Monday 21 September 1992

US-EC NEGOTIATIONS OVER SOYA DEADLOCKED

Geneva 18 Sep (Chakravarthi Raghavan) -- The talks between the United States and the European Community over the soya-beans imports and the EC oil seeds regime have not led to any solutions and the issue will come up before the GATT Council at its meeting on Sep 29, according to GATT sources.

The issue is coming up at the instance of the EC, the US which seeks authority to retaliate against the EC for failure to implement panel rulings, and Argentina which feels aggrieved that its 'claims' for principal suppliers interest in tariff renegotiations has not been accepted.

The EC which is seeking to renegotiate its tariff concessions on oilseeds under Art XXVIII, and has received the Council's okay for such negotiations with those contracting parties having initial negotiating rights and/or interest as principal suppliers, has itself brought the issue on the Council agenda.

The EC had sought such renegotiations because of its inability to implement the rulings of the two panels on this issue on the dispute raised by the US, which had successfully contended before the panels that the tariff concessions it obtained from the EC during the Kennedy Round (resulting in a bound zero tariff) have been impaired by the EC's domestic support policies to oilseeds producers and processors.

Unable to implement the panel report, the EC sought the tariff renegotiation route, which would involve its compensating the affected parties, as it had a right to do under the General Agreement.

It also sought to do this under the authority of the GATT Contracting Parties, and got the GATT Council to agree.

The 60-day time-limit for this has now expired, but the Council could extend the period.

In the negotiations with the US and other interested parties, the EC offered to in effect bind the existing level of domestic support (under its new oilseeds regime), and also offered to compensate the other cps through tariff quotas in other products including wheat, beef etc. All the items and products indicated by it carry some high-value added items.

Subject to the EC agreeing not to raise the tariffs on the oil- seeds, some of the other parties like Brazil would appear to have reacted favourably.

But the US has baulked, arguing that the compensations would not benefit its soya producers.

The US, which has been threatening retaliation against the EC over its failure so far to implement the panel rulings, is expected by some to come up with a list of products on which it would withdraw concessions and imposed 100 percent duties on imports from the EC and seek the Council authorization.

While any retaliation would still not help the US soya producers - unless the EC backs down because of the retaliation, which no one expects - the move and posture of a strong stance would help Bush in his re-election campaign where he has been wooing the farm lobby and is getting increasing demands from it.

GATT sources do not expect any easy solution either.

The renewal before the GATT Council of the oilseeds dispute comes amidst some other contradictory reports that the US and EC have in fact been able to arrive at a modus vivendi over their differences on the agricultural issue in the Uruguay Round and are merely waiting for a favourable timing to announce it.

The timing, presumably, is with an eye to the US elections and whether it would help or hinder Bush.

However, other GATT participants doubt that given the uncertainties of the US elections, any of its major or minor trading partners would be willing to commit themselves and do a deal.

If Bush does not win, or even if the new Congress has a different orientation, there will be pressure to renegotiate, and the trading partners would be asked to give more concessions.

This is a scenario that no one would like. Any serious negotiations on the Uruguay Round and to conclude it could thus be expected only after the outcome of the US elections.

The uncertainties of the Maastricht process in the EC would also be another uncertainty.

`ho{Whatever way the French referendum goes, a major issue that has cropped up is the concentration of power, including negotiating and decision-making power in a few hands, and with technocrats and bureaucrats, answerable to no one, and with the public in countries feeling their sovereignty and ability to influence their parliaments and politicians are being taken away.

The issue is seen as developing in terms of wider controversies about governance. It is not merely the issue of the EC bureaucracy and its powers in Brussels, but even issues like the future Multilateral Trade Organization and what powers it would vest in international bureaucracies acting in cohorts with some national bureaucracies and private interests of corporations could do.