Jan 29, 1993



Geneva 11 Jan (Chakravarthi Raghavan) -- The United States and the European Community appear to be engaged in hard bilateral talks at senior official levels in an effort to conclude a outline deal in the six-year old Uruguay Round trade negotiations before President Bush leaves office -- a deal that the incoming Clinton administration would find difficult to repudiate or change substantially.

Warren Lavorel the top official negotiator for the United States and Hugo Paemen chief official negotiator for the European Community have been in Geneva and meeting over the weekend in an attempt to clobber together the outlines of a political deal that they could present to the meeting of the Trade Negotiations Committee (TNC) set for January 15.

Also on hand for the 'last ditch' effort to clinch a 'deal' by the middle of January are the official negotiators for Canada and Japan the two other members of the 'Quad' -- German Denis of Canada (who is also leading the market access negotiations in track one) and Minoru Endo from Japan.

If a deal is struck in time for the TNC meeting, the other participants would be expected to endorse it.

The main focus of the US-EC negotiations would appear to be to achieve a market access accord that would be 'big' and attractive to both sides.

The last minute effort is on the premise that if the two sides now reach an accord on these and other outstanding issues, the incoming Clinton administration could, if it so chooses, complete the details in time to submit the agreement to Congress to meet the 'fast track' deadline (notifying Congress by 1 March).

And, even if the Clinton administration does not like it, the incoming administration would find it difficult to repudiate or re-open a concluded deal.

If this is not done, it is noted, the negotiations would be prolonged at least well into the summer and might take many more months before it can be concluded.

While the impending change of guard in Washington introduces some uncertainty, other trading partners have to take some amount of risk -- in concluding a deal now by paying a price, and having to pay a 'second price' with negotiators of the Clinton administration.

Besides Lavorel and Paemen, both the US and EC have also brought in their service negotiators.

The attempt to agree on an outline deal flows from a January 2 meeting between Bush's Trade Representative Carla Hills and the EC Commissioner Leon Brittan where the two apparently agreed to make what is described as a 'last ditch' effort to conclude a deal before Bush leaves office, leaving only some technical details to be filled in.

Brittan, while reportedly agreeing with Hills in making a push to conclude a deal, is reported to have indicated that for this to be achieved, the US would have to moderate its position on reopening the Dunkel text in a number of areas.

Some European sources, while insisting that they were engaged in a serious effort to conclude a deal if the US was ready, also remain somewhat sceptic. They suggest that by the end of the week, all that might be possible perhaps would be a stock-taking exercise to pin down the points of differences to be resolved.

Negotiators from other countries, at the level of their permanent delegations, say that they too are ready to engage in substantive negotiations and conclude a deal -- even as privately several of them remain sceptic.

While none exclude the possibility of the US and EC striking a deal and using their collective weight to force it down on others, few consider it to be technically feasible to reach an agreement over the next few days -- before the mid-January deadline set by the Bush-Major-Delors meeting in Washington in December, and in a sense endorsed by the TNC.

And what may seem technically possible is not anyhow in the realm of political probabilities, several Third World participants say.

Even if Bush, to go down in history as a President who concluded the trade negotiations, is not too concerned about giving an embarrassing legacy for his successor, and the EC Commission and Commissioner Leon Brittan try to ignore the French sensitivities, it is not politically feasible, several of the GATT negotiators privately agree.

Bush leaves the White House on January 20, and the shots thereafter will be called by Clinton and his Commerce Secretary and the new Trade Representative. And unless the entire package, including all the technical details are completed and signed before that, the new Washington crowd could always find a new point to reopen the issues.

Whatever the political directives from Bush and Hills, US officials are unlikely to agree to a deal and put Clinton on the spot unless they get all their points, and no agreement appears feasible on that basis.

One experienced Third World negotiator even wondered whether the official negotiators of the two majors, in presenting an appearance of serious negotiations, are not merely engaged in a public relations exercise to blame the other side, but even to fool their own political masters at home.

Even if Carla Hills and Brittan had thought that the serious issues to be resolved could be done in four to five days and everything can be wrapped, it is difficult to believe that their official negotiators could have agreed with that view, he noted.

The US and EC have put on the table now in legal language their 'Blair House' accord of November on the changes in the Agricultural text agreed upon between them.

Besides this, the United States has put on the table informally the changes it is seeking in the Dunkel text in regard to rules on anti-dumping, on the TRIPs accord and on sanitary and phyto- sanitary rules in agriculture. It has also come out in opposition to the proposed Multilateral Trade Organization (MTO) and has instead suggested a different institutional arrangement through a socalled GATT II.

Though it has not apparently sought any formal change of language in other areas, some negotiators say the US is also interested in getting changes in the text on Textiles and Clothing, on subsidies, safeguards and one or two other areas.

A few other countries have also indicated the changes in the text they would need -- some on the basis that the US and EC are reopening the Dunkel text and thus forcing them to do the same, and others like India who say that without some changes they would in any event find it difficult to accept the Dunkel text.

All these issues will have to be sorted out one way or another before Friday, if the outline of a political package has to be presented to the 15 January TNC meeting.

The United States and the EC have also some serious differences to be resolved on services particularly on the exclusion of maritime services sought by the US and the 'cultural exception' on audio-visual services sought by the European Community.

There is also the problem of the market access negotiations where there is some serious difference between the US and EC in the area of industrial products.

The US has been pushing for a socalled zero-zero option, cutting tariffs to zero across a sector. The EC in December disagreed with this, and tabled its own offer for tariff reductions and reducing the peak tariffs.

The United States on 8 December would appear to have responded by tabling its own new 'offers', claiming it would achieve the Montreal mid-term review objective of a one-third cut in overall tariffs.

However, sources who claim to have knowledge about the offers say it is hedged in with many conditions still, has some very high peaks still in several product areas, and is unacceptable to the EC.

The sources said that while the US has in its latest offer reduced some peaks, still on many products it remained high. For example, in woollen textiles, the duty would only be brought down from 56 to 48 percent, while the EC's 'offers' on cutting some tariff peaks would keep their maximum tariffs at 20 percent (on consumer electronics and a few other sensitive items).

The US is still maintaining its zero-to-zero option on steel, but this is also conditional on the conclusion of an international steel agreement.

Even if the US drops its 'zero-to-zero' option and merely seeks 'harmonisation' at low levels, it would be difficult for the Europeans to accept this in the case of consumer electronics, another source said.

All these make the conclusion of an outline agreement to be concluded in the next five days very problematic, several of the Third World negotiators privately say.

GATT sources said some informal consultations among a key group of countries to be chaired by GATT Director-General Arthur Dunkel is expected on Monday, to take stock of the situation, and review the situation on the changes in the Dunkel Draft Text sought be the United States and others.

According to GATT sources, the chairman of the track one process for market access, German Denis of Canada has also scheduled a meeting of countries who have made offers on market access on Monday to take stock of the state of the negotiations.

A delegate of one Third World country said that while he (like several other Third World official negotiators) was in a position to 'conclude' an agreement on behalf of his country, this was not the case in regard to the US and the EC, whatever the public position of their official negotiators.

They have very wide ranging interests and lobbies to satisfy and their political masters are looking over their shoulders and have to make an overall assessment.


correction: The first paragraph on page two of SUNS 2983 should read:

Uruguay Round negotiations, officially resumed on 4 January after the year-end holiday break, is just marking time and, despite the US-EC talk of a new effort to reach agreement, will miss the mid- January target for concluding the Round set in December by US and EC, Third World sources said this week