Jul 9, 1987


GENEVA, JULY 7 (IFDA/CHAKRAVARTHI RAGHAVAN) – Negotiators in the Uruguay round of GATT MTNS welcomed Tuesday the "tabling" by the United States of its proposals for far-reaching proposals for reforms in world agricultural trade, with most delegates however reserving their comments on the substance of the proposals until they had had time to study them.

The U.S. under-secretary for agriculture, Danial Amstutz, had presented the proposals Monday evening to the negotiating group on agriculture, and later released the proposals to the press at a press briefing. Simultaneously, in Washington these were made public by President Reagan.

All these gave rise to suspicions, which some delegates privately voiced, that the U.S. moves were as much aimed at the Congress, where protectionist trade bills are under consideration, as at the GATT negotiators here.

But no one reportedly voiced these suspicions at the negotiating group, and everyone who spoke welcomed the "tabling" of the proposals as a step forward in the negotiating process.

Many delegates also congratulated the U.S. for its move, in what GATT sources described as a lot of rhetoric about the proposals being "ambitious", "revolutionary", "innovate", and "historic".

But everyone made clear that the proposals would need study in capitals, and would need a lot of clarifications.

Many delegations reportedly underscored the view that negotiations would have to stick to the four corners of the Punta del Este declaration and mandate in this area.

The U.S. proposal has said that a process for monitoring progress (in the agricultural plans to be negotiated) as well as special rules for safeguards, enforcement and dispute settlement will be needed during the transition period.

This, and other portions of the proposal, left the impression that what the U.S. in effect was proposing was a separate GATT for agricultural trade. Though only one or two delegates apparently flagged this issue, it was apparently in many minds, with some of them suggesting that the U.S. was proposing more revolutionary disciplines for agricultural trade (so far not subject to normal GATT disciplines) than that prevailing in GATT for industrial products.

In calling for a phase-out over a 10-year period of support policies that impact on agricultural trade, the U.S. has said the negotiations should cover all agricultural commodities, food, beverages, forest products, and fish and fish products.

Several delegations reportedly expressed surprise and even some concern at the product coverage, since the scope of negotiations in the group had so far been seen as confined to basic agricultural commodities.

Questions were also raised about how the process envisaged would lead to change in GATT rules, as envisaged in the Punta del Este declaration, which calls for negotiations aiming to achieve "greater liberalisation" of trade in agriculture and bringing all measures affecting import access and export competition under "strengthened and more operationally effective GATT rules and disciplines".

The U.S. proposals in effect cal for use of the so-called "Producer Subsidy Equivalent" (PSE), developed in the OECD as a measure to judge agricultural supports – by looking at internal and world market prices to judge the extent of government support to its farmers.

Many delegates reportedly felt that the OECD work on PSE could be a reasonable basis for some part of the negotiations, but felt that more work needed to be done on the PSE before it could become an adequate basis for negotiations in GATT.

A number of third world countries, and the EEC, referred to the absence in the proposals of the concept of special and differential (S and D) treatment to the third world countries.

To the U.S. however the whole approach based on world market and comparative advantage implied the S and D principle, since third world countries now were the worst sufferers of the current situation.

The U.S. proposals exclude from the phase-out direct income or other payments to farmers "decoupled from production and marketing".

Several delegates raised question as to how it could be ascertained that such income supports were genuinely not support subsidies, and did not in fact result in increased production or unfair trading conditions.

Several countries saw the U.S. proposals as not reflecting adequately the specific aspects of the agricultural sector.

There were also references in this connection to the need of countries for "food security", problems of geographical and climatic disadvantages, comparative farm sizes.

In this view the idea of agricultural reform based on one single approach acceptable to all was questioned.

The U.S. made clear, in response to questions, that not only its "permanent waiver" in GATT for the U.S. agricultural adjustment act, but also other such waivers or equivalents – like the waiver for the Swiss in their protocol of accession – had to be put on the table and negotiated.

Also, in the U.S. view the questions relating to subsidies, market access, and problems of health and sanitary regulations and restrictions would all have to be negotiated as one package.

Some third world sources said that statements by the members of the Cairnes Group of so-called non-subsidising agricultural exporters were the "warmest" in their comments on to the U.S. proposals, though the individual statements did show some nuances.

Australia, it was reported, went the farthest in welcoming the U.S. move, and seeing this as opening the possibility for early decisions and "early harvest". Argentina and Uruguay were described as having been more cautious in their comments, reserving their views on substance until they were studied in the capitals.

The EEC representative, the Community’s Director-General for agriculture, Guy Legras, reserved detailed comments to a later meeting, but felt the U.S. proposal was "courageous and ambitious", envisaging full free trade in agriculture after ten years, and thus trade in this sector being totally ahead of other sectors of international trade.

In this view, the EEC delegate reportedly questioned the realism behind the U.S. proposals.

The Community, the EEC spokesman reportedly said, stood by the agreements at the Paris OECD meetings and the Venice summit. The EEC was serious on the need to address the issue of imbalances between supply and demand, but the means of doing this should be flexible and could differ from country to country.

In the EEC view a stable price support system would have to be maintained, with emphasis on market stability. Support for farmers and price support should be progressively reduced.

But in the EEC view the existing basic disequilibria between supply and demand would need to be addressed, as also problems of food security, special and differential treatment for third world countries.

The EEC would be tabling its own proposals before the end of the year.

Japan viewed the U.S. proposals as "ambitious and revolutionary", and preferred and "evolutionary" approach.