Oct 27, 1989


GENEVA, OCTOBER 25 (BY CHAKRAVARTHI RAGHAVAN)— The United States tabled Wednesday before the Uruguay Round negotiating group on agriculture what it has described as "comprehensive proposals to guide agricultural production and trade towards a market oriented system".

The paper got support in principle of the members of the Cairns Group, but met with hostility and reserve from the European Community and Japan.

Third world countries, both members of the Cairns Group and others sharply questioned the paper's approach to the development dimensions of third world agriculture.

Several of them, in preliminary comments in the group, contented, themselves by saying that the paper needed to be strengthened or improved in this area, while others posed questions and sought clarifications.

But some of them privately said outside the meeting that the U.S. paper was an attempt to distort and confuse long-accepted GATT/UNCTAD terminology and concepts of "special and differential", and "differential and more favourable" treatment for third world countries. By using the term "special and ‘distinctive’ treatment" the U.S. was trying to bury part IV of GATT and the 1979 enabling clause, introduce "graduation" and divide and isolate individual third world countries.

While the U.S. proposals were officially introduced in the negotiating group on Wednesday, it had been unveiled in Washington earlier this week by the U.S. trade representative and agriculture officials. The U.S. farm lobby has been reported as receiving it coolly and negatively in some aspects.

The very far-reaching proposals, reviving some of the controversies about zero option that had "wrecked" the Montreal Ministerial meeting in December 1989, but which had been seemingly given up in the mid-term accord in April at Geneva, raised some questions about the real U.S. intentions and negotiating tactics.

GATT sources said that at the negotiating group meeting, the U.S. proposals received general support from the members of the Cairns Group, but that the European Community and Japan viewed it as going beyond the mid-term accord.

The EEC reportedly complained that the U.S. was "turning the clock back" and it was retrogression from the mid-term accord. Japan which described itself as the world's largest net food importer saw it as too drastic and going beyond the April mid-term accord at the Trade Negotiations Committee.

Third world countries found fault with the U.S. proposals for special and "distinct" treatment, noting that this was different from the GATT language (special and "differential" treatment) or the commitments on the "differential and more favourable treatment" in the Punta del Este declaration.

Peru, on behalf of a group of five "net food importing countries" (Egypt, Jamaica, Mexico, Morocco and Peru), felt the U.S. proposals, while comprehensive, had not taken into account the negative effects on food importing third world countries.

At a press conference, U.S. Under-Secretary for Agriculture, Richard Crowder, made clear that the U.S. was opposed to any uniform treatment for, the "group of developing countries", and its concept of "distinct" treatment would enable longer transitionary arrangements for countries, and even in specific products and sectors.

This individual case-by-case approach would have to be negotiated and agreed upon in the negotiating group, Crowder declared.

The U.S. believed that the third world countries should be part of the system, but that individual countries would need longer transitional arrangements.

Asked to reconcile this position with the Punta del Este declaration and the mid-term accord both of which provided for the "special and differential treatment" and committed the negotiators to work out the modalities to give effect to this, Crowder and other officials present argued that third world countries would best benefit through liberalisation of the agricultural trade and growth in world markets.

The main focus, in their view, should be on this aspect and not on special and differential treatment.

The mid-term accord recognised the S and D concept as an integral part of the negotiations, and agreed that in third world countries government support measures, direct or indirect, to encourage agricultural and rural development were an integral part of the development programmes of these countries.

The negotiating group in its work programme was asked to advance detailed proposals on the modalities to achieve the-special and differential treatment in this area.

The U.S. proposals now for "distinct" treatment, and the comments of U.S. officials appeared to imply that the U.S. was now going back on the compromise in this area agreed to in the mid-term accord, and by using the term "distinct" trying to obfuscate and bury the concept.

U.S. negotiators in this and other areas have made clear their opposition to the concept or treating the "developing countries" as a distinct group.

GATT sources said that in the preliminary comments on the U.S. paper, the EEC felt that the U.S., by its latest proposals, risked stopping the clock in the agriculture negotiations and was restarting the conceptual discussions that had engaged the negotiating group for over two years. It was not only maintaining the substance of its 1987 positions but had made it more rigid.

The EEC could not abandon its "double-price" system (under its agricultural policy). This appeared to be the main thrust of U.S. proposal. The EEC favoured a gradual reform and not one overnight.

Compared to the mid-term review commitments, the U.S. proposals were even retrograde, the EEC commented.

The elimination of most supports was not compatible with the mid-term review where it was agreed that participants would be left room for manoeuvre as long as the support was substantially reduced.

While previously the U.S. talked of ending export subsidies in ten years, it was now seeking to effect this in five years. Instead of elimination of the U.S. agriculture waiver, it now only envisaged "tariffication" of the waiver and the reduced the concept of AMS aggregate measurement of (...) U.S. proposals as a blueprint for more equitable agriculture trade. It was ambitious, but also had flexibility and did not step back from the mid-term review.

Argentina, another Cairns Group member, GATT sources said, viewed the proposals as demonstrating "a firm political will to change".

Canada saw the proposals as reflecting some Canadian views, but had some difficulties in some areas including in relation to the GATT provision (which the U.S. wants to end) enabling import restrictions to match domestic production controls. It also had some questions about the U.S. proposals for "tariffication" and lack of any new disciplines on counter-vailing measures.

Uruguay saw the proposals as realistic, but questioned the references to the special and "distinctive" treatment for third world countries. This part of the U.S. document would need improvements.

Brazil echoed similar views on the s and d question and felt this had to be properly taken into account.

New Zealand and Hungary, two other Cairns members also gave general support to the U.S. proposals.

Nigeria saw the U.S. proposals as not "helpful" on the issue of s and d, while Pakistan was unhappy that some of the domestic support measures of third world countries were being sought to be prohibited. Pakistan however welcomed the "extended" coverage envisaged in the U.S. proposals and particularly the inclusion of cotton.

India sought clarification about the use of the term "distinctive" treatment.

The U.S. concept of the "special and distinctive" treatment for countries with "demonstrated need" was contrary to the mid-term accord, where it had been recognised that "government measures on assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries", and negotiators had been asked to work out modalities of "special and differential treatment to developing countries".

There could be no question of individual countries having to "demonstrate" their need. The S and D treatment to them was an integral part of the mid-term accord.

The U.S. approach of disciplining domestic support policies by prohibiting them, phasing them out in five to ten years and permitting others, might fit the problems in agriculture of countries with "structural surpluses" but was not feasible at all for third world countries for whom agriculture development was a fundamental part of development. Support to agriculture, and help in increasing productivity, in third world countries was aimed at increasing availability of food and nutrition, employment and overall rural development. It had no trade distorting effect. In the case of industrialised countries, the U.S. paper conceded that there were some supports measures that had "minimal" trade distorting effect and could be permitted.

But in the case of third world countries, when their domestic support had no effect on international agricultural trade a different concept and yardstick was being brought in about "demonstrated need".