G7 ASKED TO SHOW POLITICAL WILL ON AGRICULTURE.

Jun 30, 1992

G7 ASKED TO SHOW POLITICAL WILL ON AGRICULTURE.

GENEVA, JUNE 28 (CHAKRAVARTHI RAGHAVAN) --Ministers of the Cairns Group of agricultural exporting countries have called on the G7 countries at their forthcoming Munich summit to demonstrate their "political will, leadership and joint responsibility" to achieve a breakthrough in agriculture and unblock the Uruguay Round negotiations.

The 15-member group issued the appeal after a two-day Ministerial meeting (with participation of Ministers from four countries and a Deputy Minister from the fifth) in Geneva. The Group offered to participate in the U.S.-EC talks to reach a settlement on the agriculture issue.

The meeting reviewed the prospects and options for bringing the Round to an early and successful conclusion and issued the communique which the Australian Trade Minister and chair of the group, Mr. John Kerin, is to present at Bonn Monday to German Chancellor Helmut Kohl.

GATT Director-General Arthur Dunkel attended a luncheon session of the Group Sunday where he reportedly discussed with the members various ideas including his proposal to convene a ministerial session of the Trade Negotiations Committee.

The Dunkel idea of a Ministerial meeting of the TNC has been seen as essentially a move to apply pressure on the U.S. and EC. However, it has not met with much enthusiasm, but has elicited some words of caution, among the majors and other key players in the Round - a view shared by many in the Cairns Group too.

Meanwhile, in a speech to the American International Club Friday, the U.S. Ambassador to GATT, Rufus Yerxa, said the U.S. had given the EC some options to resolve the deadlock over agriculture, but that regrettably, the EC had been unable to formulate a response. Yerxa said there seemed to be a paralysis in Brussels because of its many internal problems (Maastricht, CAP reforms, etc), but that the issue would be discussed at the Lisbon summit by Major, Kohl, Mitterand and others. If the Community made meaningful proposals, the U.S. would be ready to respond, he said.

However, reports from the Lisbon summit of the EC members suggest that the Uruguay Round issue was not on the agenda and was not discussed by the heads of government. The bilateral talks on these between French President Francois Mitterand and German Chancellor Helmut Kohl do not appear to have provided any opening that would enable Kohl to put through an agreement at the Munich G7 summit either)

Several of the participants in the Cairns Group meeting privately confessed Sunday to a feeling of frustration and helplessness, and agreed that they did not see much prospect of the Munich summit or any other impulses to conclude the Round over the next few weeks or months. Some of them said that with the U.S. unable to provide leadership because of the Presidential election situation, and with the EC's priorities somewhat altered, others could do little except to apply pressures on the U.S. and EC to persuade them to take steps to bridge the remaining small differences and enable the conclusion of the Round.Kerin stressed at the press conference that the group was prepared to be "flexible" in promoting a compromise on agriculture, but said that the Dunkel text contained elements, which the group was not prepared to move away from, since otherwise the entire package would unravel.

But he would not elaborate which were the elements the group would not move away from, noting that the discussions and negotiations were between U.S. and EC behind closed doors.

When the Dunkel text was presented, the U.S. had been prepared to accept it but the EC had rejected it. Since then, the two had been discussing and negotiating. The EC had since then started the reform of its Common Agricultural Policy and the three-year package of proposals on reform of internal support to begin in 1993-94 were in the right direction. But on market access and export subsidies, the CAP had not been changed. So far the EC had indicated that they were not prepared to change them to accommodate the Dunkel text.

Kerin dismissed as "hypothetical" a question as to when and whether the Cairns Group would decide that the Uruguay Round had failed and had to be either wound up or suspended to be restarted at a future time when conditions were ripe.

In their communique, the Cairns Group stressed that the Uruguay Round was in a crisis as a result of the continued deadlock on agriculture and there were grave fears that the Round would fail unless a breakthrough on agriculture was achieved in coming weeks.

The remaining differences separating the major agricultural trading countries the communique said had narrowed and were by no means insurmountable and the major requirement for resolving them was "exercise of political will on the part of key participants".

"It is essential that G7 leaders demonstrate that will, their leadership and their joint responsibility to unblock the negotiations", the communique said, adding: "The Cairns Group is prepared to play a part in the search for a final settlement and in securing its acceptance multilaterally. In so doing, the key consideration is that the outcome be genuinely trade liberalising and consistent with the central principles and reform modalities in the draft final act".

The communique, and the press conference at the end, showed that Canada had failed to win the support of the group for its own effort at changing the Dunkel proposals on agriculture to enable it to continue to maintain import restrictions - under GATT Article XI: 2 (c) (i) - so long as it is coupled with measures for domestic supply management through production restraints.

The Canadians have been asking for changes in the Dunkel draft text on this score - to enable them to continue to restrain imports of dairy products and maintain the supply management regime.

To be accepted, it would need changes in the "modalities" (and full tariffication of import restrictions and domestic support measures) proposed in the Dunkel text. It would also open the way for similar exceptions to Japan over rice imports and to South Korea for beef and rice.

Canada had sought the deletion from the communique of the Cairns Group insistence that any compromise in agriculture text should be "consistent with the central principles and reform modalities in the draft final act".

Kerin responded to a question about the "tariffication" issue by pointing out that if the questions of rice, bananas and S. 22 waiver of the U.S. Agriculture Act were taken into account, tariffication was obviously very important. In the real world of trade, the real barriers now were non-tariff ones. If there was "comprehensive tariffication" (as called for in the Dunkel text), that would be quite a trade liberalisation.

"There has to be a bottom line on disciplines and we have laid down the bottom line", he said.

When a question was specifically directed to the Canadian representative and what its position was on "tariffication" vis-a-vis its stand on Article XI: 2, and what it would do to the call by Japan and South Korea for other exceptions for their own restrictions (of rice and beef) the Canadian ambassador said that in any event the Dunkel package was being reopened because of the U.S. and EC. His country supported tariffication as a mortality, but that its own practices (in restricting imports of dairy products as part of domestic supply management) to be consistent with GATT (and should be allowed to continue).

The group called upon the G7 leaders to respond to the crisis now overhanging the negotiations and the serious adverse consequences that would flow from failure and said: "The G7 countries had a particular responsibility for resolving their differences over the package, especially on agriculture. Without such a resolution, the entire Round will remain paralysed".

The Cairns communique noted that since last December, when Dunkel tabled his draft final act text, a successful outcome of the Round had been "within grasp", but the necessary political steps to reach a final settlement had not been taken.

"Negotiations have drifted to bilateral discussions between major participants without positive results and as a consequence there is now a very real danger of failure", they said.

The Dunkel text, the group said, represented "the best compromise achievable" after more than five years of negotiating effort and any further delay would endanger a successful conclusion. "Without a breakthrough on agriculture, the further work required on detailed commitments across all market access areas, including services, cannot proceed".

It was time for everyone to consider the Dunkel text as a "package" and the Cairns Ministers therefore felt it important to "signal now" their own governments' readiness to accept the package as the basis for concluding the negotiations and work intensively to complete the Round. They urged all others to reciprocate that commitment.

"It would be intolerable for the multilateral system to have the Round fail for the want of a final political step. Now is the time to take step".