Nov 13, 1990

URUGUAY ROUND "CRISIS" OVER AGRICULTURE.

GENEVA, NOVEMBER 12 (BY CHAKRAVARTHI RAGHAVAN)ó GATT Director-General Arthur Dunkel is reported to be planning to convene an informal meeting of the Trade Negotiations Committee Monday to advise the TNC of the crisis facing the Uruguay Round negotiations over agriculture as well as other areas.

The Group of Negotiations on Goods (GNG) is due to meet Monday afternoon to carry out its mandated assessment of the results of the Round in terms of its principles and from the perspective of the special and differential treatment for Third World countries.

But with virtually no result in any of the areas, the Third World countries are planning to point this out and call for another meeting, on November 26 or so, to carry out this assessment.

The informal TNC meet is scheduled Monday to take place immediately after the GNG. It is partly to meet the EEC views that the crisis was not only in agriculture (where the EC is being blamed) but also in services (where the EC blames the U.S.)

In Tokyo Sunday, the EC Commissioner for external relations, Frans Andriessen complained that the agricultural issue was being over emphasised and that the EC wanted a "total balanced package including agriculture, services, intellectual property rights and other issues" - an indication that the EC would try to spread the blame for failure to others too.

The U.S. and EC are to hold in Washington Tuesday consultations at level of the U.S. President and the Italian Prime Minister as head of the presidency of the EEC Council of Ministers. Later Friday, the U.S. and EEC are to hold their bilateral Ministerial consultations at Brussels.

Dunkelís decision to convene the TNC meeting, and spell out to the negotiators the deadlock in agriculture and other areas, was taken after the negotiations on agriculture were broken off saturday with no date set for their renewal.

GATT sources said that Dunkel would spell out to the TNC not only the deadlock and breakdown in agriculture, but the deadlock in other areas too and the virtual collapse facing the Round, 21 days before the date set for the Brussels meet.

Dunkelís spelling out of the other areas of deadlock appears to be in deference to the EEC, which had pointed out last week that agriculture was not the only area of deadlock, and referred in this connection to services where the U.S. has now retreated from its position of four years back and is seeking to exclude several of the service sectors from the scope of the framework.

Meanwhile there are increasing doubts about the nature of the Brussels meeting, and even whether it would take place in time.

However GATT officials have been trying to discourage such talk, and even whether Dunkel would officially tell the TNC of the crisis, though in a TV interview over Swiss Television he acknowledged last week that there was crisis over agriculture.

Since it has been known for some time that the negotiations as a whole are in a state of crisis, the way the "crisis" over agriculture was created in the green room consultations, "acknowledged", w and made manifest "officially", raised some questions among observers.

They noted that in the entire negotiating process so far, there seemed to be two sets of negotiations going on:

One is of the U.S., EEC and Japan vis-à-vis each other and, in combination, against the Third World in new areas and so-called rule-making. The other is to use these negotiations, and accords that might come as a leverage - by the U.S. administration against Congress and the States and local authorities and by the EC Commission against member-states.

The "crisis" over agriculture became evident Saturday when in green room consultations the U.S. and Cairns Group members complained that the EC offer on agriculture was worse than no offer.

Participants said that the explanations of EEC negotiators on their "offer" tabled last week, showed that at best a "freeze" on existing access was envisaged and no liberalisation, and no commitments on export subsidies but only "market sharing" based on its current share obtained through subsidised exports.

In the consultations, chaired by Dunkel, the EEC offer was reportedly assailed strongly by almost everyone. The EEC offer, it was noted, was worse than no offer - since it would result in agricultural exporters having less access than what they had now. If this was to be the situation, it was clear the EC was not negotiating in good faith.

The Community's proposals on retaining Community preferences and subsidised exports would mean that its offer would not result in any real gain in access. The "rebalancing" (reducing domestic support and/or border protection in some cases and increasing in others, subject to the overall ceiling of 30 percent cut) in a number of cases would actually result in reduction of existing access.

(Brazil has publicly noted that the "rebalancing" involving higher duties and quota restrictions on Soya and some animal feeds could well result in loss of nearly a billion dollars of exports.)

The only support that the EEC apparently got was from Austria and indirectly from Switzerland, which argued that, it was wrong to think negotiations had not begun. Success or failure might change reform process already under way.

Dunkel at the end reportedly commented that unless there was a change in basic positions, within a few days, if not hours, the negotiations faced problems. He reportedly indicated that on Monday, after the scheduled meeting of the Group of Negotiations on Goods (GNG), there would be an informal meeting of the TNC where he planned to advise participants about the crisis over agriculture negotiations and the lack of progress in other areas.

While Dunkel at one stage would appear to have envisaged another "green room" consultations on agriculture on Wednesday, he would appear to have given up the idea later.

In its explanations, the EEC would appear to have said that its offer was a freeze and not increase in access.

As for export subsidies, there was no way the EEC could accept cuts in subsidies on exports. It could only accept disciplines on the basis of equitable market share through subsidised exports which under GATT Art. XVI, was legitimate.

Cairns Group members said that if this was to be the outcome of four years of negotiations, they were negotiating unnecessarily.

Other participants said that the EEC, in its explanations-and interventions, made clear that it envisaged a different "safeguards" (emergency protection against imports) in agriculture than that in Art. XIX of GATT. The use of "corrective" factors to be applied on imports and their prices, stipulated in its "offers", would amount in effect to a perpetual safeguard arrangement.

Also, the EEC commitments for reduction of support under AMS could be price-based or volume-based - and whether it was to be price-based or volume-based would be decided on a year-to-year basis by the Commission.

Cairns Group members noted that this meant there would be no certainty and asked EEC to spell out for example as to what would be tariff binding in 1995, on the basis of its offer. The EEC delegation was unable to provide any figures, participants said.

In other discussions, the U.S. and EEC would appear to have indicated that in the textiles and clothing sector, in an MFA-based modality for integration they envisaged a very gradual reduction of restrictions by increased growth rates of 10-12 % over existing growth rates which in many cases are already low.

A 10-12% on an existing 2% growth rate would mean an actual growth of 0.2 percent and at this rate, the MFA-type arrangement, under GATT rather than the MFA as a derogation, would continue for another 50 years. It would at best benefit the very large exporters whose market shares would thus be safeguarded.

In the consultations on services, participants said that the work on sectoral annexes had not been able to progress. In the "green room" consultations last week, the main protagonists had merely repeated their positions and discussions in the GNS had shown that none of them had changed their positions.

Differences on the draft framework too remain unresolved.

 

Correction: in suns 2487, page three, first para should read:

The Europeans seem to feel that if the U.S. and EC agree they could not afford a trade war, they could still reach a compromise and "persuade" others to fall in line.