Mar 13, 1989

U.S. FOR "RATCHETED-REDUCTION" OF SUPPORT

GENEVA, MARCH 9 (IFDA/CHAKRAVARTHI RAGHAVAN) The United States in a seeming concession to the EEC on agriculture trade issues, has reportedly given up talk of "elimination" of all government support and subsidy, but now calls for "ratcheted-reductions".

Since the failure of the Montreal mid-term review in the Uruguay round, and parallel to the GATT consultations on agriculture, the U.S. and EEC have been holding official bilateral talks.

Ministerial consultations are slated for this weekend.

In proposals to the EEC, the U.S. would appear to have called for fullest liberalisation of trade and market-oriented agricultural trading system and reforms through negotiation of commitments on support and protection and strengthened GATT regime.

The U.S. has presented the objective of the reforms as "ratcheted-reductions" in agriculture support and protection, to be sustained over an agreed period of time to correct and prevent restrictions and distortions in agricultural markets.

The use of "ratcheted" reduction would mean that reduction process at no stage can be reversed.

This goal is to be achieved through negotiations on specific policies and measures, and commitments on aggregate measurement of support (whose terms would be negotiated) or combination of these approaches.

The reforms would address all direct and indirect subsidies and import barriers directly or indirectly impinging on trade in all agricultural products, and should be subject to surveillance and other procedures to ensure compliance.

In terms of import access, the reforms should encompass commitments in respect of all measures maintained under waivers, protocols of accession or other derogations and exceptions or QRS and other non-tariff access restrictions, which should be converted to tariffs.

The commitments on export competition should cover direct budgetary assistance to exports, other payments on products exported, and other forms of export assistance.

Reforms and commitments in respect of internal support should include all price and income supports and all other measures directly or indirectly affecting trade.

In respect of third world countries, the U.S. wants that government measures to encourage agricultural and rural development in the third world should be an integral element of the negotiations.

It envisages non-commodity specific direct or indirect government subsidies by the third world, and subject to disciplines to be agreed upon.

In terms of short-term measures, the U.S. would appear to envisage a freeze on support and protection policies, including market access constraints, and commitment not to initiate new programmes.

The participants are however to give special attention to possible negative effects of short-term measures on net food importing third world countries.

The freeze and any reductions, in terms of short-term elements, in the U.S. view should be expressed in terms of specific policies and measures.

The U.S. also envisages exempting "some developing countries" from actions under these short-term measures, "based on their need for such exceptional treatment".

In this week's GATT consultations the Dunkel ideas in this area, and on which U.S. apparently made no comment, involved exempting all third world countries from short-term measures, a view supported by the EEC, except for some competitive exporters of the cairns group.

The U.S. proposals to EEC also involve "harmonisation" of national regulations as a long-term goal in sanitary and phytosanitary regulations, through a work programme to be completed by end 1990.

The U.S. proposals for harmonisation, involving GATT rules to ensure regulations are based on "sound scientific evidence" and recognising "principle of equivalence" touches the core of the U.S.-EEC hormones dispute, namely sovereignty of countries to determine their health and safety standards.