11 April 1991 - 13 April 1991

A Review of the State of Play in the Uruguay Round Negotiations and of Future Developments in the GATT

Chair: Senator William E Brock III

Conceived originally as an opportunity to review the outcome of the Uruguay Round, in the event the title and terms of reference of this conference had to be completely revised. Nevertheless it proved quite timely, falling as it did between the revival of the negotiating process following the break-down in Brussels and the resumption of active negotiation once the US Administration has wrested from Congress, probably by the end of May, an extension of the “Fast Track” authority (by which the Congress binds itself to deal with whatever agreement may be reached without amendment).

Much of the discussion at the meeting was technical. Partly this was inevitable; but the tendency was perhaps encouraged by the break-down for the group discussions: the services sector, the products sector (including agriculture) and the institutional arrangements. Nevertheless, having got most of this off our chests in the course of the Sunday morning, we were able to have a lively general discussion in the afternoon at which the anxieties stemming from the risk of failure were aired.

On the positive side, it was clear that despite the breakdown at Brussels (some questioned whether that had been necessary or tactically wise), much had been achieved in the Round so far. The wish was expressed that this “acquis” should be preserved even if in the end there were no general agreement, though some doubted whether this would be possible. For example, there had been much progress on intellectual property rights, (trade-related intellectual property measures, or TRIPS, covering patents, trademarks, copyright, industrial designs, geographical indications, integrated circuits and trade secrets), following considerable movement by the developing countries. Remaining disagreements could probably be resolved. Any TRIPS machinery set up ought, it was argued, to be based in the GATT and not in the World Intellectual Property Organisation (WIPO).

In the area of services, it seemed unlikely that major regulatory reform would be achieved through a General Agreement on Trade in Services (GATS) despite a large measure of agreement on principles (national treatment, market access and most favoured nation (MFN) treatment), because disagreements over the scope persisted (e.g. shipping and air services) and because of the difficulties encountered in applying the principles to different sectors. Nevertheless, it was hoped that a dynamic process leading towards liberalisation would be established.

Less progress was noted in the area of investment because of disagreement between the developed and the developing countries over the regulation of trade-related investment measures (TRIMS), e.g. local content or export performance requirements. The developing countries who saw a trade-off here for concessions over textiles and agriculture, might nevertheless come around because of the increasing globalisation of national economies. There was thus a prospect of some minimal agreement, which would at least clarify existing GATT obligations in this area.

On products, the major sticking point is of course agriculture. The arguments are well-known: in broad terms the one side proclaims that the European Community dragged its feet before producing a mouse of a proposal which was totally unacceptable and had failed to engage in any proper negotiations, while the Europeans argue that their proposals have not been understood, that the offer of 30% reduction in direct subsidies, even if based on 1985, represented a bigger reduction than appeared and would in any case, by conceding the principle, start a dynamic process which, given the budgetary burden of the CAP, would produce much bigger cuts over the next 10 years. The relationship between trade policy and domestic policy in this area was noted: the consequent difficulty of creating a uniform support system meant that each country would maintain its own regime, while reducing the distorting effect. The US had moved from market intervention to deficiency payments and was willing to cut further. The EC was unlikely to follow but if internal supports could be reduced, reduction in other areas, e.g. export subsidies, which were an integral part of the CAP, would follow. But reform of the CAP would take time and there were doubts about current proposals for reform. If the transatlantic dispute over subsidies could be resolved, it might be easier for Japan to make a move over rice.

Over textiles, there was agreement to phase out the Multi-Fibre Agreement (MFA) over an 8-10-year period: even if there were weaknesses, that was a major achievement. High tariffs remained a problem and might cause the developing countries to doubt whether the agreement gave them enough to justify their concessions in other areas.

On tariffs generally and non-tariff barriers (NTBs), much progress had been made, though there were still differences of approach, which however appeared manageable provided that the package as a whole was judged worth-while. Absence of harmonisation of standards should not be allowed to become an NTB. Progress over safeguards and grey area restrictions had not been marked but there was some movement. The conference agreed that any safeguard clause should be “usable but not abusable”. On anti-dumping, the US and the EC wished to strengthen the possibility of action against alleged dumping and to incorporate measures against circumvention, including such issues as rules of origin, while Japan and others wanted greater safeguards against abuse. One obstacle had arisen over the liberalisation of government procurement policies in that the US claimed that it could not commit individual American states, a claim which was admitted being political rather than legal.

There was serious examination of the institutional future of the GATT. Set up originally to cater for only a small number of members, it now had a membership of 101, and was being called on to handle a much wider range of topics, with the resulting need for some umbrella body. Though part of the UN family, it had managed to avoid the proliferation of jobs that marked so many agencies, and to maintain a high standard of service to the membership. Progress in the GATT had been gradualist and the meeting favoured a continued evolutionary process. While the status of the Director-General might need enhancing, there was no strong support for moving to an International (or World) Trade Organisation, particularly if the UN requirement of universal membership were to be accepted - it was important to maintain the principle that members had to pay a price. There was a case for taking the GATT out of the UN family.

One further area of reform was urged strongly, namely the need for closer involvement in the GATT of industry and business, and perhaps also of organised labour, though the tripartite structure of the ILO was to be avoided. Greater transparency of operation was essential.

While the GATT was in essence a system of rules, some argued that the juridical side and particularly the enforcement procedures fell short. Against that, the difficulty of disciplining, e.g. the US, was clear. Peer group pressures were effective in 90% of cases. There might however be a case for making GATT rules enforceable in national courts, or for providing for collective measures against offenders. This should not rule out the strengthening of the dispute resolution procedures. The new trade policy review mechanism (TPRM) was important and must be built on, e.g. by strengthening the secretariat (or perhaps by contracting out the work) and by publicising the reports and the subsequent peer review. Finally, there was a great need to bring trade and economic policy together: the G7 attempted this but inadequately.

In its concluding session the conference agreed that all this needed to be viewed against the possibility that no over-all agreement would be reached in the Round, or that the negotiations would drag on, with consequent unravelling of what had already been agreed. While the optimists believed it would be possible to hit the ground running in June (after ringing calls for action by the OECD ministers and the G7) and to achieve a comprehensive conclusion by the end of the year (a side bet on this has been registered), several wise heads believed that with the US election in 1992, a date in 1993 was more likely and even that was optimistic: failure seemed a more probable outcome and the EC’s attitude over agriculture would prove the decisive stumbling block. These pessimists were unmoved by the argument that half a loaf was better than no bread and that the membership would be well advised to settle for what had been achieved, even if there were weaknesses and even if agreement on agriculture could not be reached, though there was some encouragement in the assurance that the European Commission could, if it wished, negotiate on its own authority, regardless of its mandate (with the risk, of course, that like the US Administration, it might be disowned by its constituency). Some argued that while it would not do to talk about the possibility of failure, serious thought ought to be given in private to how to mitigate the effects: there was no need for the apocalyptic view that the whole system would break down into out-and-out trade war. Others, however, claimed that failure would lead to the break-down of multilateralism in favour of bilateralism, the creation of regional groupings in contravention of the GATT (the EC and the US-Canadian Free Trade Agreement were judged to be complementary to it), the aggressive use of the US Section 301 (and its EC equivalent which, if it did not exist, would be found) and to serious friction affecting other areas. It behoved the trading nations who most benefitted from the GATT system, to act to ward off that disaster.

This Note reflects the Director's personal impressions of the conference. No participant is in any way committed to its content or expression.

Chairman: Senator William E Brock III
Senior Partner, The Brock Group, Washington, DC;


Ms Myriam Vander Stichele
Coordinator, NGOs GATT Steering Committee, Brussels

Mr Mohammed Iqbal Asaria
Third World Network

Mr Nicholas Bayne CMG
Deputy Under-Secretary of State, Foreign and Commonwealth Office

Mr Richard J D Carden
Under-Secretary, European Community and External Trade, Ministry of Agriculture, Fisheries and Food, London

Mr Will Hutton
Economics Editor, The Guardian

Professor Deepak Lal
Professor of Political Economy, Department of Economics, University College, London

Mr Peter Montagnon
World Trade Editor, Financial Times

Mr Tom Muir
Head, External European Policy Division, Overseas Trade Division, Department of Trade and Industry

Mrs Rosemary Righter
Senior Leader Writer, The Times; journalist and writer on international affairs and international organisations

Dr Ann Robinson
Head, Policy Unit, Institute of Directors; Chairman, Industry Section, Economic and Social Committee

Mr Clive Robinson
President, Food Matters Working Group, Liaison Committee of Development NGOs to EC

Mr David Thomson
Director-General, British Invisible Exports Council (now British Invisibles) (1987-91); Member, Monopolies and Mergers Commission; Chairman, Jufcrest;

Mr Kenneth Warren MP
Member of Parliament (Conservative), Hastings and Rye; Chairman, Select Committee on Trade and Industry; British Soviet Parliamentary Group

Mr David Wood
Deputy Director for International Affairs, Confederation of British Industry

The Hon Alison Wright JP
Director General, British Invisibles; author; Board Member, Commonwealth Development Corporation; Member of Council, Overseas Development Institute

Dr John Curtis
Senior Policy Adviser, Office for Multilateral Trade Negotiations, External Affairs and International Trade, Canada, responsible for economic and policy analysis concerning the Uruguay Round of Multilateral Trade Negotiations

Mr James H Smith
Domtar Inc, Montreal
Professor Gilbert R Winham
Professor of Political Science, Department of Political Science, Dalhousie University, Halifax, Nova Scotia; Member: International Trade Advisory Committee, Government of Canada; Dispute Settlement Panels established under Canada-US Free Trade Agreement; author.

Dr Phedon Nicolaides
Research Fellow, The Royal Institute of International Affairs

Mme Pascale Andréani
Counsellor, Ministry of Foreign Affairs; Assistant Secretary General, Interministerial Committee on European Economic Cooperation, Paris

M Gilles Briatta
Chargé de Mission pour les négotiations commerciales internationales, Ministry of Foreign Affairs, Paris.

Mr David Hartridge
Director, GNG & GATT Policy Affairs Division, General Agreement on Tariffs and Trade, Geneva

Dr Bernhard May
Senior Research Fellow, Deutsche Gesellschaft für Auswärtige Politik

Herr Ulrich Rosengarten
Minister, Permanent Mission to the UN, Geneva

Dr Peter Witt
Head of the Office of the Delegation for Multilateral Trade Negotiations, Geneva

Mrs Helen Junz
The Special Trade Representative and Director, International Monetary Fund office, Geneva

Signor Maurizio Massari
First Secretary, Italian Embassy, London

Ambassador Minoru Endo
Ambassador of Japan for International Economic Affairs

Mr Shinzo Kobori
Economic Counsellor, C Itoh & Co Ltd, Tokyo

Professor Yoshinobu Yamamoto
Professor of International Relations, University of Tokyo

Mr Hiromi Yamaura
Manager & Legal Adviser, Risk Improvement & Survey Department, Mitsui Marine & Fire Insurance Co Ltd, Tokyo; Member of Japan Societies of Economic Law, Civil Law, Financial Law, Insurance Science, Civil Procedure Law.

HE Mr Bryce Harland
New Zealand High Commissioner, London

Mr Robert A Cornell
Deputy Secretary-General, Organisation for Economic Co-operation and Development

Mr Geza Feketekuty
Senior Policy Adviser, US Trade Representative and Resident Scholar, International Trade Commission

The Hon Richard N Gardner
Professor of Law and International Organisation, Columbia University

Mr James A D Geier
Chairman, Executive Committee, Cincinnati Milacron Inc; Director, Clark Equipment Co, USX Corporation and Unison Telecommunications Service; senior member of The Conference Board; member, Executive Committee of Manufacturers’ Alliance for Productivity and Innovation; vice chairman, Management Executives’ Society

Mr Thomas L Hughes
President, Carnegie Endowment for International Peace

Dr Robert W Jerome
Fellow, Economic Strategy Institute, Washington DC

Mr George Melloan
Deputy Editor (International), The Wall Street Journal (New York), responsible for the editorial pages of The Wall Street Journal/Europe and the Asian Wall Street Journal and writing on global affairs

Professor Jeswald W Salacuse
Dean and Professor of International Law, The Fletcher School of Law & Diplomacy, Tufts University

Mr Jeffrey J Schott
Research Fellow, Institute for International Economics, Washington