--those that infringe on patents,
copyrights, and trademarks--has become a serious problem in international
trade, affecting both developed and developing countries and involving a
wide range of goods. GATT has a working group to examine part of the
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problem, but the United States has proposed that GATT take multilateral
action to reduce trade in counterfeit goods, raise the minimum standards of
protection, and strengthen protection for new technologies. Many countries
argue, however, that the issue is already handled in the World Intellectual
Property Organization (WIPO)
Positions:
o The developed countries have given lukewarm support to this issue. While
they agree there is a problem, many countries, including the EC and
Japan, have not elaborated their position and probably prefer that the
matter be left to WIPO.
o The hardline LDCs oppose negotiating this issue in the GATT for the same
reasons they oppose negotiating services. Brazil also believes that
negotiations on this subject are intended to maintain developed-country
dominance of patented and state-of-the-art technology at the expense of
LDC interests. They believe WIPO is the proper forum.
o Moderate LDCs have not elaborated their positions on this issue; they
have indicated that, while they will not block the negotiations, they
would prefer to leave the issue to WIPO. Several of the ASEAN countries
believe they have made significant progress on this issue in bilateral
negotiations with the United States and do not relish the thought of
making further concessions in the multilateral arena.
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Outlook:
If the treatment of services is resolved, GATT members will likely
agree to some treatment of IPR. Many countries would probably want to
continue work on a counterfeit code for trademarks, rather than expand
their work to address patents and copyrights.
INVESTMENT
GATT has never addressed how government investment policies--such as
local content and export performance requirements--distort and divert trade
flows. The United States has proposed that GATT members negotiate ways to
increase discipline over these measures in order to stimulate flows of
foreign direct investment and thereby encourage world economic growth.
Many countries have attempted to focus GATT discussions on trade-related
investment measures in order to protect their domestic investment
policies.
Positions:
o Most developed countries, including the EC, Japan, and Nordics, weakly
support negotiations of trade-related investment measures (TRIMS) only;
France is somewhat more supportive. Their positions on this issue are not
well defined. They also believe that pushing this issue may alienate the
LDCs and adversely affect negotiations on more important issues,
especially services.
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o Hardline LDCs, specifically Brazil and India, oppose discussion of
investment policy, stating that GATT has no competence in this area and
that investment issues should be handled in a more appropriate forum
such as the World Bank.
o Moderate LDCs, like the ASEAN countries, argue that investment strikes at
the heart of national economic and social development policies and
therefore should be left to the host government. Malaysia and many other
LDCs have severe reservations on the issue.
Outlook:
Countries have generally not made public their positions on this issue,
and ultimately may only support the most vague language allowing maximum
flexibility. Negotiations probably will be optional, and most LDCs will be
reluctant to participate. Most GATT members believe more study needs to be
done. We believe that at a minimum GATT members will agree to set up a
study group on expanding GATT to cover investment and at a maximum agree to
negotiations on TRIMS, allowing great flexibility in participation, and
perhaps special treatment for LDCs.
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SPECIAL AND DIFFERENTIAL TREATMENT FOR LDCs
LDCs benefit from GATT's most favored nation provisions, but Article 18
allows them great leeway in undertaking reciprocal liberalization of their
trade policies. Other benefits include preferential tariff rates (Global
System of Trade Preferences) and specific privileges from the Tokyo Round
negotiations. During the last decade, however, several LDCs--such as
Singapore and South Korea--have become increasingly competitive, and
developed countries believe these LDCs should take on increasing
responsibility to liberalize their economies and grant reciprocal
concessions. LDCs strongly oppose this concept of 'graduation' from
preferential treatment. They believe they have not been able to draw full
benefits from the system because of LDC debt burdens, developed-country
protectionism, and weak commodity markets-in key LDC exports
Positions:
o Most developed countries view preferential treatment as necessary for
some LDCs, but it should not be permanent nor apply to all LDCs. They
believe that in the New Round it should be an objective rather than a
topic for negotiation, and LDCs should bargain for concessions. The EC
and Japan view themselves as intermediaries in negotiations between
developed and developing countries. They too, however, will be looking
for the more developed LDCs to take increased responsibilities
commensurate with their level of development.
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o Hardline LDCs believe that special and differential treatment should be
specified in all areas of the negotiations. They propose that developed
countries be required to follow a specific liberalization program, and
actions they take in favor of LDCs should be quantified.
o Moderate LDCs support preferential treatment for LDCs and have agreed to
language in the G-48 agenda that calls for GATT members' continued
attention to preferential treatment. However, the LDCs reluctantly concur
that this treatment should decrease as their economies develop.
Outlook:
The issue of graduation is a touchy one for the LDCs, and they will
resist any attempts to single out countries and industries for
liberalization. In addition, several countries such as Brazil have severe
debt burdens and may use this as justification for continued protection.
Most of the G-48 agenda language on special and differential treatment has
been resolved, with paragraphs on the need for special treatment balanced
by sections recognizing that the treatment is temporary and the advanced
LDCs should take on increasing responsibilities to reciprocate concessions.
GATT members increasingly are resorting to informal safeguard
actions--such as negotiated bilateral voluntary restraint agreements (VRAs)
or orderly marketing arrangements (OMAs)--to protect domestic industries
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threatened by imports. These agreements, often known as 'grey area'
measures, violate GATT rules which state that restrictions must be applied
evenly to all imports of a specific product regardless of source. In
addition, GATT-authorized temporary restraints that protect infant
industries or are applied for balance of payments reasons are increasingly
becoming permanent and some members claim they retard LDC structural
adjustment. Most GATT members agree changes are needed but disagree over
whether grey area measures should be addressed in GATT.
Positions:
o Developed countries strongly support safeguards negotiations. The EC
and other OECD countries believe grey measures have merit, should be
discussed as a legitimate safeguard action, and perhaps brought under
GATT jurisdiction. The Japanese are particularly interested in this
issue; they believe that grey area measures should be eliminated rather
than brought under GATT.
o Brazil and the hardline LDCs have proposed that comprehensive
safeguard negotiations take place independent of the launch of the round
or in the first stage, with the results implemented immediately. They
make no mention of grey measures but probably oppose them.
o Moderate LDCs strongly support safeguard negotiations. However, most
oppose grey measures because they believe the measures are discriminatory
and would lead to further deviation from GATT's Most Favored Nation
principle by allowing selective application of rules. The ASEAN countries
on the other hand support grey measure discussions.
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Outlook:
Most GATT members will probably be looking for an early agreement on
safeguards. Because of the controversy over selective actions such as grey
measures, discussions will probably initially focus on strengthening
existing rules. The current language in the declaration is vague enough to
allow discussions on the issue if desired.
STANDSTILL AND ROLLBACK
Most GATT members agree that the key to a successful New Round will be
a meaningful commitment to freeze protectionist measures when the round is
launched (standstill) and dismantle measures inconsistent with GATT rules
during the course of negotiations (rollback). LDCs, in particular, are
looking for a strong commitment from devleoped countries, especially the
United States, to halt the rapid spread of protectionism. Developed
countries support standstill/rollback but want it to be reciprocal and
apply to all members.
Positions:
o Japan, the EC, and most developed countries support standstill/rollback,
although they are more interested in the standstill commitment to halt US
actions. They do not favor a timetable or specific program. They oppose
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making standstill/rollback a precondition to negotiations.
o Hardline LDCs (Peru, Argentina, Yugoslavia, Egypt) support the strong
language in the G-10 draft because they believe it is the only way to
commit GATT members, particularly the developed countries, to fulfill
the pledge. They also support language on special treatment for LDCs.
Most LDCs, however, balk at signing the pledge called for in the G-10
draft and would not bind themselves by the legislative approval required.
o The moderate LDCs generally support the G-48 text but question whether
it is strong enough to prevent US protectionist actions. They probably
would like to see even stronger language in the draft agenda.
Outlook:
During the Ministerial, moderate LDCs may seek stronger language on
standstill/rollback, while the hardliners will probably be forced to accept
some version of the G-48 text on the issue. Once the round gets underway,
the successful adherence to standstill/rollback will do much to set the
tone for the negotiations. Having made the commitment, most countries will
probably be reluctant to impose protectionist measures, at least for a
while. If members fail to adhere to the commitment, however, many will
probably question the utility of the negotiations.
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IMPLICATIONS FOR THE UNITED STATES
We believe the US negotiators in Punta del Este will have their hands
full forging a consensus on a draft agenda for the New Round. Resolving
disputes over the language on agriculture and the new issues may overflow
into other issues, such as special and differential treatment, as countries
attempt to bargain for last-minute concessions. LDCs will stand firm in
their support for strong language on agriculture as a result of growing
dissatisfaction with recent US agricultural policy such as the Farm Bill
and subsidies to the USSR and Possibly China. They would seriously question
the value of participating In a new round if their concerns over
agriculture are not met. Many developed countries--Australia and
Canada--also support strong language on agriculture, which has isolated the
EC and given them a siege mentality similar to that at the 1982
Ministerial.
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Overall, this multilateral trade round has the most ambitious agenda
yet attempted by GATT members. If the negotiations are successful, they
will go a long way toward shoring up the problems within GATT and
broadening its mandate so its framwork is more responsive to the realities
of the trade environment. Members hope this round will carry the trade
system into the 21st century. While several countries have argued that the
agenda may be too full and positions and goals too divergent to allow any
sort of meaningful agreements to be reached, interest in the New Round has
grown during the preparatory process. Most realize that failure would lead
to an increasingly fragmented international trade environment and reversion
to bilateralism; complete failure could even spill over into other
areas--namely debt negotiations. Members therefore have great interest in a
successful launch, meaningful negotiations, and continuation of the
multilateral system whch has been the foundation of the world trade system
for the past several decades. Consequently, we believe that a new round
will be successfully launched, but the negotiations will be long and
concessions hard-fought.
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