Feb 6, 1991


GENEVA, FEBRUARY 5 (BY CHAKRAVARTHI RAGHAVAN) – GATT Director-General Arthur Dunkel will continue his "consultations" to revive the Uruguay Round negotiations, but these will be in fairly low-key and at level of Geneva diplomats, GATT sources said Tuesday.

Last week Dunkel held consultations with senior negotiators from the U.S., EC and Australia (for the Cairns Group) to evolve a "platform" for agricultural negotiations and use to re-start the entire negotiations. It became clear at the consultations that the U.S. and EC could not agree on a "platform" nor could the EC go beyond its position at Brussels on agriculture, that the U.S. would be seeking an extension of its "fast-track" authority and that a formulae would now have to be found for restarting the negotiations.

At least for now, until the issue of extension of U.S. fast-track authority becomes clear, any work would be essentially at a technical level and would merely be a way of marking time.

While there are some apprehension that the U.S. administration might not be able to get such a fast-track extension, it seems apparent that the administration in fact has talked to key congressional members and is confident of getting it, particularly because of the Gulf War and the support it is garnering for the President.

Technically, the President has to seek extension of authority before March 1, and that is automatic unless either House of Congress disapproves by resolution. Congress would in effect have 90 days to approve or disapprove and U.S. officials have given the impression that they are confident of getting the authority. The only question appears to be whether the U.S. textile lobby would have enough votes to get either House to adopt a disapproval resolution.

However, there is also the view that the U.S. Trade Representative might try to use this to gain some "advance benefits" in the shape of concessions from the Third World and the EC.

Dunkel is scheduled to meet the informal Third World group in GATT later this week, perhaps on Friday, when he is expected to outline the result of his "consultations" last week and perhaps indicate how he would proceed.

However, there is a snag in this entire scenario. It is predicated on the view that while the EC would not be able to be more forthcoming now on agriculture than it had at Brussels, fundamental reforms of the common agricultural policy is under way and that this would benefit the agricultural exporters.

But the proposals of the EC Agricultural Commissioner - for severe cuts in the "intervention price" (guaranteed minimum at which the domestic production would have to be purchased), with full compensation for small farmers and graduated reimbursements for the big ones, depending on size and willingness to set aside land and thus prevent over-production - has already run into trouble with the countries with big and more "efficient" farms like UK, Netherlands and Denmark.

Also, the U.S. administration has sought in its budget for the year starting 1 October, funds from Congress for resumption "bonus" export plan (Export Enhancement Programme), which was cut in last year’s budget.The U.S. cuts last year were stated by its negotiators to mean a 50 percent cut in its export subsidies, and this was used as an argument to demand at least matching cuts by the EC.

If the resumption of exports under the EEP goes through, the main victims would be those in the Cairns Group who have been willing to support the U.S. by concessions in new areas (like Australia, Argentina and Uruguay).

But if it is now restored, it may mean that the U.S. is getting ready to accept a lower level of cuts on EC export subsidies.

And whichever way and whenever the Gulf war is settled, the new world order of George Bush would be one in which the financial and economic muscle has already gone out of the U.S. hands.