Jan 29, 1993


Geneva 18 Jan (Chakravarthi Raghavan) -- As the current phase of the Uruguay Round negotiations come to an end Tuesday with the stocktaking by the Trade Negotiations Committee, the European Community believes that after a pause of two or three weeks (for the changes in Washington to be sorted), the negotiations could be resumed and concluded in the coming months.

While the EC's assessment appears to be founded on information from the US side, including from those close to the incoming administration, there also appears to be an element of 'whistling in the dark'

While no new deadlines or targets are being suggested or set, the current thinking would imply that the negotiations, if resumed by first week of February, could continue and be completed early in April -- by when the French Parliamentary elections would be out of the way and Paris might be willing to take a more balanced view of the overall outcome, rather than the current total opposition to US-EC agriculture deal.

However, French sources note that the opposition expected to take office could be even more adamant on agriculture than the current Socialist government.

The EC believes, on the basis of the assessments given to it from the US side and other information, that the Uruguay Round could be concluded in terms of the current fast track authority of the US negotiators, but involving some 'flexibility' that could stretch, by a few weeks, the 1 March deadline for advising the US Congress of the full terms of the accord in all its details.

If the new administration comes to the view that continuing and concluding the negotiations within the current fast track authority would not be feasible, and new legislation would be needed, the Community hopes that it would be in terms of "matters on the table" within the context of the Punta del Este mandate.

If one went beyond that and new issues, like environment are added, it would need a new kind of balance and the negotiations could take a year or more to be concluded, and would be "a high risk phenomenon involving an unravelling of the package"

A senior EC official said Monday that in the EC view there was a "very good chance" that the Round could be completed in the coming months. Various alternatives had been tried and exhausted and they had come back to the initial concept of 'global negotiations' where everything had to be done in parallel and everyone would know what they had to 'pay' and what they would 'receive'.

The Trade Negotiations Committee is due to meet Tuesday afternoon when the Chairman of the TNC, GATT Director-General Arthur Dunkel, is to make an assessment suggesting that the consultations had shown a better understanding of the positions of participants and that the negotiations would continue.

He is not expected to come up with or undertake to produce a "Dunkel II" -- revision of the draft text put forward by him in December 1991, nor outline proposals for changes and suggest discussions should be confined to them.

The current phase of consultations on changes to the Dunkel text of the Draft Final Act (DFA), a phase involving some 19 countries, came to an end Friday with scrutiny in that group of the various proposals for changes in the agriculture text, including the US-EC Blair House accord of 18 November.

Besides the US and EC proposals for change, there are also now proposals by Switzerland, Japan, Korea and Mexico and Egypt -- all in effect seeking 'flexibility' over the demand for complete tariffication as well as on other aspects. Switzerland, for example, is reportedly seeking some exemption from export subsidy disciplines. It wants some de minimis to apply to the export subsidy restrictions (in terms of budgetary and volume cutbacks) so that subsidised exports which are 10 percent of production or one percent of budgetary outlay of domestic support.

The TNC meeting Tuesday is to be preceded Monday evening by 'Green Room' consultations.

It is a commentary on the current 'trade order' and GATT negotiations that the 'green room' consultations which are widely associated outside the closed circle of GATT negotiators with 'lack of transparency' is now being described as consultations to provide 'transparency' to what is being discussed and sought to be negotiated among an even smaller group of negotiators meeting outside the GATT -- the Dunkel consultations on changes to the Draft text tabled by him in December 1991.

Most of the participants in the Dunkel consultations say that the exercise has been useful in enabling everyone to know what changes are sought and why. They do not envisage any 'track four' process where others could or might bring up proposals for new changes.

The EC also envisages that in the resumed negotiations there would no longer be the over-emphasis on agriculture, but that the negotiations would proceed 'globally' -- the negotiations for changes in the texts to be within the Dunkel process, and with market access negotiations under the leadership of Canada's Germain Denis and the Services negotiations under the Australian David Hawes.

The US, the Europeans and several of the others believe that though only 19 participants are involved in the Dunkel consultations for changes in the Draft text, everyone who sought changes have found a way of getting their views before the group and that the negotiations when resumed should continue in the same format over the changes in the text.

The present phase of some intense consultations and negotiations to wrap up the round before President Bush and his team leave office began early in January -- following the Bush-Major-Delors statement of 18 December for a breakthrough by mid-January and the 2 January meeting in London of USTR Carla Hills and EC Commissioner for GATT negotiations, Sir Leon Brittan.

The European Community last week came to the conclusion that no breakthrough was possible because of the US-EC differences on the market access issues as well as on questions like the Multilateral Trade Organization and the outstanding services issues.

A similar view was also reached by the United States, whose senior official told newsmen Thursday in a background briefing that the conclusion of the Round could be several months away.

On the eve of the Tuesday's TNC meeting, the EC position appears to be one of regret that no real breakthrough was made though at one stage it thought this was possible.

But the EC also feels satisfied that the negotiations have now reached a position of 'globality' and there would no longer be any concentration on agriculture issues (and the EC's position within it), which in the EC view had imparted an imbalance to the negotiations.

With President Clinton due to take over on Wednesday, the EC hopes the 'hiatus' in Washington, including the need for new people to be confirmed by Congress, would be for as short a time as possible.

In this view, it believes that the TNC meeting Tuesday wold be able to address a message to Washington and the new President to the effect that the negotiators believe that "everything is in place and the conditions are there to finish the Uruguay Round within the time-limits imposed by the fast track".

With a new Democratic President and a Congress controlled by Democrats, it is hoped that the administration would have 'some flexibility' in terms of the consultations needed between the executive and the Congress before the latter could begin consideration of the package as a whole.

The current fast-track authority in strict terms would require the administration to notify Congress and hand over to Congress, 90 days before the 1 June deadline i.e. on 1 March, the entire package of agreements to enable the Congress to take up consideration of the package as a whole from July and finish it within the specified time-tables.

The EC negotiators have apparently been advised by their counterparts in the US, that with the same party controlling the White House and the Congress, this 90-day period could be somewhat shortened and that the negotiations in Geneva could go on somewhat beyond 1 March -- perhaps by a month or two.

The fast-track authority cannot be extended by mere resolutions of Congress, as was done in 1991, but would need new legislation.

While this is not likely to pose any difficulty, the danger, as the US trading partners see it is that any such US law need not be confined to the topics on the table and some Congressman or Senator could try to attach new issues, for example, the environment issues.

And while there is general recognition that at some stage or the other environment and related trade issues would need to be addressed, there is a general consensus that any attempt to inject it into the current Uruguay Round would unravel the whole.

The EC itself sees no great problem or misunderstanding between the EC and the US over agriculture or the agriculture schedules.

A senior US official had however said on Thursday that not all the difficulties had been removed and that a close examination of the EC schedules had shown that in its current form, the imports into the EC after the Uruguay Round could shrink and be much less than now and that this was not acceptable to the US.

Apart from the agriculture and the question of changes in the Draft Final Act, there are also some outstanding differences between the US and EC on market access issues in industrial products and in the services area over maritime services (which the US wants to exclude) and Audio-visual services where the EC wants cultural exemptions.

While a US official last week thought there had been some 'hardening' of the EC positions in some areas, the EC assessment appears to be that the fact that the Bush administration was soon going out of office had not made it easy to conclude a deal before mid-January.

The EC believes that the new administration could quickly send signals for resumption. It is believed that the US official negotiator and career official in the USTR's office, Warren Lavorel would continue and that the US Representative to GATT, Rufus Yerxa (a Democrat) would be continued in Geneva or would have a position in the same area (in the USTR office in Washington).

The EC also does not believe that the issues raised by France in December about the European Community's lack of jurisdiction over services -- an issue recently alluded to by the US in relation among other things to the provision in the Uruguay Round protocol and the MTO for the EC to become a party to the accords in its own right -- is an obstacle.

The EC Commission is negotiating in the Uruguay Round under the authority given to it by the Council of Ministers and in terms of the consultation process within the EC of its member-states, namely the so-called '113 Committee'.

When the negotiations are concluded and the accords are reached, the Commission would go back to the Council of Ministers and the entire package would have to be approved or turned down by the Council.

This, in the EC view, should not be confused with the issue of implementation of the Uruguay Round results. In some cases this might involve Community legislation and in others national legislations.

A lot of technical work had been achieved, the EC believes, over the entire range of negotiations and this provided a realistic working hypothesis for concluding the negotiations.

The US-EC differences on the MTO seemed to be fundamental. The EC favours an 'organizational' approach while the Americans want a 'contractual' approach.

In the EC view while a contractual approach was feasible in the beginning of GATT when the only agreement involved exchange of tariff concessions, it was no longer possible given the extent of rules making involved in the negotiations. Even as it is the GATT requirement in the rule-making area of 'decisions by consensus' had brought in an organizational approach.

The United States is opposed to an organizational approach where it fears it could be outvoted in any amendments to the MTO or its constituent agreements or waivers etc.

In the EC view however, there is already an element of safeguard in that amendments could be proposed only by consensus and the US fears could be allayed.

But the US waiver issue seemed more difficult, since it involved an effort to 'grandfather' the Jones Act (protecting the US ship- )

But the US waiver issue seemed more difficult, since it involved an effort to 'grandfather' the Jones Act (protecting the US ship- building industry) as well as some other waivers from challenge under the new accords.

The US also appeared to be opposed to the dispute settlement procedures and provisions becoming a matter for raising disputes and compliance.