Nov 7, 1990


GENEVA, NOVEMBER 5 (BY CHAKRAVARTHI RAGHAVAN)— The Cairns Group appeared Monday to be soft-pedalling the threats, voiced by some of its members, of a walkout from the Uruguay Round over agriculture.

A statement issued by the 14-member Cairns Group of agricultural exporters, after their Ministerial meeting here, merely said that if the EEC did not table its offers and negotiate in good faith, by mid-November the nature of the Brussels meeting would have to be reconsidered.

What this "reconsideration" would involve was not clarified, but it seemed clear that the Cairns Group is planning no walkout not even forcing an end to the Round in December as scheduled.

"It will be extraordinarily difficult to hold the Brussels meeting in the present format if by mid-November there are not these advances in the agriculture negotiations that we have proposed", the Australian Minister for Trade negotiations, Dr. Neal Blewett, who chairs the Cairns group told newsmen.

Repeatedly pressed to explain the group's options - postponement of the Brussels meeting, rollover of the negotiations into next year or ending the Uruguay Round - Blewett was unable to clarify - merely saying it would "extraordinarily difficult" for the Brussels meeting to be held in its present format designed to conclude the Round and it would be a "pipe-dream" for countries to go to Brussels thinking that without an agreement on agriculture, they could settle other outstanding issues there.

Blewett would not also spell out the yardsticks by which the Cairns Group's demands for "substantial outcome in agriculture" could be judged.

It was clear that the Group is divided either on a walkout or ending the Round in December. "We are not clear at this point of time and it will be self-indulgent to walk-out", Blewett said while the Canadian Trade Minister, John Crossby said "we have no intention of leaving the Uruguay Round or the multilateral trade negotiations until they are over".

"I expect the EEC to meet its obligations for the rest of the round", Crossby said adding he did not believe Chancellor Kohl of Germany or President Mitterand of France wanted to go down in history as the Smoot and Hawley of the 90’s - a reference to the two U.S. Congressmen who had sponsored the 1930 U.S. Tariff Act that is generally blamed for triggering the Great Depression.

Blewett's statements (and the silence at the press conference of Argentina and others who had been advocating a tough line) seemed to imply that the Group is divided even on ending the negotiations in December if no agreement is reached on agriculture, and that it envisaged negotiations being carried on in some form or another beyond Brussels.

After the Vancouver meeting of the Asia-Pacific Group, the U.S. Trade Representative, Carla Hills had been talking of 30 or 40 Third World countries walking out if the agriculture negotiations did not result in substantive agreements.

"If this is not the case, all participants in the negotiations would need to assess the implications for the further conduct of the Uruguay Round and for the future of the entire multilateral trading system", the statement said and reiterated the group's position, expressed in Chile in July, "that the Uruguay Round cannot and will not conclude, in whole or in part without a substantial outcome on agriculture".

The Cairns Group statement said that all participants should recognise that there was much more at stake than agriculture and that failure of the Round would unleash protectionist forces, which had been building up in recent years.

"We risk a further breakdown of the multilateral framework, a loss of predictability and stability in trading conditions and a growth of inward looking trading blocs".

"While developing countries would suffer greatly from such an outcome, the cost for competitive industries in the industrialised world would be equally enormous. Any wrong signal from the Round at this time would have unforeseeable negative effects on each and every country's economic activity and, on overall prospects for a sustained increase in world trade and prosperity".

Earlier, the statement squarely blamed the EC for the "state of crisis" in the negotiations and warned that if the Round failed "it is the EC which must shoulder the blame".

The lack of any engagement on agriculture was adversely affecting progress in most other areas including natural resource-based products, textiles, tropical products and other market access negotiating groups.

Calling on the EC to table its offer and country lists without further delay and allow negotiations on agriculture to proceed, and thereby remove the blockages, the Group said: "It was simply unrealistic for the Community to expect progress to be made elsewhere in the Uruguay round while it continued to stall on agriculture".

At the same time, the statement added, the Ministers noted with concern reports that the Community offer might contemplate minimal reductions in internal support levels over next five years, the absence of any effective opportunity for improved market access and absence of any specific commitment to reduce export subsidies.

They were also concerned at reports that the EC member-states might attach additional requirements like rebalancing and increased protection for some products, running counter to the trade liberalising objective of the Round.

The Community would need to demonstrate that its offer did not have a "take it or leave it" character, the Cairns Group said.

Before the meeting, several of the individual members had been speaking of a "walk-out". Some of them had also been talking of blocking negotiations in other areas, as had been done at Montreal.

The Argentine Minister, Felipe Sola, had said here in October that Argentina was not going to negotiate on any of the other points being discussed in the Uruguay Round if there was no positive outcome in Agriculture and that he expected the Argentina position to be upheld at the Cairns Group meeting.

"If a crisis has to be created we will create it here in Geneva and not wait till we go to Brussels", he had said.

But with the EC unable to table its "offers", and the member-states unwilling to back even the meagre proposals of its Commission, and faced with the reality of blockages across the board, there has been an effort to tone down such talks, though Washington reports monday said that the Bush administration is now weighing its options, including in pursuing its initiative for Americas.

The U.S. Trade Representative Mrs Carla Hills has arrived in Geneva and is due to meet later Monday with the Cairns Group Ministers. If the EC manages to agree upon an offer at its meeting of Agriculture and Trade Ministers Monday, EC Commissioner Andriessen is expected to arrive here to meet with Carla Hills.

But as of Monday evening, it looked as if the EC Agriculture Ministers would again be unable to agree. At the last meeting when the EEC Commission had tried to win support by agreeing to provide compensation to the French farmers, but presumably decoupled from production, the French minister had baulked, arguing that his farmers would not accept any "doles".

But the latest expectation here, particularly after the "weak" statement of the Cairns Group, is that the EC might just table its "country lists" of agriculture support measures and could well take another week to table its "offers".

The Cairns Group statement blamed the EC for the blockage of negotiations, not only in agriculture, but in other areas, because of the failure to table its offers on agriculture.

The statement called upon the EC to table its offers and country lists "without further delay" and demonstrate that "its offer did not have a ‘take it or leave it’ character".

When the EC tabled its offers, Cairns Group would engage in "intensive negotiations" to establish whether "sufficient flexibility" existed to achieve the objective of substantial and progressive reduction in support and protection.

The Cairns Group would also see whether the EC and others including Japan and EFTA countries are willing to seriously negotiate specific commitments in internal support, import access and export subsidies and pursue positive outcome on sanitary and phyto-sanitary measures, and taking into account the special and differential treatment for the Third World countries.

On this basis, it should be possible by mid-November to assess whether the Brussels meeting had any prospect of agreeing to a substantial settlement on agriculture along these lines as part of an overall package to conclude the Uruguay Round.