Dec 5, 1990


BRUSSELS, DECEMBER 4 (BY CHAKRAVARTHI RAGHAVAN) - The impasse on agriculture quickly hit the Uruguay Round trade talks here as the negotiations moved Monday night into small working groups, each chaired by a Minister, to conduct informal consultations on specific issues simultaneously.

The Chairman of the TNC, Uruguayan Minister Hector Gross-Espiell monday evening named seven Ministers to conduct these informal consultations and report to the green room on progress.

Swedish Agriculture Minister Mats Hellstrom was named to consult on Agriculture, Morocco’s Hassan Abouyoub on Textiles and Clothing, Swedish Foreign Trade Minister Anita Gradin on TRIPs and TRIMs, Malaysian Foreign Trade Minister Dato Seri Rafidah Aziz on market access, Canadian Foreign Minister John Crosbie on Rules issues, Netherlands' Yvohne Van Rooy on Rules of Origin and Preshipment Inspection and Mexican Minister Jaime Serra Puche on Services.

With most delegations waiting to see how the agricultural deadlock would be resolved, the individual consultations quickly came to an impasse and the various informal consultations ended early in the night, participants said after the meetings.

The consultations they said would resume on Tuesday, but without much progress until the logjam in agriculture is cleared, some of them said.

The plenary of the TNC meanwhile has been hearing statements from Ministers, with most of them repeating and outlining their positions.

In a plenary speech Tuesday morning, the Indian Commerce Minister, Dr. Subramanium Swamy bluntly made clear that unless Indian concerns over the TRIPs Agreement, particularly over the issue of raising levels of patent protection, were met he could not envisage any possibility of agreement. He also made clear that India could not accept linking the various agreements (in goods, TRIPs and Services) into one protocol through the concept of a single undertaking. Also, India was not opposed to the idea of a new Organisation, but only so long as it was structured to service three distinct agreements and would reject any proposal to link up three distinct agreements to facilitate cross-retaliation.

The Indian Minister is also reported to have made these positions clear in separate bilateral talks with the US and the EEC.

Earlier, the major trading partners in plenary statements reiterated their public positions and gave little signs of movements.

The US and the EEC which are on collision course over Agriculture are reportedly holding direct talks outside in an effort to reach some compromise and conclude political level discussions and negotiations with an acceptable package of results. They were also holding individual bilateral and other consultations to lobby other countries against each other.

In talks inside and outside the plenary, the EEC appeared Monday to harden its position on agriculture, with EC Commissioner for Agriculture, Ray MacSharry saying the only flexibility he had was to explain in detail the impact of the EC offer of reduction of internal support on export subsidies.

In briefing newsmen, US officials made clear that no package of agreements here would be acceptable to the US Congress if the agreements involved erosion of existing powers (to act against subsidised exports, dumping and S-301).

The EC Vice-President Francs Andriessen, in his plenary statement Monday, made clear that liberalisation in services, textiles trade and agriculture could only be a long-term process and no quick result could be expected.

But he was hopeful that a package could be put together at Brussels and one which would be a "real reflection of the interests of all of the participants", underscoring the word "all".

While Third World countries were right to emphasise their special interests, and their wide participation in the Round showed their realisation of the advantages from integration into a multilateral trading system, they also had to undertake global responsibilities and respect all the rules of the system if they were to play their full part.

These countries, he added, would respect the wills of the systems and open up their own markets according to their abilities.

In what was seen as a reference to the U.S. efforts to open up markets through the S-301 threats, Andriessen added: "They will not be willing to do this under pressure and faced with threats. But they will do it because it is in their own medium and long term interest".

The U.S. Trade Representative, Carla Hills, in her speech warned that the fate of the Round hung in the balance over the issue of agriculture reforms.

Hills also outlined other U.S. objectives - zero-tariffs in a number of sectors, integration of textiles, protection of intellectual property and promoting freer investment, improved GATT rules and disciplines on subsidies, BOP, safeguards and dispute settlements.

She also justified the U.S. stand for conditional MFN in services as aimed at opening up markets and freeing trade in services.

Among other speakers, Pakistan's Mohammad Naaem Khan made clear that there could be no successful conclusion of the Round without "substantive results" in textiles. The draft text before the meeting provided for integration in form rather than in substance and, unless currently unrestrained products were excluded from transitional arrangements, the proposed integration would be a mere illusion.

The Pakistani Minister also voiced reservations over the "graduation" concept in the subsidies draft, opposed any efforts to whittle down the BOP rights of the Third World countries, and at the proposals for conditional MFN (by the U.S.) in the services draft. He also opposed the prohibition approach to investment measures. Norms and standards in intellectual property, he said, must take into account fully the development objectives of the Third World countries. Agreements on services and intellectual property also needed a different status from traditional areas of GATT competence.

Indonesian Trade Minister Dr. Griffin Sierra, speaking for the Asian Group of countries called for significant and meaningful results in market access areas, particularly in tropical and natural resource based products. In Textiles and Clothing, a meaningful result should provide for full integration around 2000 through a credible integration process and with transitional safeguards provisions more stringent than MFA now. The interpretation of "strengthened GATT rule and disciplines" in this regard should not have the effect of delaying or derailing the integration process.

In other comments, the Indonesian Minister called for substantial outcome in agriculture, opposed expanding scope of anti-dumping and countervailing duty rules, against prohibition of subsidies that Third World countries use to enhance socio-economic development, insisted on non-discriminatory safeguards and ensuring agreements in new areas did not undermine development objectives.

The TRIPs accord should curb unilateral interpretation of "effective" IPR protection, preserve the concept of "public interest" and integrity of domestic legal systems. The Asian were also opposed to the prohibition approach in TRIMs and insisted on the MFN concept. The Indian Commerce Minister, Dr. Subramanium Swamy reiterated the Indian position against raising levels of patent protection and said: "My Government is firm on this issue and unless a solution is found to our concerns, I do not envisage the possibility of an agreement".

In other remarks, he said, the difficulties faced in the Round were due to "relentless and vigorous attempts to move the negotiations upstream into the realm of domestic policy making". Attempts to frame international rules impinging on domestic economic policies of countries could not be "successful and acceptable".

On textiles and Clothing, it was time that the highly restrictive and discriminatory regime, a blot on the trading system, was wiped out. India was agreeable to a "reasonable transitional period" but the transitional arrangement should not enable new restraints and the process of liberalisation should be irreversible.

Under the demand of ICs for "level playing fields", he said, the reality was that the present world trading order was tilted against the Third World and the Uruguay Round must correct the situation. The Indian Minister also rejected the moves to change the BOP provision or for disciplines on investment measures.

He also insisted that there was no place in GATT for any TRIPs accord nor for any multilateral framework in Services. India was also concerned at attempts to link all the agreements through a single protocol with a common dispute settlement machinery. India was not opposed to the idea of a new Organisation but only so long as it was structured to service three distinct agreements which were not linked to facilitate cross-retaliation.

In other developments, Canada, Switzerland and Japan introduced a draft text for a sectoral annexe on financial services, more in the nature of a separate financial services agreement. This was the same text that had been prepared by treasury officials from a small groups of countries and sought to be included as a sectoral annexe to the draft services framework text in Geneva but had not been agreed to by other delegations.

The draft text has the support also of the U.S. and the EEC.

However, as number of Third World countries said their original objections remained: signature of the sectoral annexe would involve their instant accord to liberalisation of banking, insurance and other financial services and a standstill on existing regulations. This they said was unacceptable to them.

Interestingly, the financial services sectoral annexe wants to ensure that there would be no cross-retaliation against financial services - neither within the services agreement and across sectors nor between goods and services.

This is in sharp contrast to the demand of the same countries, including the U.S., which are seeking cross-retaliation between trade in goods and services and intellectual property rights, investment rights, etc.