Feb 20, 1991

DUNKEL DUE TO RE-START PROGRAMME OF NEGOTIATIONS.

GENEVA, FEBRUARY 18 (BY CHAKRAVARTHI RAGHAVAN) Ė GATT Director-General Arthur Dunkel appears set to re-start the Uruguay Round negotiations in seven clusters beginning 20 February under an "overall scenario" that he hopes will not be formally objected to by anyone.

The basis on which Dunkel is trying to re-start the negotiating processes in agriculture - an issue on which the Brussels Ministerial meeting collapsed after the European Community refused to revise its "offer" or modify its stand - appears to be more or less the same as the one he has been sounding out since 8 February.

This would be a statement by Dunkel that it was his understanding that the participants were resuming negotiations in agriculture on the basis of undertaking specific reduction commitments in the three areas of domestic support, border protection and export subsidies, as also sanitary and phyto-sanitary rules. But there would be no reference to the "rebalancing" issue.

After Dunkelís consultations on February 7 and 8, among others with U.S. Deputy Trade Representative Julian Katz, EC chief negotiator Hugo Paemen and Agricultural Director-General Guy Legras, and Peter Fields of Australia (which chairs the Cairns Group), it appeared that the original idea of agreeing on a "platform" for resumption of the agriculture negotiations was being given up but that procedures were being worked for resumption of negotiations in all areas without any deadline.

It was then explained by some of the key participants that the U.S. would in any event be seeking and getting extension of fast track authority, that the EC's plans for reforming its common agricultural policy (CAP) held out some promise and thus time was on the side of the agricultural exporters, that the agriculture negotiations could be resumed on basis of a Dunkel statement of his understanding (which would not commit the participants) of the commitments that would be negotiated and undertaken by all participants, and that along with agriculture negotiations which would start at a technical level, negotiations would also resume in other areas to meet the EC views about "globality".

However, this scenario proved unacceptable to the USTR, Mrs. Carla Hills who sought to get some further commitments or assurances on agriculture from the EC Commission and its External Relations Commissioner, Franz Andriessen. But these would appear to have been rebuffed by the EC which, according to some GATT sources, even went back on what had been evolved at Geneva.

Last week, Dunkel had met with the informal Third World group and sounded out his ideas, including the statement by him on the basis for resumption of agriculture negotiations which would be a modified version of the Brussels Mats Hellstrom paper.

At that time it was said that Dunkelís ideas for resumption of agriculture negotiations and the overall scenario were yet to be cleared by the U.S. or by Argentina and Brazil.

It is not clear whether they have even now done so.

But there are some reasons to believe that while his overall scenario may not have been formally cleared with Washington and Brussels, Dunkel has been privately encouraged to go ahead by U.S. and EC negotiators and officials.

While the EC too had not formally accepted the basis for restarting agriculture negotiations, in a sense Dunkelís scheme would be along the lines favoured by it - restarting the negotiations in all areas from where it was left off at Brussels and without the EC having to make any revised offers or new commitments that it would undertake separate reduction commitments on domestic support, border protection and export subsidies and providing assurances on the "rebalancing" issue.

Dunkelís strategy appears to be based on the assumption that in the current situation (including the Gulf War) no one - neither the U.S. nor the EC nor the two Latin American Cairns members - would be prepared to take the responsibility of opposing it and thus ending the Uruguay Round negotiations and jeopardising even further the tattered GATT system.

However, it also appears to be a somewhat higher risk strategy than the one adopted by him for Brussels.

For, unless everyone agrees to lower their "expectations" and "ambitions", and this not only in agriculture but across the wide spectrum of issues on the agenda including the new areas, and the secretariat itself lowers its ambitions over institutionalising the GATT, any new failures could even wreck the GATT.

But at this point of time, with political leadership paralysed in Washington, Brussels, and elsewhere, Dunkel probably has even less options, some participants note.

With a view to re-start the negotiating processes, Dunkel has been holding meetings with groups of countries in what the GATT spokesman last week called intensifying and broadening consultations to come up with an "overall scenario".

On Monday he met with the Cairns Group of countries and later with a small group of Third World countries. He was also due to meet Monday and Tuesday with the Asian group of countries, the EFTA and the East or in the new GATT parlance Central Europeans, Japan and Canada. He has scheduled a meeting with the informal Third World group in GATT for Tuesday afternoon.

Beginning with the agriculture negotiating group on the morning of 20 February, Dunkel has scheduled a series of meetings of the other six clusters (in which the Brussels Ministerial negotiations and consultations were carried out) and culminating in a meeting of the Trade Negotiations Committee (TNC) on 26 February which would in effect endorse his plan and formally extend the Uruguay Round negotiations but without any new deadline.

Under this programme, the Textiles Group would meet in the afternoon of 20, the Services Group on 21 morning and the Rules Group in the afternoon, the TRIPs and TRIMs Group on 22nd morning and the Group on Dispute Settlement and Final Act in the afternoon, and the Market Access Group on 25.

In each of these groups, Dunkel is expected to make a statement on his own responsibility for restarting the negotiations, referring to the mandate given to him at Brussels (for holding consultations with a view to promoting agreements in all areas of the negotiating programme on the basis of the draft text that was before the Brussels meeting).

Dunkel is also expected to suggest that some use could be made of the work done at Brussels, but without committing any one to it. He is also expected to suggest a date for each of the group's next meeting, leaving the future programme of work to the groups.

He is expected to tell the Agriculture Group that that the negotiations would be carried out on the basis of the mid-term review framework for negotiations in agriculture, and that while discussions and negotiations on technical issues like definition of the measures that would go into the aggregate measure of support (AMS) by which the reduction commitments would be measured or the "green box" (permissible) support measures, could be undertaken immediately, higher level political contacts would be needed for solving the more substantive problems.

This plan, GATT officials hope, would enable the U.S. administration to suggest that negotiations have been resumed and seek from Congress extension of the fast-track authority, a request which President Bush has to notify to Congress before 1 March.

Congress itself has 90 days to act on it - take no action and allow the automatic extension by two years of the authority provided under the U.S. Omnibus Trade and Competitiveness Act of 1988 or for either House to disapprove of such extension by resolution.

While Dunkelís plans envisage further meetings of each of the seven clusters, and at local Geneva level technicians and negotiators, no one seriously expects any substantive negotiations to take place until the U.S. administration gets Congressional okay for extension of the fast-track authority.

Also, while the "talks" might go on in the seven clusters, until the agriculture tangle is sorted out, it is not easy to see how substantive negotiations could restart in other areas, particularly new themes either, though the non-Cairns Group Third World countries might try to push the pace on market access and textiles.