Dec 6, 1990

DELEGATES & OFFICIALS CHEERFUL AMID TALK OF CRISIS

GENEVA, DEC 5 (BY CHAKRAVARTHI RAGHAVAN)ó The Chairman of the Trade Negotiations Committee, Uruguayan Minister Hector Gross Espiell was due Wednesday morning to start "intensive consultations" to see whether there is political will for the "substantial breakthroughs" needed in key areas including agriculture.

In a statement issued by him Tuesday night on the basis of progress reports in all areas, Gross Espiell had spoken of "very serious impasse" in the talks with "no real movements from entrenched positions in any major areas of the Round".

After a series of consultations and "green rooms" on particular subjects, including one on agriculture, and an overall assessment in the "global room", Gross Espiell had issued his statement. He appears to have stopped short of using the term "crisis" and "collapse" that others had used outside and sought to persuade him to use.

Other participants had spoken of the talks being "near collapse" because of the deadlock over agriculture and the EC's stand, while the EC itself was also trying to throw the blame for deadlocks on others in other areas including services, intellectual property rights and the entire area of "rules".

But Third World officials also suspect that all this is an attempt to push panic buttons so that Third World countries would yield in the new areas to be put into a mini-package that both sides could sell their domestic constituents.

"It is a total impasse", the Canadian Minister John Crossbie said while the U.S. Ambassador to GATT, Rufus Yerxa, said the talks were "close to a collapse".

At a news conference earlier, Yerxa also however said he had not packed his bags but that he is a quick "packer".

But for all the talk of "collapse" and "crisis", key delegates also appeared to be less worried and irascible than they normally are in a real state of crisis.

All the talk of crisis and collapse, some long-time observers said, appeared to be more in the nature of a theatre. The way delegates come out of "green rooms" to talk to journalists and before TV cameras, reminded one of the OPEC meetings in a Geneva hotel in the 80ís, when corridor comments of Ministers often would have no resemblance to final outcomes.

The Europeans appeared to be banking on some last-minute concessions from U.S. on the assessment that the U.S. cannot afford a breakdown and a trade war lest that affect its Gulf coalition against Saddam Hussein.

The Americans try to discourage such talk, arguing that they could easily end the talks, since they could in any event not sell a "bad" agreement to Congress and domestic lobbies and Bush is now more concerned with getting his Mexican trade pact idea through Congress as also his Latin American initiative.

But Third World officials also suspect that all this is an attempt to push panic buttons so that Third World countries would yield in the new areas to be put into a mini-package that both sides could sell their domestic constituents.

EC Agriculture Commissioner, Ray MacSharry, in the agricultural consultations asked delegates not to abandon the talks, even when adding that the EC was sticking resolutely to its original position.

An EC official sought to explain to journalists, as the EC had sought within the consultations, about how its offer to cut internal support by 30 percent would be reflected in border protection and subsidies for exports.

The agricultural exporting nations, including Argentina and Brazil, had made clear in the consultations that they saw no point in continuing discussions unless all the three areas could be dealth with in terms of commitments.

Outside the halls, a journalist asked the EC official whether in terms of his details, he could indicate what would be the level of tariffs and border protection that EC's trading partners in agricultural trade would face in 1995 in any particular product.

The official said that they had agreed to tariffication and that the level of tariffs would depend on a number of factors at any particular time and would have to be worked out.

When asked whether any of the EC industries would invest if it were not sure of tariffs it would face five years later and how others could function in agriculture in this uncertainty, the official asked for the next question.

Behind the lack of real concern on the faces of delegates, is a deep-rooted suspicion that the crisis is essentially a theatre being played out at the exhibition grounds while the U.S. and EC are holding talks at other levels elsewhere and would spring a deal at the last minute.

One European delegate said that the EC was talking to the Latin Cairns group members to try to "buy" them through GSP concessions but whether it would sell was not quite clear.

Some of the comments of some of the Cairns Group members, particularly its industrialised country members suggested that in fact they were creating blocks in other areas while awaiting a signal from the U.S..

But other delegates also were concerned that while the crisis was one being "created" by the U.S., EEC and the GATT officials in order perhaps to force a package of "mini-results" (a term used by the German Minister in the plenary Tuesday) at the end that would be otherwise unacceptable, it could soon become a crisis that would be unimaginable for those creating it.

"Too many linkages have been created and too many roadblocks set up, making it difficult to resolve many substantive technical questions, and there is not enough time over the next two three days" one delegate said.

Apart from the agriculture, Tuesday they were also a series of bilaterals and plurilateral consultations by the Ministers leading the talks in particular areas with leading protagonists and later consultations with the negotiators as a whole.

In these talks, delegates said, there has been no progress so far in any of the areas including on Textiles and Clothing, TRIMs, Services and TRIPs.

In the last there are not only divisions between the North and the South but also between the U.S. and EEC.

The U.S.-EC differences on TRIPs include those on the issue of moral rights of authors in copyright, whether industrial designs need to be new or also original, and on integrated circuits.

The issues on patents and copyrights where there are some substantial North-South differences over the amount of flexibility Third World countries will have, also remained unresolved.

These discussions have been taking place at so called technical levels, but some of the officials from key countries have said these are political issues that only their Ministers can tackle.

Comments and briefings by some of the EC member-states to their national press suggest that the EC sees no need to make any move on agriculture until it is able to gain its way in Intellectual Property Rights issues - with India and others yielding and agreeing to provide enhanced protection for patents in all areas - and in textiles to the current structure of integration modality, which would leave existing restrictions in sensitive and most sensitive areas untouched till end of this century.

In both areas, one negotiator who has seen the "confidential" offers said the EC was merely holding out the possibility of future negotiations for liberalisation.

In services, the U.S. has opposed an unconditional MFN clause and has insisted on conditional MFN, so that it could extend benefits of access to its domestic markets as a tool to extract reciprocal concessions from others - a view opposed by everyone else.

In an effort to break the deadlock, the Mexican Minister leading the Services talks would appear in bilateral talks to have tried to pursued the Third World countries to table their own offers for initial market access and national treatment commitments.

Under the draft multilateral framework text, they are entitled to offer less, taking account of their development stages, but entitled to full benefits under the MFN clause.

Most Third World countries have also said that they could consider putting in initial offers negotiating them and signing the agreement only after the textís settled and they have a comprehensive view of what they would get or fail to get.

The talks are due officially to end Friday. GATT Director-General Arthur Dunkel at outset had said it would end this weekend, obliquely referring to the differing Sabbaths of the Jews, Muslims and Christians - thus leaving the door open for the weekend to end anywhere from Friday to Sunday night.

On the patents issue, the Indian Ministers' speech in the TNC plenary however was seen as quite unqualified, tough and firm and any "compromise" likely to be seen back home as "sell-off".

In any event, several Third World observes noted, with a minority government in power in Delhi and the issue being politically as sensitive as agriculture or textiles is to Europe and U.S., there appeared little room for manoeuvre.

The U.S. is not the only country where negotiators have to look over their shoulders at the Congress and a minority government in India too has to look even more over its shoulders at Parliament, an observer noted.

In its efforts to underline that others too are responsible for blockages, the EC has "tabled" its initial offer of liberalisation commitments in Services, thus enabling it to continue to do the finger-pointing at the U.S. and its insistence against an unconditional MFN clause.

Those who had seen the EC "offers" said it was vague in two areas - basic telecommunications (where the U.S. has an interest in opening up the EC markets) and on issue of labour services where both labour mobility for delivery of services and liberalisation commitments and sectoral annotations are involved.