Dec 17, 1990


GENEVA, DECEMBER 14 (BY CHAKRAVARTHI RAGHAVAN) – As the annual meetings of the GATT Contracting Parties ended here, and diplomats and officials took some year-end respite, there is some reason to believe that efforts to get Uruguay Round talks moving is to be based on a strategy of the EC moving sufficiently on agriculture and on that basis pressuring the Third World to move on some new themes.

When the Uruguay Round talks collapsed at Brussels, GATT Director-General Arthur Dunkel, in his personal capacity as chairman of the official level TNC, was given a mandate to hold consultations to promote agreements in all areas and reconvene the TNC at an appropriate level in light of his consultations.

On return from Brussels, Dunkel has had some discussions with his aides and on friday met with some Latin American delegates.

According to some of them, Dunkel was in a subdued mood, did not indicate anything of substance, but told them that the Brussels process had revealed the inadequacy and lack of transparency in the "green room" process and that in future the consultations would have to be widened.

So far Dunkel has not revealed his ideas on substance.

He has also not held any press conference - neither at Brussels after the collapse of the meeting nor in Geneva on return, though he is known to have provided some private briefing for a few media personnel who have been generally supportive of him.

A report in the Financial Times, quoting "trade diplomats", but believed to be based on a Dunkel private briefing, has said that hopes of rescuing the Uruguay Round talks depend on "synchronising three elements" and spells them out as:

Reform of EC's Common Agricultural Policy (CAP) and the EC becoming more forthcoming on its "offers" in the Uruguay Round, the U.S. administration seeking and obtaining an extension of the fast-track procedures for dealing with Uruguay Round agreements from Congress and moving forward in negotiations on services, intellectual property rights, investments and market openings.

The hopes of the CAP reform appear to lie in the public statements of the EC's combative agriculture commissioner Ray MacSharry that he proposes to put forward a "revolutionary" plan to change current domestic internal support benefiting large farmers and not the small farmers into income-support programme more like the U.S. deficiency payments.

However, others involved in the agricultural process note that for the U.S. the key factor would be an EC commitment to cut its export subsidies and reduce border protection for imports from U.S. On the former the U.S. in its budget deficit exercise has already cut 50 percent of its support, but is committed to Congress to restore it if the Uruguay Round agreements did not match this and move towards virtual elimination in a short period.

ºWhatever the MacSharry plan, and it would need quite sometime to be okayed by the EC decision-making processes, there is some doubt whether the EC could in fact go very much beyond its 30% reduction offer on export subsidies.

ºSome European sources also seem to feel that the new MacSharry plan has more to do with how the 30% cut (in the EC offer) could be effected, and not the other problems of market access and exports subsides, excepting to the extent that the reforms would reduce domestic surpluses a much more of a long range affair.

The U.S. administration is also chary of a fight in Congress over the extension of fast track procedures. There is already a pending resolution in the Senate to change its rules (when the Senate convenes for a new session in 1991), to do away with the fast-track procedures. Other U.S. domestic protectionist lobbies are also known to be organising themselves to block any extension of the procedures beyond the March 1 deadline.

The EC too would like to conclude the round soon, with others "scaling down their ambitions", on agriculture, and wrapping up a modest package with institutional arrangements for future negotiations in all the areas of the Round.

Its immediate priority now is its own internal unification, including political and monetary union, arrangements with Eastern Europe and the EFTA countries. Continuing the round beyond March would interfere with these time-tables.

The third leg of this Dunkel strategy would appear to rest on an even more shaky foundation: that once U.S. and EC settled on agriculture and the Cairns agriculture group fell in line, the other Third World countries would be easily pushed to yield on everything ranging from Tariffs and Textiles to intellectual property, investments and services.

In meeting separately friday with Latin American delegations, other Third World delegates and observers of GATT note, Dunkel is appearing to be proceeding on the basis that the Third World group which is not very cohesive can easily be split and isolated.

As a talking point, the US and EC have both been talking of regionalization if they cannot get their ways through. But this does not appear to be very credible either.

For the U.S., for example, no amount of opening up of the Latin American markets, whether under the Americas initiative or the S.301 crowbar approach or a combination, could really substitute for the major European market.

Similar is also the case in respect of the European Community, though perhaps it has slightly better options.

Observers note that the view that the weaker need a trading system more than the strong is also based on a fallacy. The rich can function only so long as the poor observe the law afraid of the presence of a policeman. But no police or armed force can enforce the law if there is no system and desire to abide by it.

Whatever the tactics or strategy, diplomats here expect little movement until mid-January, by when the EC would have tried to repackage its agricultural offer and held consultations with Washington to promote it there.