Jan 29, 1993



Geneva 12 Jan (Chakravarthi Raghavan) -- The United States would appear to have got a strong message from its trading partners that unless the US changed its stance and gave up attempts to secure substantive changes in the Dunkel text of the draft final act on the table, the six-year old Uruguay Round talks cannot be successfully wrapped before President Bush leaves office next week or even by the 1 March Congressional fast-track deadlines.

The desire of most participants to conclude the Round is not so overwhelming as to persuade them to yield to the US all the way, sacrificing their trade and economic interests, one source said.

Several participants said that with the US negotiators taking the position that they were su:ious to conclude an outline agreement and had the mandate, others had little option except to take them at their word and engage in negotiations.

As one participant put it, having pressed the US and EC to settle their differences and help conclude the Round, the others have little choice but to engage in the negotiations when the two sides seek such talks.

The current talks, including discussions on the substantive changes to the Dunkel text, at least helps in making the US understand the views of others and not think that the US or the EC have only to reach a deal with the other major partners and everyone would fall in line.

However, the source said, even the Europeans, while trying to get the best for themselves in the talks, seem to be merely engaging in the motions and remain privately sceptic that any deal could be struck before Friday, when the TNC is due to meet to make an assessment and decide on the course of action.

Another participant agreed that it was difficult to believe that US official negotiators, whatever the pressure on them from President Bush or Carla Hills (Bush's USTR) would be willing to yield at this stage on the substantive changes or on their approach to tariff cuts on industrial products, in order to enable Bush to claim success, a success that would prove embarrassing for the incoming Clinton administration which would have to accept it and fight for it before Congress.

The US negotiators, the source said, appear to be engaged in getting the best for itself at this stage, in persuading others to pay a 'price' and agree on compromises to the Dunkel text and, when the new administration comes back, would come back and say they would need more concessions to make it acceptable to the new political masters and the Congress.

From the US perspective this is a good tactic, but it is for others to decide whether they would pay a price now and another later in the hurry to conclude the negotiations or wait for the changeover in Washington, the source said adding, "none of us want to pay a price now and another later".

The sudden spurt of activity in Geneva, involving high-level US and EC negotiators on market access as well as other issues of differences between the two, and the discussions chaired by GATT Director-General Arthur Dunkel among a group of key trading nations, is expected to continue through this week, but none of the participants place any credence on the talk of concluding an outline deal before the Bush administration leaves office next week.

Since Saturday, the US and EC teams (led by their chief official negotiators, Warren Lavorel of the USTR and Hugo Paemen of the EC Commission) have been discussing tariff cuts on industrial products, but these have not made any progress in bridging their gaps, according to European sources.

At a review meeting on market access Monday, chaired by Canada's German Denis, participants said reports showed there had been little progress and none was feasible before the end of the week either. The US and EC were still apart over the US effort to get the socalled zero-to-zero tariff cuts across sectors and over the substantive reduction or elimination of tariff peaks.

While the EC has apparently agreed to the US approach on steel, the US has made it contingent on a multilateral steel agreement whose participants would agree to abandon all subsidies. There is also reportedly some partial accord on pharmaceuticals, construction machinery and medical equipment with the EC willing to accept harmonization at low levels.

But the EC is not ready to accept US zero-to-zero option on paper and wood products, non-ferrous metals, electronics and fish and fishery products.

The EC offer of December reportedly has nothing on fish and fishery products.

The US, in what it calls a 'snap shot' offer tabled last week, has reportedly brought down from a peak of over fifty percent in textile products to about thirty percent.

But it has been done in such a way that it would keep the high tariff peaks on product lines of interest to the developing world.

The EC revised offer of December has reportedly withdrawn its pre-Brussels offer of tariff concessions on leather and leather products and the US tariffs on these lines also reportedly are high.

Thus the view that the US and EC bilaterals would provide a framework for a big tariff reduction package for everyone might not prove to be so, at least insofar as the developing countries and their export lines are concerned, one source said.

Meanwhile the small group of key nations, meeting under Dunkel's chairmanship outside the GATT, has apparently been examining the changes in the Dunkel text sought by the US in several areas, and would continue this examination over the next couple of days, according to sources in GATT.

While little is known of the details of these talks, several participants said the US got the clear message that its demands for changes in the Dunkel text on anti-dumping rules was not acceptable and on this issue the US was pretty much isolated.

In December, the US had put forward the textual changes it would need in the anti-dumping rules text.

The rules on anti-dumping has been one of the most contentious and difficult areas of negotiations, particularly since the US and EC have been using it as a scarcely disguised protectionist instrument to curb imports from particular sources of particular products, both against each other as well as against Japan and the rising competition from the Third World nations.

Even the threat of initiating complaints and investigation (as under the US S.301 trade law provisions) were being used by US enterprises, and the US Commerce and trade bureaucracies, to secure agreements from competitive sources abroad to curb their exports and/or increase the prices.

In the run up to the Brussels ministerial meeting of 1990, this was one area where no draft text, with or without square brackets, was ready.

After Brussels, when the negotiations resumed under a new mandate provided to Dunkel, the negotiations proved equally difficult. The final text put forward by Dunkel in December 1991, in this area incorporated his assessment of what could command consensus.

Though the text did not go as far as the smaller trading partners, from the industrial and Third World countries had sought, in securing tight multilateral disciplines, it at least provided a mechanism by which the arbitrary way the domestic administrative procedures of investigation and fact-finding by assessment of 'evidence' were subject to multilateral review.

Article 18 of the Dunkel text on anti-dumping provides for consultation, conciliation and dispute settlement between contracting parties in disputes or differences over substantive questions of national anti-dumping rules and their conformity with international obligations, as well as in the way they are applied nationally.

The settlement of disputes arising out of the anti-dumping agreement are to be governed by the Understanding on Dispute settlement.

Under the original 1991 Dunkel text there was an Understanding on Dispute Settlement under the GATT and an integrated settlement mechanism under the proposed Multilateral Trade Organisation.

In discussions since January 1992, there has been general agreement to combine the two and provide for an Integrated Dispute Settlement Understanding governing all the agreements in the Uruguay Round.

This would provide for some automaticity of naming of panels, time-limitations from the stage of initiation of a complaint through consultations to the stage of panel rulings, adoption of panel ruling automatically unless the contracting parties decide otherwise by consensus, and further automaticity and time- limitations in implementation of panel rulings or failing that authorization for retaliation.

In effect this would bring national decisions under tight multilateral scrutiny and semi-judicial process.

While many countries had some doubts on a legalistic and semi- judicial approach to trade disputes favoured by the US, this was accepted.

But in the changes proposed on anti-dumping, the US has sought to reverse this.

In effect the US has sought to exempt the administration and application of anti-dumping rules beyond this multilateral discipline and review.

In changes suggested by it in December, the US sought to lay down some 'guidelines' for review by the multilateral dispute settlement panels of whether actions by national investigating authorities was or was not in conformity with the provisions of the anti-dumping agreement.

The US guidelines would provide that

Even in terms of Anglo-Saxon law and administrative semi-judicial actions, this would be extraordinary limitation on review and appeal procedures, one source pointed out.

But it is one thing to apply such an estoppel as between two private parties to an administration or judicial determination, and quite another to restrict the multilateral rights of contracting parties to issues that their private parties might or might not have agitated before domestic courts, the source said.

Another Third World source said that if the national determinations were to prevail over international obligations and their interpretations in dispute settlement, there was no reason why it should be confined only to anti-dumping issues, and why in other disputes a different norm should prevail.

Either international and multilateral obligations and their review procedures prevail on all issues or in none at all -- whether intellectual property disputes, service trade disputes or the entire gamut of the rules and obligations of the Uruguay Round accords, the source said.