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DOCUMENTS "COM"
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Vol.1982/0213

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)678 final
Brussels.15thOctober 1982
GATTMINISTERIAL MEETING
Information notesubmitted bytheCommission totheCouncil
fiC~Jv v
S4^ -
COM(82)678final X?^rir--r.A' =»>

Il
GATT Ministerial Meeting
"Information Notesubmitted bytheCommission totheCouncil"
Introduction
Initscommunication totheCouncillastJuly^theCommissionundertook
tomakefurtherreport#ondevelopments inthepreparatory workfortheGATT
Ministerial Meetingin-Kovember ,andtopresent newproposals asnecessary .
TheCounoil'sdiscussion tooknoteofthisapproabh .
SincethentheCommission hasremained incloseconsultation withtheMember
States,throughtheprocedures ofthe113Committee ,sothattherehavebeen
regularexchanges ofinformation andofviewsontheevolution ofthedis­
cussions inGeneva.
TheCommission transmits herewith areportonthedevelopments inthemajor
areasunderdiscussion ,together withsomeIndications oftheprogresslikely
tooccurincomingweeks.Ithastobeunderlined ,however,thatthesitua­
tionisnowveryfluidanduncertain ;thisreportcanonlyrefloctthebeet
poBBible assessment atthemomentofitspreparation .
ThoCoairiiiBDion intendstosupplement theindications setoutbelowbyaddi­
tionalinformation andproposals onpointsfordecision bytheCouncil;but
thcaeproposals needtotakeinto_account ascloselyaspossiblethelatest
developments inGeneva.
RrcentPr-v»lomenta
Thepreparatory workamongDelegaticnc inGenevaledtotheissueofadocu­
mentbytheChairmanofthePreparatory CommitteeattheendofJuly.This
document was,however,incomplete inthesensethatonseveralmajorissues
.itprovedimpossible toincludespecifictextsonthedecisionsthatMinisters
mighttakeinNovember ,whileonothermattersthetextincludedseveraldif­
ferentalternative possibilities .Thisillustrates abasicabaenceofcon­
sensusamongGATTMemb..sbothonthesubstantive natureofdecisionsthat
mightbetakenandalso~>nwhethoiitwouldbeappropriate toembarkona
wide–rangingnewworki>rograin!ne 'ithelementssuchasservices ,trade-
relatedinvestment issues,etc..orwhether,inpresentcircumstances ,an
approachlimitedtothemostdif.-cultcurrentproblemswouldbepreferable .

2.
Aoertain oonfuoion onthoseoentralchoicesofapproaoh haspersisted in
thefurtherdiscussions duringSeptember andOotober.Ineffect,the
developing countries haveincreasingly madeplainthattheobjectives
plannedfortheMinisterial MeetingsetoutintheJulydocument didnot
neettheirrequirements .Theyhavepointedoutthattheobjectives pursued
bydeveloped oountries-whiohinoludetheprinoiple that,moreadvanoed LDCs
shouldassumegreater GATTobligations (the"graduation ?issue))whiohaimat
•improving theGATT1.Safeguard Clausetoinoludeselective action,and
whichseekanextension ofGATTaotivity intoareassuchastradeinservicee-
arecontrary totheirinterests .Thishasbeenreflected innegative ,even
hostileattitudes fromdeveloping oountries inthepreparatory discussions ,
withstrongemphasis onthenegative impactofthecurrent economiocrisison
theirtradewhiohmakesiturgentintheirviewforfurthereffortsto
liberalise barriers totheirexportsandtorespeot morefullyGATTrules
providing themwithspecialtreatment .
Thereisstillouohtobedonebeforethecontentofthepolitical declaration
tobeadoptedbytheMinisters willbeaoceptable tothen,whichisanessen­
tialprecondition tothesuooessoftheConference .
•Declalonn tobetakenbyMinisters
InJulytheCommission communication envisaged thatMinisters wouldreoeivea
three-part document comprising apolitical declaration ,together withtexts
ofsubstantive orprocedural decisions ,whichwouldineffectsetupanew
programme ofworkinGATT.Inpractioe ,thecontentofeachpartofthe
dooument -hascometobeseenasdependent onthedevelopment ofdiscussions
ontheo*therpartstforexample,thepolitioal declaration couldnot,in
relationtotheSafeguard Clause,containcommitments whichgobeyondwhat
wasagreedinthesubstantive discussions on-thisissue.
Aethepreparatory workhasadvanoedithasbecomeclearerthatsubstantive
decisions onmanyissueswillbeverydifficult ,ifnotimpossible ,atthis
time.Thisrefleotstheincreasing reluctance ofallcountries toenvis­
agesubstantial newcommitments sosoonaftertheagreements attheendof
theTokyoRouMandvhqntheinternational econoaic scene1^,souncertain .
(2)seesectiononpage9-10below.

3.
Againstthebackgroundofcontinuing economiccrisis,theoriginalexpecta­
tionsofmanyparticipants asregardswhatcouldbeachievedbytheMini­
sterialMeetingareincreasingly seenasunrealistic andexaggerated .In
consequence ,thethrustofpresentdiscussion istowardsamorelimitedset
ofobjectives,withmoreemphasisontheneedtopursueanumberofproblems
inthefurtherworkprogramme andlessemphasisonspecificsubstantive
decisionsintheimmediatefuture.Afurtherdocumentisexpectedtobe
issuedbythePreparatory Committeearound20October.
. *
IntherestofthisreporttheCommission presentstheprincipalproposals
andissuesunderdiscussion,aswellastheoptionsatpresentbeingexplored
bytheparticipants .Thereportissetoutunderthefollowingheadings:
1.Thepoliticaldeclaration .
2.IssuesrelatedtotheSafeguard Clause.
3.Agriculture .
4.Issuesrelatedtodeveloping countries.
5.Disputesettlement procedures .
6.Othermatters(inparticular UnitedStatesproposalsforstudies
inareasnewtotheGATT).
ThePolitical Declaration
Thedraftingofthistexthasprogressed butisstillthesubjectofinten­
sivedi'scussion,especially asregardsthenatureofthecommitments that
mightbeadoptedbytheMinisters asameansofgivingspecificexpression
tothegeneralobjectiveofreaffirming andstrengthening theworldtrading
(3)System.
Ingeneral,theCommunityattitudesofarhasbeenthatthereisatendency
toplaceanexcessive emphasisontheshortcomings andfailuresinthe
functioning ofthetradesystemasamajorreasonforcurrenteconomic
**Seedocument"InterimDraftofPoliticalDeclaration"dated1October.
Para.5setsouttheproposedc*'.ectivecommitments inageneralised form.

difficulties .Ineffect,amoreaccurateandbalancedpresentation is
necessary,acknowledging therelativecapacityofthetradingsystemto
survivethepressuresinherentinthepresentcrisis,aswellasunderlining
theimportanceoftheinstability oftheinternational monetaryandfinancial
system,andofhighinterestratesandothermacro-economic constraints as
equalfactorsofuncertainty forworldtrade.
Theanalysisofthefunctioningofthe6ATTsystemisalsoamatterofsome
«
disagreement ,especially insofarasitseemstoindicatetoostronglythat
itisessentialtosecureimprovements intherulesgoverningtradein
areassuchasagriculture ortextiles,orinthedisciplines appliedto
safeguard measures.
Asregardscommitments tobeadopted,thediscussion hascentredonwhether
theseshouldbepoliticalinnature(asanexample,theOECDTradePledge)
orofamorecontractual characterwhichwouldbeclosertothetraditional
GATTapproach.Inthelattercase,itisclearthatthecom­
mitmentswouldneedtobepitchedatarealisticlevelwhichgovernments
couldacceptandbereasonably expectedtoobserveinpresentcircumstances :
itwouldnotbeadvisablenorpolitically credibletoannouncenewcommit­
mentsgoingbeyondsuchlimitsorimmediately accompanied byqualifications .
Indeed,afailuretolivebythetermsofanynewpledgewouldbedisastrous .
Inthiscontextconceptsincluding atotalstandstill onprotective measures
taken-outsideGATT(e.g.autolimitation agreements),orofprogressive
phasingoutofsuchmeasures,havebeenproposed;butthesearedifficult
todefineprecisely andthereseemstobegrowingawarenessthatsuch
pledgescouldnotbegenerallyrespected.Similarly,undertakings to
achievefurthertradeliberalisation (i.e.bynewnegotiations )ortophase
outthespecialrulesforagriculture ortextileswouldbeunlikelytogain
generalacceptance atpresent.However>acommitmenttoseekfurther
expansionoftrademightbemorefeasible.

5.
Furtherdraftingisinprogressandnewtextscanbeexpectedtoemergein
comingweeks.TheCommunity _hassofarbeenoftheviewthatprecisecommit­
mentswillbelesseasytoacceptthanfairlygeneralexpressions otpoiuitdi
willtoreinforce andrespectexisting GATTrulesandobligations .
Apledgetomakerenewedeffortstoavoidactionswhichwouldhavethe
effectoffurtherunravelling theGATTsystemisonepossibility,andageneral
commitmenttoresistprotectionist pressuresinformulating tradepolicies
mayalsobe.appropriate.•
%
IssuesrelatedtotheSafeguardClause
Twoprincipalmattershavebeenunderdiscussion intheconsultations on
theseissues:
-thequestionwhether,andifsounderwhatconditions,selectivesafe­
guardactioncouldbeauthorised underGATTdisciplines ;
-thequestionwhethersuchactionstakenatpresentoutside,theGATT
framework (e.g.voluntaryrestraintarrangements ,bilateralarrange­
ments)couldbemadesubjecttodiscipline andsurveillance withinGATT.
Theconsultations ontheseissue'shaveenabledadegreeofprogresstobe
made.Theexistenceofmanymeasuresofaselectivecharacter wasstrongly
underlined inarecentGATTstudy,andthisfacthasledmanycountriesto
recognisetheimportanceofthesecondquestionaboveevenifsubstantial
reservationsstillexistonthesolutionstothefirstquestion.
Thepositionreachedisasfollows:
-adraftdecisionincorporating improvements totheSafeguardClausewas
issuedtodelegations on30August.Thisenvisagesselectivity only
onaconsensual basiswherebothpartiesagree;andexplicitlypro­
hibitsselectiveactioninothercases;
thisdocumenthasuptonowbeenrejectedbythedevelopingcountries as
anunacceptable basisfornegotiation .Theyinsistthat,onanumberof
aspects,thedocumentmustincludestricterconditions andsurveillance
byaGATTCommittee be..reeventhisforaofselectivity ispermitted;

-theCommunity,followingCouncilnegotiating directives fromtheTokyo
Roundandinconsultation withthe113Committee,hasbeenoftheview
thatanynewprocedureprovidingforselectivity mustbeopera­
tionalandpractical andthatitwouldbenecessary,intheabsenceof
bilateralagreement,tohaveaprocedurewherebyselectiveaction
m
wouldstillbepossible;
-inrecentinformal*di€cussions theseviewshavehardenedfurtherand
•selectivity inanyformnowseemstoberejected,largelyduetopast
experienceinthetextilessector.Thereisabasiclackofconfidence
thatstrictercriteriawouldbeobservedinpracticebydevelopedcoun­
tries,eveniftheprocedureenvisagedtheapprovalofselectiveactions
byanewCommittee;
-inconsequence ,thebalanceenvisagedinC0M(82K03,betweenarecogni­
tionoftherighttotakeselectiveaction,incertainlimitedcircum­
stances,andgreatertransparency anddisciplinefor"greyareameasures",
hasnotsofarbeenachieved.Whileawillingness toacceptsomemore
transparency inthisareamightfacilitatefurthernegotiations ,itdoes
notappearatpresentthatthiswouldsecureasolutiongoingbeyondcon­
sensualactions.
Onpresentassessments thegapbetweenalldelegatibns ontheseissues
remainsverywideanditseemsimprobablethatsolutionscouldbefoundby
November.TheCommunity hassuggestedthatmoreworkbecarriedoutto
examinetheGATTstudy,especially the"greyareameasures"init,asameans
ofmakingfurtherprogress.
Therehasbeenpressure,duringthediscussions onthepoliticaldeclara­
tion,forastandstill andphasing-out ofsuchgreyareameasures.Some
ofourpartnersarereadytoconsiderthis,onthehypothesisthatanew
safeguardsdecisionwouldlegitimise suchactions,thusresultinginlittle
changeinpractice.TheCommunity hasindicatedthat,intheabsenceof
agreement onsafeguards atthisstage,theproposalcannotbeconsidered as
arealistic newcommitment .

A'iricut ture
Thediscussions have centred onthefollowing main proposals putforward
byvarious trading partners :
-that theGATT should embark onaprogramme ofwork onagricultural trade
with aview topreparing further negotiations ontrade liberalisation and
market access ;
-that afull review ofthecurrent rules relating toexport subsidies in
. - <1)agriculture should beundertaken with aview totheir improvement ;
-that GATT rules for .agriculture should progressively bebrought into line
with those applicable toother products .
Ithasbeen possible ,sofar,toavoid anyopen confrontation onthese issues
despite widely divergent points ofview .Asregards thefirst proposal ,the
Community hasmade itclear that anydecision implying further negotiations
onagriculture would bepremature ;and aconsensus appears tohave developed
that the thirdpoint isnot likely tocommand general acceptance .
Asregards the idea ofareview ofexport subsidy rules ,theCommunity has
suggested that such anexamination should take place inanappropriate body
(anAgriculture Committee )and should not belimited tosubsidies butextended
toall forms ofdirect and indirect protection and support .Thepurpose of
thereview would not be,explicitly ,toseek improved rules -this would not
beacceptable sosoon after theresults oftheTokyo Round -but toconsider
allthevarious measures affecting access andcompetition inagricultural trade
andtheadequacy oftherules relating tosuch measures .
(1)Australia hasalso been proposing astandst i11on
followed byagradual "winding down "from currentsuch subsidies ,tobe
levels .

Following therecentdiscussions intheC6.18onthissubject,aconsensus
appearstobedeveloping onaprogramme ofworkforagriculture including
thefollowing elements :
-agreaterdegreeoftransparency foragricultural measures
-examination ,inthelightofrightsandobligations underthe
General Agreement ,inparticular itsPartIV,of:
-measures relating toaccesstomarkets;
-exportsubsidies andallformsofexportassistance;*
-national agricultural policies .
"Thisexamination wouldcoverallmeasures whichcouldbeseriously pre­
judicial tothetradeorinterests ofContracting Parties.
-anexamination ofthebalanceofrightsandobligations inthis
sector,including waivers andotherexceptional measures
-development whenever necessary ,ofacommonunderstanding ofthescopeof
theprovisionsof theGeneral Agreement
-theestablishment ofacommittee tocarryouttheworkandtoreportin
about2years(1).
Whilstprobably acceptable totheUSandAustralia ,thesetwocountries still
seemtowishtoputmoreemphasis onsubsidies ingeneralbothindustrial
andagricultural ,andhavebeenproposing ageneralreviewonthelines
ofarticle XVI:5inaseparate body.Inaddition Australia proposes that
thereshouldbeanimmediate andprogressive reduction inthelevelof
existing subsidies withinadefinite timeperiodnottoexceed 5years.
TheCommission recallsthat,forallproducts,therewasalengthyreview
ofGATTrulesduringtheTokyoRound,andthatforagricultural subsidies
inparticular abilateral agreement wasreachedwiththeUS(exchange of
lettersbetween Mr.Gundelach andMr.Strauss )duringthesamenegotiations .
(1)ThereisnoGATTcommittee atpresent withamandatetodiscussina
globalmannerallquestions relating toagriculture ,suchmatters
beingraisedinanumberofthecommittees established bytheTokyo
Roundagreements andarrangements inparallel withdiscussion relating
toindustrial products .

DevelopingCountries
Asmentionedintheintroduction tothisreport,themoodofdeveloping
countries hasbeennegativeonseveralissues.Althoughtherearesigns
ofneweffortsontheirparttomaintain aunitedfront(perhapsbecause
theysensethatsomecurrentproposalswouldleadtogreyerdifferentiation
amongthem)theyhavenotbeenabletoputaspecifictpxtforwardincor­
poratingcommonproposals.Thismayalsobeatacticalposition,toavoid
pressureforreciprocalbargaining . •
Developing countrydesiderata (interalia,forfullerimplementation of
PartIVofGATT,foractiontoliberalise accessfortropicalproducts,to
reduce/eliminatequantitative restrictions andtoeliminate/alleviate the
effectsoftariffescalation )havenevertheless beenreiteratedduringdis­
cussions;andthereisalsosubstantial emphasisontheneedforareturn
tofreetradeinthetextilessector.
Someexchanges havedeveloped aroundideasputforwardinformally bythe
UnitedStatesandbySwitzerland.whichenvisagenewtariffnegotiations ,
especiallywithmoreadvanceddeveloping countries .Insummary,suchnego­
tiationswouldconsistinofferingtothesecountriescontinuing (orin
somecases,new)GSPbenefits-possiblyatspecialdutyrates,lessfavour­
ablethanforotherbeneficiaries -inexchangeforcommitments bythemon
accesstotheirmarkets.Thedeveloping countries havemadeitclearthat
suchanapproachisirrelevant anduntimelyinpresenteconomicconditions,
andthe'Community viewhasbeendubiousifsuchanapproachcanbethebasis
forrealimprovedaccesstosuchmarkets,andiftheadvantagesofferedwould
be,finally,acceptable todeveloping countrypartners.
Nevertheless ,inconsultation withthe113Committee,anapproachtothis
issuehasbeenworkedoutwhichalsoincludestheothermattersofdevelop­
ingcountryinterest.Thisconsistsofathree-point plan:first,itis
proposedtoagreeuponaprogrammeofpossiblemeasuresinfavourofthe
tradeinleastdevelopedcountries;second,toexpresscontinuedsupportfor
theeffortsbeingmadebydevelopingcountriestodeveloppreferentialtariff

10.
arrangements amongthemselves ;andthirdthesuggestion hasbeenputforward-
bearinginmindthesubstantial progress thathasalreadybeenmadeinaccording
dutyandquota-free accessforproducts ofLDCexportinterest,andthedifficulties
ofengaging infurtherwide-ranging negotiations inpresenteconomic circumstances -
thatafeasibility studyshouldbeundertaken inordertoestablish whetherthe
basisexistsforfuturenegotiations ,whichwouldbeonthebasisofreciprocal
concessions withthosedeveloping countries capableofmakingsuchcommitments .
Anewtextfromthe6ATTSecretariat totakeaccount ofthesevarious ideasand
proposals isexpectedshortly.,Thiswillhavetobeevaluated bythe.Community indi
courseandtheCommission willmakefurtherproposals ifnecessary .
.jy.
Disputesettlement
Consultations havetakenplaceonthebasisofadraftdecision whichwouldin­
corporate certain improvements topresent GATTprocedures inthisarea.These
proposals includethreeprincipal suggestions :
-thatmoreexplicitprovision bemadefora"conciliation "phaseintheprocedure ,
sothattheDirector-General ofGATT,forexample,couldintervene toencourage
solutions andthusobviatetheneedforformalpanelproceedings ;
-thatpartiestoadisputeshouldinallcaseshaveanautomatic righttothe
establishment ofapanel(1);
-that,wnen ■panelreportsaresubmitted ,theCPsshouldbeabletotakecon­
sequential decisions bytheconsensus procedure ,evenifoneorotherparty
dissents fromthereportordisagrees withaproposed recommendation .
Thediscussions haveshownthatawidedegreeofagreement islikelytobe
foundonthefirstandthirdpointsandaMinisterial decision covering these
matters maybeagreedbythedateoftheConference .Ineffectastrengthening
oftheinitialphaseofdispute,toencourage thechanceofasettlement between
parties,seemsopportune ;andtheconceptofdecisions byconsensus evenwhen
allparties donotapproveismerelyaconfirmation ofthetraditional GATT
practice .However,thereisanincreasing trendforpanelstobeaskedtointer­
pretGATTrules,andinthesecasesitwouldbenormal GATTpracticethatpro­
posednewinterpretationss whichinvolve newobligations arenotconsidered to
bebinding uponthoseContracting Parties whodisagree withthepanel'sviews.
Onthesecondpoint,however,theCommunity hasdefendedtheattitude already
takenduringtheTokyoRoundthatthisproposal isanexampleofexcessive codi­
fication ofGATTpractice which .isundesirable inprinciple andwhichwould,in
thiscase,bedangerous ,sinceallelementofdiscretionary judgment insuch
situations wouldbedeniedtotheCPs.Itseemslikelythatthematterwillnot
bepursued .
(1)Underpresent GATTrulesandpractice,thisisnormallytheresultofa
requestforapanel;buttheCPshaveatleastatheoretical rightto
decideotherwise .

ClherMittee.
TheUnitedStates,inparticular,haspursueditsproposalsforaG.^TTstudy
ofspecificproblemsintradeinservices,incorporating aphaseinwhich
information ondifficulties wouldbecollected andlaterastudyofthe
applicability ofGATTprinciples andrulestotheservicesector./,time­
scaleof2-3yearsisenvisagedbeforefurtherdecisions wouldbetaken.
TheCommunity,despitesomereservations (e.g.onwhetherGATTcouldorshould
dealwithproblemsrelatingtorightsofestablishment),iTashithertogivena
certaindegreeofsupporttoaGATTstudywithoutprejudging inanywaywhat
•«*«««
mightbetheoutcomeofsuchwork.ItsviewhasbeenthatTradeinServices
willcontinuetogrowinimportance indeveloped economies andthatacertain
degreeofinternational discipline maybeuseful.Someotherpartners (Japan,
theNordicgroupandCanada)havetakenasimilarorevenstrongerline.
Ithasincreasingly becomeapparentthatthisissueisconsidered ofgreat
politicalimportancetotheUSAbutthereisstrongopposition fromdeveloping
countries whoarenotconvincedthatamovebyGATTintoarelatively new
fieldisopportuneatthistime,inviewofotherurgentproblemsassociated
withtheeconomiccrisis,indebtedness andbarrierstotradeingoods;and
someofthemhaveclearlybeenirritatedbypressuresbroughttobearupon
theminthiscontext,whichhasledtoarapidpolarisation ofviews(expe-
ciallyOra/il).ThesuggestionthatGATTprinciples (e.g.MFNornational
treatment )mightberelevantintheservicessector,isalsostronglyopposed:
IdeswouldpreferworkontheseIssuesshouldbeundertaken inforaother
thanGATT.
Asregardsotherproposalsforfuturework,onmatterssuchasdomesticcon­
tentorexportperformance requirements andontradeinhigh-technology pro­
ducts,theview,ofdevelopingcountries havebeensimilarlynegative.
WhiletheCommunityviewhashithertonotbeentoopposethefirstissue,it
hosbeenstronglyopposedatthisstagetoanynewstudiesinthehigh-techno-
logy»rea_