5:22 AM Sep 1, 1993
EC FARM POLICY DEBATES LEAVE NEGOTIATORS CONFUSEDGeneva 1 Sep (Chakravarthi Raghavan) -- Reports, several of them contradictory, from Paris, Brussels and Bonn over the France's determined efforts to get changes in the "agriculture file" of the Uruguay Round and the varying degrees of support from Belgium (the current EC chair) and Germany, have left negotiators in Geneva confused. Despite GATT Director-General Peter Sutherland's pep talk at the Trade Negotiations Committee Tuesday, and the call for immediate resumption of market access negotiations, the negotiators seem likely to have an extended summer vacation until after the 20 September "jumbo" EC Council of Ministers meeting, and perhaps a subsequent 3-4 October foreign ministers meeting. And while everyone speaks of the 15 December deadline (the deadline of the US fast track authority), few in private have been impressed by Sutherland's talk that the negotiations will end, with success or failure, on 15 December. As one of them put it, "if the participating governments in the TNC decide that they cannot finish the negotiations and have to carry on, Sutherland has to accept it and carry on or at best give notice and walk away from the job; he is only a 'contracted party' of the GATT." In Paris Tuesday, Willy Claes, Foreign Minister of Belgium (which currently holds the EC Presidency) after meeting the French Prime Minister Edouard Balladur, told journalists that he would not object to the French call for renegotiating the Blair House accord, but that this should not wreck the GATT negotiations. In Bonn, the German economic and foreign ministers were quoted as supporting Sutherland in his stand and opposing the renegotiation of the Blair House accord, adding to the overall confusion in view of Chancellor Kohl's press conference remarks last Thursday (after his meeting with Balladur), the interview in the Sunday newspaper (Weltam Sontag) of need to find compromises to meet the French difficulties and the statement on Monday of the German government spokesman Vogel. As one French source put it, whether it is to be called renegotiation or any other, the Blair House accord, signed by the EC Commission, as such had not been approved by the EC Council and before it could be incorporated into the Draft Final Act text of the Uruguay Round or the Round agreements approved changes would be needed. While it seems clear that the Balladur government is seeking changes that it could present to its farm lobby as a major concession and change, and few key countries would oppose it so long as it is only cosmetic and not substantial, the media reports of the French proposals have left negotiators here confused. All of them say that until they see what was to be changed, either in terms of the textual changes sought in the DFA (the EC Commission last December had put forward informally a text based on the Blair House accord) and actually in terms of the EC's market access "offers" in agriculture as well as the schedules of domestic and export subsidy reductions envisaged in the DFA texts, they would be unable to make a clear assessment, negotiate or take a firm position. Some reports say that France is merely seeking "flexibility" within the overall terms of the subsidised export cuts proposed to take care of currency fluctuations etc. The exchange rate variations issue is to some extent already covered in the DFA text in terms of imports. And it is not clear whether the French proposal relates to the imports, international prices on export markets and the subsidy allowed or something else. Considering that most exporters, agriculture or otherwise, have been struggling with the variable exchange rates since mid-70s, and agriculture exports even from France is big business and not a farm-level activity, to suggest that the French or EC farmers need to be protected against currency fluctuations would not move many others. But if reports are correct that the French in fact want to exclude the disciplines on subsidised exports (24 percent over a six year period in the DFA text, 21 percent over a six year period in the Blair House accord) to apply only to future production and not to the stock-piled surpluses of the past or reduce the volume reductions to 16-18 percent over nine years, then it might be more difficult to strike a deal. Other reports also suggest that the French want the Americans (and others) to accept voluntary limitations on exports to EC of such products as corn gluten. A developing country delegate with some agricultural exporting interest said that the reports are so confusing that his country would be unable to do any market access negotiations with the EC or the other major entities without some clarification and finality. The Sutherland idea of "conditional" offers just cannot work here, or for that matter in other major areas like textiles etc, since in the final stages, "our conditions won't stick, and we will be forced to pay an additional price", he said. This, he said, is apart from the fact that several of the major Third World exporters, like Asean or some of the Latin Americans, would be extremely reluctant to "improve" their market access offers, without knowing the fate of the US demands for changes in the anti-dumping text. Sutherland's strategy at this time, through the informal group headed by Julius Lacarte, of addressing only the issue of changes in the DFA text on Multilateral Trade Organization and integrated dispute settlement, both areas where the US wants changes but isolating these changes from the changes sought in other parts of the DFA, would only complicate problems and not produce results, another said. The informal developing country group at the GATT, with Malaysia's Haroon Siraj in the Chair, is due to meet on Thursday when delegations might voice their concerns. But whether Malaysia will be able to provide a stronger leadership to the group, than its predecessor Morocco, and use it to ensure that Sutherland not merely take account of or meet the US-EC concerns, but those of the developing countries remains to be seen. And while everyone publicly join Sutherland's hand-wringing of dire consequences to the multilateral system and the world economy of a failure of the Round, few share in private these cassandra-like predictions. The sluggishness and the recession and employment crisis in the world economy, and more so in the industrial countries (the major markets for the South) are structural and successful trade rounds would contribute little to reigniting the economy, they say in private. Other measures, including government activism in the economy (macro and micro) rather than withdrawal, are needed -- not unilaterally in countries but in concert and involving both the majors of the North and in the South. Of that there are no signs, as yet, though the EC Commission President's voice has been added to critics who have been complaining of the inadequacy of sectoral approaches (by GATT, IMF and the World Bank) and need for a system-wide global approach through the UN.