YEUTTER GIVES UPBEAT VIEW OF MID-TERM REVIEW PROSPECTS.

Jul 13, 1988

YEUTTER GIVES UPBEAT VIEW OF MID-TERM REVIEW PROSPECTS.

GENEVA, JULY 11 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The United States is hopeful of reaching agreement on fundamental principles to govern an agreement on services at Montreal mid-term review meeting in December, the U.S. Trade Representative, Clayton Yeutter indicated Monday.

Yeutter was addressing a press conference along with members of the "services policy advisory council", a private sector group of U.S. businessmen interested in pushing a services multilateral agreement, that would enable U.S. TNCS in the service sector to expand into the third world. The Council is chaired by Jonathan Reid Chief Executive Officer of Citicorp in New York.

As Yeutter put it at his press conference, the group is in Geneva to get some exposure on the Uruguay round negotiating processes, and had meetings Monday with negotiators from other countries including the Ambassadors of India, Canada, Argentina, the EEC, and the chairman of the Group of Negotiations on Services (GNS).

It is due to meet the GATT Director-General, and Ambassadors of Nordic countries, Japan and Australia, Tuesday.

Yeutter said that the first step in the service negotiations was in achieving consensus on a minimum number of principles that would make services agreement worthwhile.

The next step was to determine which sectors within the services industry would be included in the agreement and to which of the 150 odd services so far identified the principles and agreement would apply, and how the issue of "liberalisation" of existing trade barriers in these sectors would be handled.

Earlier in a luncheon address to the Swiss-American Chamber of Commerce, Yeutter said that in the U.S. view for GATT to work effectively, all trading nations had to commit themselves to multilateral trade liberalisation and strengthening GATT as an institution.

From U.S. perspective, he added, this meant GATT disciplines must be extended to trade in agriculture and services, protection provided to Intellectual Property Rights (IPRS), and rules and disciplines established for trade-related investment.

Defending the extensive use over the last three years by the U.S. of its section 301 of the trade act of 1974 (a provision that other Contracting Parties view as contrary to GATT obligations) Yeutter said: "we will continue to use sec. 301 whenever necessary to end unfair trade practices. Such practices are not the major cause of U.S. trade deficit but they are a significant threat to confidence in the world trade system".

At the press conference Reid shared Yeutter’s assessment, on the basis of talks with Geneva negotiators, that positive progress was being made in the Geneva negotiations.

Yeutter said in the group’s meeting with the Indian negotiator, Amb. S. P. Shukla had made the valid point that much of the impressions about third world countries opposing a services agreement was base as present there, the U.S. private sector group was surprised to learn from them that the industrial countries pushing for a services agreement had so far not been prepared to indicate which sectors of services would be covered in a services agreement.

At the last meeting of the GNS, while the U.S. had put forward a "procedural" proposals to move the negotiations forward on the lines indicated by Yeutter at his press conference (agreement on principles and then decision on which sectors would be governed) it refused to state the particular service sectors to which the agreement would apply.

The EEC had similarly indicated it too would be unable to identify the sectors to be covered without agreement on the principles.

A number of third world countries for their part had said that unless they had a clear idea of what sectors would be included, including whether sectors of interest to them like labour and labour-intensive sectors, it would not be possible for them to agree on the principles of a multilateral framework agreement.

The U.S. in its procedural proposal had suggested all participants in negotiations putting forward sectors of interest to them "anonymously", leaving the actual decision on inclusion after framing the principles, and providing countries the right of "reservation" on any particular sector.

In other comments at the press conference, Reid agreed with Yeutter’s assessment of prospects for the U.S. economy, and said he did not expect any significant slowdown in the U.S. economy in 1989.

But the third world debt issue continued to be a serious one, and "it is the global problems of our time", the Citicorp Executive declared.

Reid did not want to enter into a discussion over the IMF Managing Director’s recent criticisms, including at the ECOSOC here, over the failure of the banks to support the adjustment efforts of middle-income countries, and felt the press conference not the best forum to discuss these matters.

"What matters", Reid said, "is that debt continues to be a serious problem, we will be silly if we do not recognise that flows of capital are very much within the north, and there is very little flows from north to the south".