8:26 AM Dec 3, 1993

US, EC AGREE, BUT KEEP OTHERS IN DARK FOR NOW

Geneva 3 Dec (Chakravarthi Raghavan) -- Trade Negotiators in Geneva gave a cautious welcome Thursday night to the reports out of Brussels that the US and EC are about ready to wrap up bilateral deals that would help the conclusion of the Uruguay Round by 15 December deadline.

Negotiators from several countries, close to one or the other side, said they had few details and some aspects of the purported US-EC deal, if reports were correct, would cause them concern.

The US and EC have reportedly reached agreement on both market access and agriculture, but with some details and issues still remaining in services (over audio-visual and maritime services).

Though both sides are still talking of difficulties and hard bargaining, few in Geneva seriously believe that the two sides might still break off.

The public talk is seen more as aimed at their domestic lobbies, and build up the public for the compromises.

The US and EC top officials are continuing the negotiations in Geneva over the weekend. The US Trade Representative Mickey Kantor and the EC Trade Commissioner Leon Brittan are due to meet again in Brussels Monday to finalise their deals and then come to Geneva to push others.

Reports reaching here show that the US has yielded some ground to the European demand for 'clarifications' of the Blair House deal in agriculture on subsidised exports (to meet French objections), with the EC both paying a price in the form of increased access to its markets in beef and some cereals.

The EC is also reported by US sources as having given ground on its demands for deeper tariff cuts in textiles and clothing.

And the EC, while not overtly supporting the US, is also expected to keep a low profile and not vigorously oppose the US moves to weaken the Uruguay Round agreement on anti-dumping, so as to preserve the US ability to use its domestic law in this area, as it has been doing so far as a major protective trade policy instrument.

The EC it is reported would not be unhappy, and could even welcome, the US gaining its way on the anti-dumping issue -- where for both the real targets are the developing world and to some extent Japan.

The EC is also expected not to stand in the way if the US gains its points over a two-tier financial services approach in the services negotiations.

Some of the outstanding issues still to be settled, according to reports, are those relating to the subsidies code and the civil aircrafts agreement (where the US and EC are feuding on the airbus subsidy vs the hidden subsidy to the US industry through military and other contracts).

The Multilateral Trade Organization issue, some believe could go right upto the mid-April ministerial meeting -- with the Americans probably giving way then.

However, some developing countries think this could complicate the problem of a package approval of all the accords, if the MTO and the dispute settlement understanding is not part of the package to be approved by the TNC on 15 December.

Many Third World delegations are also concerned that there will be no serious multilateral process at work in Geneva, earliest before Tuesday, and that there is so little time left.

The GATT Director-General Sutherland has set a 13 December deadline for locking up the texts in the DFA.

But with the US-EC Blair House accord (and with its latest modifications/clarifications) yet to be multilaterally considered and accepted, and with the US itself having so many demands for changes -- in antidumping, TRIPs, services, subsidies and other rules areas -- the negotiating process seems destined to go right down to the wire.

Many developing country negotiators are also privately concerned that the price for the US-EC compromises to unblock the deadlocks in Geneva is to be paid by them, though none of them seem to be in a position to say 'No' to the majors.

But the Indian delegate Balkrishan Zutshi told the TNC (and repeated it to newsmen outside), "Nations, like human beings, if pushed to the wall can act irrationally".

And Brazil's Amb. Luis Felipe Lampreia spoke of the need for a balanced outcome and said if the balance were upset either by dilution of rules or insufficient market access or both, his government was "fully prepared to modify or even withdraw our offers".

Meanwhile, US Senator Patrick Moynihan, who is in Geneva with Senator Rockfeller to monitor the talks, told a press conference that the Uruguay Round antidumping text was totally unacceptable to the United States and must be changed to preserve the US law.

Moynihan said that he and Rockfeller had met Sutherland who had advised them on the need for US restraint and had warned that if the US persisted and got its way, it would well regret this one day as more and more developing countries were also enacting their own antidumping laws and use it in a similar way.

"We agreed to differ," Moynihan said.

He however appeared to take a softer line on the textiles and clothing, noting that the special regime had been there for nearly 30 years and perhaps it was time to go.

Moynihan presence and press conference (with deputy USTR, Rufus Yerxa present) appeared though to be part of the US tactics to show how difficult it would be to carry the US Congress without other trading partners yielding to the US on these and other such issues.

An earlier IPS report from Brussels said that the EC and the US wound up two days of talks Thursday on a note of optimism that a bilateral trade deal could be done by Monday.

EC Commissioner Leon Brittan, told a news conference Thursday: "There is a real prospect of hope in the final straight, but a deal will not happen before we reach the finishing post."

His United States counterpart, Mickey Kantor, echoed his cautious words: "Nothing is agreed until everything is agreed."

"I am very optimistic of a deal by Monday based on the results of our talks," said United States Secretary of State for Agriculture, Mike Espy, also participating in the Brussels talks.

Espy returns to Brussels Monday for further discussions with his EC counterpart, farm commissioner Rene Steichen and trade chiefs, Brittan and Kantor.

"We have made significant progress, but there is not yet an agreement on agriculture," added Espy.

But Steichen said that the technical progress on the "clarifications" the European Community in seeking on Blair House could not be made public because of the "fragile balance" in negotiations.

European and North American technical experts will burn the candle both ends this weekend before the high-level talks resume Monday. Any deal with the US will be put to EC foreign ministers who also meet next Monday.

Two of the most sensitive issues still outstanding on Thursday are a measure of protection for the European Community's audio- visual industry from a flood of US entertainment products and tariff reductions package for industrial goods.

Both Kantor and Brittan made an appeal to the other 114 parties to the Uruguay Round offers to put offers on the table quickly in Geneva to wrap up a deal. Both men accused other nations of hiding behind the EC/US debacle.

"It is essential for ASEAN Nations, Japan and Latin America to make efforts and they must not hold back because we are doing so, the stakes are very high," said Kantor."

In reaction to Brittan's statements Thursday that "good progress" has been made on negotiations with the US, Bernard Brigouleix, spokesman of French Prime Minister Edouard Balladur for international affairs, said "we have entered a delicate period when one must be discreet and prudent. Everything is fragile. If indeed there has been progress made, especially on the agricultural issues, then that augurs well. If indeed there has been progress, France is glad...France wants an accord, "but not at any price."

French Industry, normally adopting a low profile about their position, has also been coming out openly for a conclusion of the GATT talks.

Francois Perigot, president of the National Council of French Employers (CNPF) said Thursday during a meeting: "Nothing is worse than the failure of seven years of negotiations. If we fail, we will risk seeing once again individualism."