8:11 AM Oct 12, 1993


Geneva 12 Oct (Chakravarthi Raghavan) -- A ministerial meeting of the Cairns group of agricultural exporting countries is set for Monday, 18 October (with ministers beginning their consultations over dinner the previous day) to consider the outlook in the Uruguay Round.

A Cairns group source said that while the US Trade Representative Mickey Kantor and EC Trade Commissioner Sir Leon Brittan are due to meet Wednesday in Brussels, Brittan has been already pressing the Cairns group countries to find compromises to accommodate France's viewpoint against the Blair House deal.

Brittan reportedly held a meeting with Cairns group envoys in Brussels Monday where he stressed the need to find solutions to accommodate French view in order to conclude the Round and that such a compromise to France would have to come from outside the Community.

This is presumably a reference to a view that the French could be persuaded to accept the Blair House by providing them compensation internally -- through reduction of internal market prices support that will make the French cereals which are competitive get a greater EC share (at the expense of the German and other producers).

Brittan's main message to the Cairns group would appear to have been that this was not on the cards and that the other agricultural exporters have to find a way out!

The Cairns group itself is known to be divided on its approach to Blair House accord between the US and EC. Canada still resists the complete tariffication, and wants to maintain the GATT provision now to enable quantitative restrictions in support of domestic supply management.

Others have other variations relating to their particular exports.

The next two weeks will be very crucial for the entire negotiations and will determine what would be the content of a successful package and whether it will be such as to command wide acceptance and consensus, one of the delegate said.

Third World sources said that there was little doubt a successful conclusion of the Round would need an US-EC accord and both Kantor and Brittan were currently engaged in striking such an accord.

Given the French position on agriculture, for a deal to emerge some compromises would have to be found on the Blair House, and it would need concessions from the US and the Cairns group, with the US as the crucial element. Few see the Cairns group rejecting a US-EC deal and blocking the consensus on an overall package.

There can be no repetition of Montreal, one of its members said, in a reference to the Montreal mid-term meeting in 1988 December.

At that time when the US and EC were ready to put the agriculture issue aside (in terms of a mid-term accord), and Australia and New Zealand and other industrialized country members of the Cairns group supported it, the Latin American members of the group said no and blocked the accord, only to fall in line a few months later (including yielding on intellectual property issues) the moment the US and EC reached some understanding.

But for the US to agree to a compromise now, whether it is called renegotiation or interpretation or whatever, the EC would have to expand the US market access package in industrial products through a larger sectoral zero tariff approach in areas where European industry is as much resisting concessions as the French farmers on agriculture.

But for the EC and Brittan to deliver on it, the negotiations between the two on textiles could be crucial, with the EC demanding larger cuts of peak tariffs (in return for its agreeing to throwing in a few more sectors into the zero-tariff basket). The discussions between the US and EC textile industry interests are reported to be not progressing enough to produce the kind of concessions that the EC is looking for in textiles and clothing.

For the US, any reduction by it of textiles and clothing high peak tariffs, has to be matched by major market opening concessions from developing countries who should be agreeable to front-load their tariff cuts in textiles and clothing and liberalisation of imports from the US, in return for the promise of backloaded commitment by the US to remove the quota restrictions on them in 2002.

Apart from the problems of agriculture, industrial tariffs, and some of the services issues (maritime and audiovisuals), the question of the future institutional framework has also to be settled.

While all these may or may not amount to the 'interim accord" (excluding agriculture) to conclude the Round, and continue negotiations on outstanding issues in the future, it is very clear that the final package would be very small indeed and contain little for the developing countries.

Whether this small market access benefits to them, and the enhanced obligations by them in services, intellectual property etc, would be compensated by clear rules and security of market access and credible dispute settlement processes that will safeguard their interests, is not clear at all at this moment.

This too, whether there will be a multilateral trade organization (the name is not seen of great importance) with an integrated dispute settlement mechanism that would oblige the major trading partners to observe the internationally agreed rules and procedures and eschew any unilateral trade retaliation threats, would appear to depend on the US-EC discussions.

The Sutherland consultation processes are seen as crucial in these and other matters.

Several participants are beginning to worry that Sutherland, who was the US-EC choice, in his process of consultations to establish a consensus, would be holding individual consultations to push an US-EC accord as one commanding consensus, in effect daring any who have objections to stand up and say no at the end and take the responsibility for the failure of the Round.

The informal group of developing countries are due to hold a meeting Thursday to make an assessment, including the consultation processes of the GATT chief, Peter Sutherland, which under the guise of transparency through TNC meetings, has sought to convert the negotiations among participants into negotiations with him to establish the existence or otherwise of a consensus.

Some participants have been expressing concern that instead of their being able to argue with and convince other trading partners in a plurilateral set up, the current processes in GATT appear to involve their convincing Sutherland and his ability to convince others to accept this viewpoint.