Feb 5, 1991


GENEVA, FEBRUARY 4 (BY CHAKRAVARTHI RAGHAVAN) – Two days of consultations in the GATT this week have failed to provide a basis for restarting the Uruguay Round negotiations, but consultations are continuing, participants reported Friday.

The consultations by GATT Director-General Arthur Dunkel were aimed at producing a "platform" for negotiations in agriculture and use it to resume negotiations in all areas of the Round.

But after the consultations involving among others U.S. Deputy Trade Representative, Julian Katz, EC negotiators Hugo Paemen and Guy Legrasse, and Australia which chairs the Cairns Group, attempts to evolve a "platform" have been given up and the focus now is how to restart the negotiations.

Dunkel had meetings with Katz, Paemen and Legrasse and Fields. The U.S. and EC officials also had bilateral meetings while the members of the Cairns Group conferred with Katz.

U.S. and EC officials have gone back, but the U.S. and EC will continue their bilateral consultations for a modus vivendi and in the light of it Dunkel might renew his efforts.

The consultations here have shown that the U.S. is now convinced it can't push the EC, in relation to a platform for agriculture negotiations, to go beyond the Positions it had taken at Brussels, but that the Commission's proposals for reform of the Common Agriculture Policy (CAP) did hold out some prospects of genuine change, though it is not clear how far it would meet the demands of others.

At the same time, the U.S. administration appears to have decided for its own reasons to seek an extension of the "fast track" authority for negotiating trade agreements, under the 1988 U.S. Omnibus Trade and Competitiveness Law.

As of now, to enable the administration to take advantage of the fast-track authority, it has to notify Congress of its intention to reach agreements (at least in outline) and send the proposals to Congress latest by May 31.

The administration could however ask for an extension and it would automatically be extended for two years unless either House of the Congress disapproves by resolution.

In any event the administration needs such authority for negotiating the proposed Free Trade Agreement with Mexico.

The authority itself is not specific to the Uruguay Round or any bilateral or plurilateral deals but general for agreements in non-tariff areas. The only question thus is whether the administration would limit itself and or provide any assurances to the Congress about its use for the Uruguay Round.

The general impression here is that the administration has decided to ask for an extension, which in the situation created by the Gulf War and the domestic political support for Bush, it is believed, would not be denied by Congress. However, it is said, the administration would still need the re-start of the negotiations in Geneva to be able to tell Congress that agreements beneficial to the U.S. would emerge. There are even suggestions here that in fact the administration and the USTR have already canvassed support in the Congress, but that the USTR might try to extract some concessions from its trading partners in other areas, using the Congress as an excuse.

With the USTR decision to seek an extension of its fast-track procedure authority, the dynamics of the negotiating processes have changed somewhat and the focus would now appear to be on finding ways to "re-engage" in the negotiations, without setting "deadlines" which are now proving counter-productive, one participant said. Previously the U.S. officials had been insisting that they would not come back to the negotiating table here without a "platform" for agriculture negotiations and EC commitments. In agreeing to restart the negotiations and coming to the negotiating table, the U.S. would in fact be making a retreat.

As one of the participants in the consultations put it, "the problem now is how to re-engage in negotiations without a ‘platform’ for agricultural negotiations and is the Third World to pay the price for what the U.S. has already decided?". One of the ideas apparently under consideration, and which is before Washington and Brussels, would appear to be to re-start work first in the agriculture group on technical issues such as what would be the composition of measures to go into the "Aggregate Measure of Support" (AMS) which would be the overall measure used to judge the level of protection and its reduction, as also other questions like what would constitute "export subsidies". But whether this would be enough or whether the Americans would want negotiations to begin in other areas too, so that it could get some progress in such matters like intellectual property rights, services etc is unclear at the moment.

After the Brussels fiasco for which the EC has been roundly blamed, the Community has been anxious to quickly re-start the negotiations, and using the problem of the deadlines for the U.S. "fast-track" authority, reach a package of agreements, with what it repeatedly calls "scaling down of ambitions". Diplomatic reports from Brussels suggest that for the EC this would mean "scaling down" of ambitions by the U.S. and Cairns Group on immediate reforms in agriculture. The EC has also been hinting that in any such package, it would be more forthcoming in textiles and clothing, support "scaling down" in such areas like investments, but would push for substantial agreements on intellectual property and changes in the GATT's balance-of-payments provisions. It is not very clear whether the EC's "hard" positions in TRIPs and BOP issues is genuine or whether it is a tactical move (knowing opposition to these from some of the non-Cairns Group Third World countries as well as some in the Cairns Group) so that if negotiations resume "globally" and there is another deadlock or failure, the blame would not merely be at the EC doors over agriculture but at doors of others too.

The U.S. and Cairns Group members see the proposals and processes under way within the EC for changes in the present Common Agricultural Policy (CAP) as positive, the proposals and its implications could not be evaluated now, one participant said.

The EC, for its own budgetary reasons, is trying to undertake some reforms of the CAP, including in shifting support in such a way as to benefit small farmers and by tying it to production controls or off-set programmes. But these are clearly not likely in the short-term and would take several months or even a year to materialise and provide a clear picture. It has been trying to convince its partners that its reforms would result in lowering of domestic support and reduced production of surpluses. In terms of the Uruguay Round it has also been talking of willingness to reach accords involving separate commitments on reduced domestic support, increased access (but not tariffication of all border protection and its subsequent reduction) and ceilings on subsidised exports in volume terms. But these have not been sufficiently precise and provide assurances of an irreversible process to convince its trading partners to resume negotiations.

At the same time, the U.S. has been trying to convince the Cairns Group that in this matter time could be on their side. But it is not clear whether the EC would be willing to prolong the negotiations for another two years, though it is said to be not opposed to it so long as it also means easing of the pressures on it for immediate changes in CAP or commitments on the negotiations. The EC has its own priorities: the post-1992 single market, the situation in Eastern Europe and issue of negotiations with the East Europeans and EFTA countries, both for a wider EC-EFTA agreement as well as requests from some of them for entry into the EC, and would like to get the Round out of the way. But it could also come to a conclusion that it would be better off by negotiations being extended without any new deadlines, if this would enable it to decide on and come to arrangements on the arrangements in Europe. In the discussions here between the U.S. and the Cairns Group members, the latter have come away with the feeling that the U.S. has not changed its fundamental position in agriculture and for the U.S. it is necessary to have a "good package" in agriculture. There are however a number of uncertainties.

While the U.S. has apparently decided to seek an extension of its fast-track authority, it is not clear whether it is making formal resumption of negotiations a condition for this.

Also, if its and Cairns' Group's perception that time would be on their side in securing better results in agriculture, after the shape of the EC's domestic reform programme is clear, rather than in quick negotiations and agreements over the next weeks, the U.S. could try to use this to force further substantive progress in other areas - claiming that this is essential to satisfy Congress to extend the authority.

There are already some hints, that the U.S. wants to make use of the interregnum to extract further substantive concessions from the EC in other areas, and possibly from the Third World on issues like intellectual property rights. As one Third World diplomat suggested would be a case of the U.S. trying to extract a price from the Third World for what the U.S. for own reasons may have already decided, namely, seeking an extension of the fast-track authority. There are also uncertainties over the length of extension of the fast-track authority and negotiations. Though the U.S. law provides for two-year extension, in an attempt to pressure others and also to reduce any congressional opposition, the administration might itself suggest that it would use the procedures over a shorter time-span.