8:27 AM Sep 30, 1993

RE-ENGAGEMENT OF TALKS, BUT NO PROGRESS OR BREAKTHROUGHS

Geneva 30 Sep (Chakravarthi Raghavan) -- A sombre assessment of the re-engagement of multilateral talks and negotiations in Geneva after the summer recess, but with no progress or breakthroughs, was the mood among participants Thursday after a meeting of the Trade Negotiations Committee of the Uruguay Round.

Most delegates from the developing world said outside the meeting that October was a critical month, which would see a 'make or break' in the negotiations, and it would just not be possible to leave key outstanding issues till the end.

Several of the delegates also said that they saw the entire process continuing to be blocked by the US-EC differences and were afraid that the two would keep it like this and spring at the last moment their compromises and try to get others to accept it.

"In this process," one delegate said, "the developing countries are going to be asked to pay a higher price to compensate the two majors, and it would be so near the deadline that many of us might not even be able to withdraw our conditional offers on the table... this is why we cannot make or improve our offers, until this dispute is resolved."

At the meeting, Peter Sutherland, GATT Director-General and Chairman of TNC, announced that market-access related issues in the Draft Final Act text (the Dunkel text tabled in December 1991) relating to agriculture and textiles would be taken up by Germain Denis of Canada (who chairs the market access negotiations) and given priority to enable the blockages in market access negotiations and unlocking the entire process.

This need for looking at the DFA texts on agriculture and textiles, in relation to the market access negotiations, had been raised at earlier meetings of the TNC by India and a few others.

But Sutherland had been hoping to put off consideration of all DFA issues (changes in the existing texts) until the final stages, after all the market access issues are resolved, in the hope that by this process the demand for changes could be abated or reduced.

But with the market access negotiations themselves being stymied as a result of the uncertainties over the agriculture and textiles and clothing texts, a related process for consideration of the texts in so far as they impinge on market access issues has now been opened.

In his overall assessment since the 31 August meeting of the TNC, Sutherland gave a mixed overall picture and stressed the need for the industrial countries and the major trading partners to respond to the offers from the developing countries in market access and address trade sectors not covered in the Quad agreement. He also sought to put a positive gloss on the state of play but failed to change the mood of frustration and disappointment among the large number of participants.

The TNC meeting also brought out, more clearly than at the last, the division within the TNC on the mandate of the informal group under Amb. Julio Lacarte-Muro dealing with institutional questions -- the draft agreements on a Multilateral Trade Organization and the Integrated Dispute Settlement System (IDSS).

Siraj Haroon of Malaysia, speaking for the informal group of developing countries, and supported by Egypt for the African countries and Bangladesh for the Least Developed Countries, insisted that no new issues other than those covered in the two texts could be taken up in this group and that any new issues or substantive changes would have to be dealt with and addressed in the TNC, and changes made only if there was a consensus.

Earlier to the TNC, at a meeting of informal group of developing countries, a number of speakers referred to this question and the efforts being made in the Lacarte group by the US to open up the texts for substantive changes. Haroon was mandated by the group to make the position of the group clear at the TNC.

The United States responded at the TNC by saying that this was not their understanding and any new issue relevant to the MTO and the IDSS could be dealt with to the extent possible and only if unresolved could be brought up to some other forum.

However other speakers did not agree with this view and, finally, Sutherland said that it was clear that there was divergence and "let us keep it at that, get on the work, and take up the differences..."

In other comments, Egypt speaking for the African group also said that the mandated assessment and evaluation of the outcome of the negotiations, from the perspective of the developing countries, could not be done in the first week of December or around that period. It had to be undertaken in late October or beginning November so that a clear assessment could be made and corrective actions taken to revise the DFA and the market access package and other such questions. Egypt also raised the issue of the problems of net food importing countries and the need to compensate them.

In other comments, Haroon had earlier also stressed that the developing countries were not hiding behind the US-EC disputes (as Sir Leon Brittan tried to imply in Brussels on Tuesday), and were ready to engage in serious market access negotiations, both in goods and services. But it was for the industrialized countries and the major trading partners to respond to the offers and requests from the developing countries, he added.

In his opening statement, Sutherland said there was now growing perception everywhere that a successful conclusion of the Round was essential to economic recovery, development and jobs -- and cited in this regard to the Montevideo Declaration of the Rio group and the statements at the annual Fund-Bank meetings and the joint statement of the heads of the IMF, World Bank and the GATT -- which he described as "joint statement issued by the heads of all three Bretton Woods institutions".

In describing the Camdessus/Preston/Sutherland joint statement in Washington Monday in such terms, as one delegate (who did not want to be identified) cynically put it outside, "Sutherland has promoted himself to be part of the Bretton Woods Institution".

That the Fund and the Bank, finding all their macroeconomic policies and advices failing to get the world back to recovery and employment, are now pointing the finger to the Uruguay Round as a magic solution could be understood, the delegate said, but for the head of the GATT to acquiesce in it and not make the point about the macroeconomic policy problems is a strange outcome, he added.

In providing his assessment of the state of play in Geneva, Sutherland said the re-engagement of negotiations after the summer break had been serious and many capital-based negotiators were now in Geneva negotiating bilaterally and plurilaterally and that other Geneva based teams were in a position to move to make deals.

"The scene is now conclusively set for the final phase", he said in language often heard before in the GATT halls from his predecessor.

In the area of market access in goods, 55 participants had tabled their offers, covering both agricultural and non-agricultural, five had tabled 'non-comprehensive' offers and eight others had expressed their intention to do so shortly, the GATT head said. There was thus far some 70 market access offers on goods on the table or about to be tabled. Of the remaining 45 participants, 26 were least developed countries (who in theory could benefit without making any offers of their own).

From every perspective one looked at the situation, "a substantial and meaningful market access package is an essential element for all participants, big or small, developed or developing", Sutherland said and went on to stress the important role of the major trading entities in responding to developing countries.

While the Tokyo Quad accord had created the favourable conditions for re-engaging in negotiations at Geneva, the constraints resulting from the "unfinished agenda" of the Quad countries and between them and others had now emerged as clear obstacles in Geneva, he stressed.

"There has been no progress on additions to the lists of sectors identified for tariff elimination or harmonization," he said reflecting the complaints of the developing world and other trading partners.

Many participants, he noted, had indicated the possibility of accepting one or more sectoral proposals (for zero tariffs or harmonisation in the Quad package) if sectors of interest to them were also added to the list, while others felt that product areas of interest to them would be taken up in the context of implementation of other elements of the Quad accord which addressed tariff peaks or tariff cuts by an average of onethird or more.

"On these elements, there has not been sufficient progress," Sutherland said, adding: "This unfinished agenda adds a further complication to the lack of substantive progress on the agricultural market access negotiations. These factors inhibit participants from exercising the negotiating flexibility that all recognise is essential to close our deals.

"Thus, achieving the necessary breakthroughs in essential areas like agriculture including tropical products, textiles and a number of other key sectors is the only way to remove a feeling among participants of frustration and helplessness.

"In this process it is obvious that the major players will have to be responsive in the specific requests made to them by developing countries. We need leadership and a larger share of the responsibility for movement must lie with the major players. While efforts by the major players to enlarge the market access package among themselves should obviously continue, I believe they must also develop modalities for making progress in parallel with other countries."

If there was to be a solid market access package, breakthroughs must occur in October. Since such a package was a sine que non for the success of the Round itself, the implications of waiting for Godot on key issues were clear.

"While the overall picture is not a bad one, clearly much more needs to be done, and urgently. We need to have the market access negotiations substantially concluded by mid-November, if we are to conclude a market access package acceptable to all by 15 December."

For progress to be achieved, all elements must move together. Agriculture and textiles required "very special and urgent attention" in terms of their relationships to unblocking the process as a whole. He had hence requested Germain Denis "to give them priority" in his informal consultations and address them in a comprehensive manner including the market-access related Draft Final Act issues in these sectors.

On Services, Sutherland gave a more optimistic assessment, noting the new and revised offers tabled on initial commitments so far, bringing the overall total of offers to that from 77 countries. Good progress had also been made on the text of the framework agreement and the Group of Negotiations on Services was due to meet Friday to receive a new comprehensive text of the GATS agreement.

Sutherland later told a news conference that except for one or two areas, the texts now commanded near consensus and could be safely considered to be locked up.

Sutherland told newsmen that in his view the primary responsibility for moving the negotiations forward and completing them lay with the industrial countries and the major entities among them. He would be visiting next month Singapore to meet with the Asean ministers whom he would press to take more initiatives and will also be visiting Japan on 21-22 October for talks with the Japanese Prime Minister.

The US and EC, he stressed, were having bilateral talks behind closed doors on sensitive issues and there were similar discussions within the EC and he hoped all this would resolve outstanding problems.

Sutherland conceded in response to questions that while there were a number of other serious unresolved issues, the agriculture and market access issues were clouding the overall picture.

The GATT head insisted that the negotiations were, more or less, going according to schedule and he for one was not looking beyond 15 December (of negotiations having to continue).