5:39 AM Dec 8, 1993

US, EC PRESS OTHERS TO FALL IN LINE

Geneva 7 Dec (Chakravarthi Raghavan) -- The United States and the European Community, despite some lingering differences on a few issues, brought their bilateral deals over a wide range of the Uruguay Round issues to Geneva, and asked the GATT Director-General Peter Sutherland to multilateralise them -- an euphemism to make others accept them -- and conclude the Round over the next eight days.

The US Trade Representative, Mickey Kantor and the EC Trade Commissioner, Sir Leon Brittan, who negotiated their deals in marathon talks at Brussels, came to Geneva separately, met Sutherland and also some of the ministers who were on hand, and were in an upbeat mood in calling upon others to do their part and conclude the negotiations.

The ministers present in Geneva whom the two met separately (from Canada, Uruguay, Brazil among others) were given a briefing but did not appear to have got all the details.

The US, EC upbeat mood was also shared by Canadian Trade Minister, as well as a number of delegations at the GATT -- who spoke to the media after the evening's Heads of Delegations meeting.

But Koro Besscho, Director for GATT section in Japan's Foreign Office and Koji Tsuruoka, Japan's service negotiator -- in briefing newsmen expressed some concern and anger that the resulting package from the US-EC deal in market access in industrial goods and in services sector would be much less than the Quad decisions of July and that Japan might be compelled to revise its own offers in this light.

Besscho also noted the large number of changes in the rules areas being sought at this point of time, and particularly the US proposals in anti-dumping rules, and said that while everyone wanted to take into account the political difficulties of the US administration and find some solutions, the attempt to weaken the antidumping rules was meeting with very strong opposition from many of the other partners.

"This could well be a deal-breaker", Besscho warned, even as he agreed with the others that despite a large amount of work still needing to be completed, it would be possible to do so.

Tsuruoka also noted that both the US and EC had been consistently behind the target dates set for submission of their various schedules -- market access schedules in goods and agriculture and initial liberalisation commitments in services and the MFN exemptions sought.

The latest US offer, put forward Tuesday at the GNS meeting, he said was an improvement in some areas, but maintained its two-track approach on financial services and the tax carve-out position and its schedule of MFN exemption was not known. The EC was still to make a new "offer", and the only "official" offer available to others multilaterally through the secretariat was the offer it made in 1991, he said.

However, late Tuesday night, GATT sources said that the EC had now put in its services offers, but leaving blank the one relating to audio-visual services where the US and EC still had differences.

One European source said these related to the cultural reservations and restrictions that the EC wanted to have in terms of future technologies (reception of satellite beamed TV or cable TV etc) as well as the question of the share in the distribution of revenues gathered by Europeans out of the levy on blank tapes and video-cassette recorders.

At present these are being distributed to the European artists who films or productions are shown on TV. The US is demanding that its motion picture and video industry should have a share proportionate to the amount of its programmes on TV -- an issue falling within the TRIPs accord rather than the services one.

While the audio-visual problem has been so far handled as if it is a US-EC problem -- with the French and a few others insisting on cultural protection -- Tsuruoka said that Japan too had a great deal of interest in this question and did not see how the French or other cultures would suffer by showing American films etc, citing Japan's own experience.

However, other observers noted that unlike Japan (or China) where the language is ideograph-based script rather than alphabets, the "cultural invasion" problem is different.

Tsuruoka said that the way the market access and services negotiations and bilaterals on offers involving the two principals were going, it would make it very difficult for others to prepare their own final schedules and lodge them -- whether in goods or services -- by the 15 December deadline -- with little scope thereafter for anyone to change it. This situation would be particularly serious in services, where there had been no previous experience, and it was an issue causing concerns to everyone he said.

Initially on Tuesday, and based on reports out of Brussels, both the GATT secretariat and Third World delegations were concerned that the two still had some outstanding differences that could still hold up an agreement and that in addition, the French, who have already benefited a great deal and won the right for dumped exports, could still block the final accords.

Later, it became clear to them, that though there were differences, they were more maintained for domestic purposes, and the two had struck a deal to force their way on others and that these would be fully evident in the course of this week.

Many Third World delegations who publicly spoke Tuesday evening of the relief at the US-EC solving their differences and the positive outcome and benefits that would come out of the Uruguay Round deal, privately said that the outcome would now be much less than they had assessed just last Friday (at the TNC's assessment exercise) and that the US-EC agreement and peace in several areas had been at the expense of the developing world -- whether in agriculture, market access, rules or overall.

One of them in explaining the difference in the public and private assessments asked "what choice do we have...". He noted in this connection that most capitals and delegations seemed ready to throw in the towel -- unable and unwilling to face the joint pressure of the two majors -- and there was the attitude of some who were trying to find ways of accommodating US "demands" on the ground of political compulsions of that government, but unwilling even to look at problems of others.

Both Kantor and Brittan, in separate press conferences in Geneva, said they had discussed all the issues and resolved their differences, excepting on audio-visual services and the question of aircraft subsidy, but would not disclose details.

Brittan said however that the US-EC talks on audiovisuals were broken off by Kantor on Tuesday morning, but that the two sides would be in touch and find a solution.

But all the reports from out of Brussels, and the talks of Kantor and Brittan, suggested that besides their deals on the market access and agriculture issues, the two had also gone over all the rules areas -- whether in goods or services -- and including the MTO and have reached an understanding where each would be supporting in the Sutherland's job of "multilateralisation" any changes and amendments that one or the other would bring forward.

These are expected to include the question of changes to the anti-dumping rules sought by the US -- where Kantor told the press that the EC position was "inconsistent" with the US position.

Brittan in effect appeared to confirm this, but said that not all the US proposals perhaps were of equal importance to that delegation and that multilateral discussions were going on in Geneva, with EC participation.

There was some confirmation that the EC might want an accommodation to meet the US views about standard of review and circumvention, and for some modification of the AD text on sunset clause, but not as far as the US wanted.

Besscho said that since the EC was the second largest user of the antidumping measures and investigations as a protectionist instrument, this was not surprising, but others had strong reservations on changes.

Brittan confirmed at his press conference that the US-EC understanding included an agreement over the MTO.

Other sources said they expected some of its provisions to be weakened. One such is expected to be to knock out the requirement in the latest draft that signatories accept an obligation to bring their laws and regulations into conformity with the MTO, its agreements and decisions.

While there would still remain the general Vienna Law of Treaties obligation of "free consent, good faith and implementation" -- it would no longer provide an instrument within countries like the US (and others with similar systems) where the international obligation could be enforced as against a contrary domestic law or regulation or administrative decision.

"We will have an MTO, but it will be much less of a powerful international trading organization to enforce the rule of international law, and it would probably need a different name," one European source said.