GENEVA 13 SEP (CHAKRAVARTHI RAGHAVAN) -- WITH AGRICULTURE TRADE ISSUES

6:28 AM Sep 13, 1993

GENEVA 13 SEP (CHAKRAVARTHI RAGHAVAN) -- WITH AGRICULTURE TRADE ISSUES
Getting some support within the European Community for changes in the Blair House accord, there is renewed speculation among Third World participants and others as to whether the GATT would be missing one more deadline for concluding the Round.

Apart from other internal deadlines, the GATT missed the December 1990 deadline for concluding the Round (set at Punta del Este) and two deadlines of the US fast-track authority (March 1991 and later renewed till March 1993).

It has been working to complete the negotiations by 15 December, the new deadline set by the US Congress under the fast track authority granted to the Clinton administration.

After the visit to Paris on 8 September of the GATT Director-General, Peter Sutherland and his failure to dissuade the French government from seeking to reopen the Blair House accord, and the weekend meetings of the EC Council of Ministers (where the others failed to persuade France to go along with the Blair House accords), Third World sources in Geneva said that once again negotiators in Geneva have been sidelined as Washington and Brussels try to resolve this latest impasse.

"Whatever the outcome," the Uruguay Round talks have again been stalled, and there is little we can do until the situation becomes clear", one Third World negotiator said Monday.

At a weekend meeting of EC foreign ministers, the EC Commission not only failed to persuade France to lift its threat to veto an eventual Uruguay Round agreement, but clearly has found that France has support from others, if not for reopening the Blair House accord with the US, at least to get some changes -- whether it be called through interpretations or side agreements etc.

The EC Commission President, Jacques Delors and Belgian Foreign Minister Willy Claes who chairs the EC Council, are due to discuss the issue in Washington Monday with Secretary of State Warren Christopher (on the sidelines of the ceremonies for the Israeli-PLO accord) and try to persuade the US to agree to reopen the agriculture talks. The EC Commission for GATT negotiations, Sir Leon Brittan has also gone to Washington to meet his counterpart, US Trade Representative, Mickey Kantor, and persuade him to agree to find ways to meet French objections.

There were reports that the United States would refuse to renegotiate the Blair House accord or agree to changes -- but it was not clear whether this is all part of the negotiating tactics and belief that by standing firm the US hopes it could force the EC and France to fall in line and whether both the US and EC would be ready to walk away and give up all that they have gained so far in the Uruguay Round from concessions by developing countries in various areas.

Key Latin American countries in the Rio Group are meeting later this week at Montevideo (Uruguay), with the ministers due to meet with Sutherland on 17 September.

But the ball is now clearly in the US-EC court and there seems to be little that Sutherland or any of the negotiators from other countries could do, one of the participants said.

Some of them felt that the Sutherland strategy of talking to ministers and capitals and using the media to create pressures had clearly backfired in respect of France.

On the eve of his visit to Paris last Wednesday, for talks with the French Prime Minister Balladur, Sutherland's interview to the Figaro where he was quoted as saying that the French country-side was "hysterical" over the farm accord, got considerable prominence and created quite a row in the media and French official circles.

At Paris, Sutherland tried to impress the French about the imperatives of the 15 December deadline, noting that it was not his deadline (though since mid-July the English media have been portraying him as having set the deadline and that he would close the talks one way or another, but without any contradiction from the GATT press office).

But Balladur remained unimpressed, according to French media reports as well as other reports of Sutherland's press conference at Paris.

(According to an IPS report from Paris, Sutherland left Paris Thursday amidst a flurry of French media invective and threat of a French veto on EC ratification of the 'Blair House' EC-US deal on subsidy cuts unless it gets better terms.

(For his part Sutherland, on his first trip to Paris since taking over as GATT chief in June, has warned that Blair House cannot be renegotiated. Washington has also said the transatlantic pact cannot be changed without jeopardising the entire Uruguay Round.

(The GATT chief drew some criticism in France for his widely quoted remarks that French farmers were in "veritable hysteria" over the threat to farm trade subsidies.

(Paris daily France-Soir found a French psychologist to look at Sutherland's picture and conclude that he was "irascible, inflexible, swaggering, contemptuous, withdrawn and intolerant -- but intelligent".

(The subsidies are bitterly opposed by producers across the developed and developing world, which enables EC farm produce to be sold more cheaply than their goods. In some developing countries in North Africa and eastern Europe the cheaply dumped produce has badly damaged local farmers' incomes.

(But the issue is a sensitive one for France, despite the fact that agriculture contributed just 3.7 percent of the country's GDP in 1992.

(France's traditional vision of itself as a farming nation lives on and its slow loss is deeply mourned, the daily Le Figaro noting Thursday that Sutherland did not understand the "human dimension" of the farmers' problems.

(French economist Jean Weiller, who participated in the initial Uruguay Round negotiations said the reason why France wanted to reopen Blair House was not just to protect farmers' interests, but to prevent further exodus from the countryside to the cities.

(France, he said, seems to be trying to help the poorest of the farmers so they can stay on their farms. In an article in the French daily Le Monde he theorised that it any case it would be difficult to relaunch the Round in the present world recession.

(France is also under pressure from its EC partners, notably Britain and possibly Germany, where two leading business foundations Thursday urged German Chancellor Helmut Kohl to face off French demands to reopen Blair House and save the GATT.

(The presidents of the Federation of German Industry (BDI) and the German Federation of Chambers of Commerce (DIHT) told Kohl in a letter that talk of changing Blair House was dangerous, and that France's position "endangered" the entire Uruguay Round.

("In view of the recession and high unemployment in Europe, German business is losing its understanding why attempts are repeatedly made to enforce national interests at the expense of the whole European Community," said the letter.

(But Michel Fouquin, an economist at the Paris based Association for World Economic Studies said the threat of chaos if France used its veto was not as grave as some in the EC feared.

(While admitting there was a political side to the French demands, a kind of face-saving gesture was needed, a simple gesture from the EC showing France that it need not use its veto and block all negotiations.

(Other countries resisting a reopening of the Blair House accord are afraid that France will go too far against the U.S. at a price too dear to pay, said Fouquin. But he thought that such a price might be bearable.

("After all, the Blair House agreement contains several grey areas which could be interpreted in a way so as to be favourable to France," he said. "Annexes could be added, for instance.")

The EC's GATT Representative, Mr. Tran Van-Thinh, was quoted in the Paris daily Figaro over the weekend as saying (after the Sutherland visit) that the December 15 deadline for concluding the negotiations would not be met.

"There is no question that anything goes and at any price in order to meet the Dec 15 date," Tran was quoted as saying in the weekend edition of Figaro. "The Uruguay Round deadline has already been postponed and it can be done again," he is reported as having said.

The American's fixation on this closing date (15 December) to conclude the negotiations has no doubt an arbitrary quality, Tran has added. It was through the application of internal legislation (the fast-track authority granted by Congress to the administration) that Washington had imposed this time-table on the rest of the world.

The rest of the States, he said, were abiding by this mid-December deadline, to give it time and perhaps to let the dossiers ripen. But the deadline has already been postponed in the past and it can be done again, though it would be necessary to obtain the US agreement (for postponing the deadline) and this was far from being reached, the EC Commission representative has said.

The same issue of the Figaro also quoted Alain Juppe, French Foreign Minister has also been quoted as saying (at Bonn) that it was not "sacrilegious to ask for rediscussion" of the Blair House accord, reminding people that the Americans themselves had reopened discussions on Nafta agreement concluded with Canada and Mexico when they realised afterwards that some of their interests had been compromised.

Juppe is quoted as claiming that France had not slammed the door in the GATT affair and that he was optimistic about finding an European compromise in the next eight days of debates.

"Our proposals are not for breaking up the house and no one said they were far fetched or inacceptable, and agriculture is not the only unresolved question " Juppe said in the Figaro report, referring in this connection the outstanding issues on finalising the Airbus agreement (on aircraft subsidies), steel, the audio-visual issue (in the services accord) and questions of access to Asian markets, as well as the "world trade organization which only the Americans don't accept".

Third World diplomats said that even apart from this, they had the impression from their colleagues in the Commission here that the EC did not expect the issue to be resolved even at the 20 September meeting of the 'Grand Conseil' (of foreign, trade and agriculture ministers) and that a solution may have to wait for the meeting of foreign ministers on 4-5 October and even an EC summit at end of the month.

The British Foreign Secretary has also been quoted as saying that the October special summit over the Maastricht treaty (now ratified by all members) might have to be postponed if the GATT talks issue remained unresolved till then.

Whether the French would be impressed enough to compromise however seemed doubtful.

Negotiators in Geneva said that all this would leave very little time for the large number of details and issues to be resolved, and no one would be ready to adopt the 'conditional approach' advocated by Sutherland to settle all other issues, pending the resolution of the agricultural tangle.

Tran was also quoted as saying in the Figaro that not enough efforts had been made to educate the French public on the goals of the Uruguay Round and was at stake, adding, "the Americans had never given priority to a multilateral system. They want to eat their cake and have it too."

It was therefore imperative in his eyes, that Europe give itself an arsenal capable of insuring its defence in case of attack in order to be respected -- presumably a reference to the French idea that the EC should empower itself with its own version of the US 301 provisions for trade retaliation.

Tran is reported as having added that the Blair House agreement, brought "real progress despite its imperfections and despite the fact that it does not meet their (French) demands."

"Nonetheless, it is now necessary to find the means to allow better presentation of the Blair House agreement and even to touch it up."

Tran is quoted as saying in this regard that the French were complaining that the Blair House looked for ways to reduce the volume of export subsidies in the event of the hypothesis that the market was shrinking and asked "what happens if the market increases".

Blair House in this case is not very balanced, Tran recognizes, according to the Figaro.

The EC Commission President, Jacques Delors and Belgian Foreign Minister Willy Claes who chairs the EC Council, are due to discuss the issue and try to persuade the US to agree to reopen the talks, at meetings in Washington today with Secretary of State Warren Christopher. The EC Commission for GATT negotiations, Sir Leon Brittan has also gone to Washington to meet his counterpart, US Trade Representative, Mickey Kantor, and persuade him to be flexible on the Blair House accord.

But If Tran's remarks about the deficiencies of the Blair House and other reports of various compromise ideas that France has presented be any guide, any compromise would prove to be of even less value to the Cairns group and Third World countries who, with reluctance, have so far gone along with the Blair House compromise on the ground that even if it gained them little in terms of market access, it would atleast mark a turning point and bring agriculture trade under disciplines and 'freeze and reduce' volumes of subsidised exports, thus providing them an opportunity for fair competition in third markets.

If the French views about "what happens if the market increases" are to prevail, then those competitive producers and exporters (like Argentina, Australia, Uruguay, Brazil etc) might find themselves faced in fact, not with disciplines and fair trade, but managed trade and market-sharing arrangements and they would have little to look forward even in the next decade.

Whether in this situation, and the prospect of the US demanding its own changes (for looser disciplines on anti-dumping etc), developing countries would have anything to gain or would continue to press for and sing the chorus of completion of the Round is not very clear.

In a speech Monday at a Commonwealth business forum in London, India's GATT Representative, Balkrishan Zutshi, suggested that while it would be difficult to estimate the precise costs of failure of the Round for each country or even groups of countries, "it is quite clear that losers are not necessarily going to be the developing countries. Perhaps, the developed countries have to lose much more."

Meanwhile, at the GATT, negotiators are going through the motions: engaging in bilateral market access talks in goods and services.

The GATT secretariat, nervous about giving formal credence to suspension of the talks, has arranged several bilateral meetings among negotiators on market access issues. But several of them said it was very frustrating since they had to go to these bilaterals and find there was nothing much to say.

The Group of Negotiations on Services (GNS) was also meeting Monday under chairmanship of former Australian Ambassador to GATT, David Hawes, to set a work programme for finalising outstanding issues and setting the text of the framework agreement.

GATT Director-General and TNC Chair, Peter Sutherland, has reportedly asked Hawes to fix the text of the framework agreement by the end of this week.

There are some relatively minor issues where the text has to be filled in or some wordings changed. But there is some doubt whether it would be possible to look into some of the key substantive questions and settle them.

Some delegations have made clear that they would not agree to any finalisation of the text, or empower Hawes or Sutherland to finalise and settle the text -- except in the context of an overall 'track four' process for substantive changes where some balance could be set.

Among the substantive questions in the framework accord on services to be resolved are questions relating to some of the annexes -- those relating to telecommunications and financial services.

These include questions as to whether the General Agreement on Trade in Services (GATS), for example, could settle issues relating to taxation of services profits and earnings by different contracting parties, about the pricing policies for basic telecommunications, proposals for setting the parameters of future negotiations in telecommunications, and what would happen to the understanding on commitments on financial services (which have been drawn up as guidelines for the exchange of concessions), once the GATS enters into force, questions of most-favoured-nation treatment and 'exceptions'.