6:36 AM Sep 28, 1993

TNC MEET SET FOR THURSDAY

Geneva Sep 27 (Chakravarthi Raghavan) -- The Uruguay Round Trade Negotiations Committee (TNC) is due to meet on Thursday to take stock of the progress and keep up the pressure to wrap up the substantive negotiations by the 15 December deadline of the US fast-track authority.

But trade negotiators expect no breakthroughs and see agriculture as a continuing major roadblock.

At the TNC, GATT Director-General and TNC Chair, Peter Sutherland, is expected to try to keep up the pressure, and use the latest World Bank/OECD claims about the $213 billion gain from the Round in 2003 as a carrot to persuade everyone to fall in line and the danger of a total breakdown as a stick to frighten negotiators and policy-makers.

The $213 billion figure has cropped up in a study published by the Bank and the OECD and appears to be an updating of the earlier OECD centre study and claim of a $200 billion dollar welfare gain by trade liberalization at the end of the 10-year period.

Media reports from Washington where the Bank released the study speak of its being based on a 30 percent trade liberalization and given the 'unfamilitariy' with such economic and econometric questions and trade policy issues, has even produced some misleading statements -- with reporters unable to distinguish between welfare gains, trade gains and income gains. A BBC report, for example, went ahead and projected the gain in terms of a $40 per capita gain for the world's population!

Economists and econometrists in other international organizations, while suspending judgement until they see the actual study and its details of the basis of calculations and models, continue to be sceptic about such projections and caution journalists against such misleading generalizations.

Some of them say that while no one could gainsay the welfare gains of trade liberalization in the medium to long term, such projections and claims (about the welfare and income gains, and creation of employment) are full of so many caveats, that it is futile to make such projections. And coming from organizations whose econometric projections even over the very short term have been proving to be wrong (and needing continuous downside revisions) it has the unfortunate effect of making public even more sceptic of the entire economic science itself.

On the state of the negotiations in Geneva, Third World sources said that while bilateral and plurilateral talks on market access in goods and efforts to finalise the framework on the General Agreement on Trade in Services (GATS) have been going reasonably well, the talks were clouded by the continued uncertainties over the agriculture trade issues and in particular the Blair House accord between the US and EC, and the latter's attempts to get clarifications and interpretations.

A major area of difference, where the US is ranged against the EC and many other participants, is over the socalled institutional issues -- the proposed Multilateral Trade Organization (MTO) and the integrated dispute settlement mechanism.

The US has repeatedly asserted that it cannot agree to an MTO and any efforts to create an international organization, as envisaged, and could only agree to a somewhat looser structure similar to the current GATT. EC officials have make clear that they cannot accept a Uruguay Round conclusion without an MTO.

A group chaired by Julio Lacarte-Muro of Uruguay is beginning work on this, taking up from where these were left in the earlier process of scrutiny by the legal drafting group (in the 'third track').

But it is not very clear whether the group can in fact tackle the substantive questions involved. But sources expect Lacarte to attempt some informal talks to explore possible compromises.

At the last TNC, India made it very clear that it would not agree to substantive issues about changes in the MTO or dispute settlement texts to be taken up, and got some indirect support from the EC. Though unstated specifically, the Indian objection has been clearly related to its view that substantive changes in any of the texts of the Draft Final Act had to be dealt with in the 'track four' process envisaged and agreed upon by the TNC in Jan-Feb 1992, and all the changes handled so to say together to enable an overall balance to be kept.

On agriculture, notwithstanding the public position of the US and its refusal to renegotiate or reopen the discussions on the Blair House accord, some of the Third World sources say that it is clear that the two will continue to talk on this and other differences between them, and spring at the last moment their overall deals and compromises, pressuring the others to accept them and not attempt to change them.

One of the sources said negotiators with less leverage have this at the back of their minds and, not knowing what would be the final outcome, continue to be very hesitant in other areas.

The value of an EC offer or concession in a bilateral discussion has to be assessed in the light of the overall agricultural package and rules, including the 'peace clause' etc, and even EC negotiators in pressing their Third World partners to put the agriculture doubts aside and negotiate are aware of this problem.

Last week, the EC's chief negotiator, Hugo Paemen who had a large number of bilateral talks in Geneva, including with leading Third World countries, appears to have left the impression that the agriculture problem raised by France within the EC was far from resolved and that, while the French have for the moment agreed not to maintain their high profile and flourish every day the threat of a veto, the EC and its Council of Ministers would have to deal with it at the end.

Some EC Commission officials hope that at that stage, the 'gains' for France from other sectors would be seen to outweigh the losses to its farmers, and the deal would survive.

However, this kind of internal balance that officials and technocrats can argue for, is one not easy to project in the political arena, particularly at a time of rising unemployment, budget constraints and recession.