U.S. AND EEC DIFFER IN PERCEPTIONS OF TRENDS HERE.

Sep 18, 1986

U.S. AND EEC DIFFER IN PERCEPTIONS OF TRENDS HERE.

PUNTA DEL ESTE SEP. 16 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The United States and the European Communities publicly differed Tuesday in their perceptions of differences among Contracting Patties (CPS), both within the two groups and between them, on the traditional issues of trade in goods and the new themes.

In a separate press conference later Tuesday evening, the French Trade Minister, Michele Noire, made clear that the Swiss-Colombian text was unacceptable to France, unless the text was changed in the formulations on agriculture, eliminating the present one-sided formulations that focus only on the EEC policies.

If France did not get satisfaction on this, "I would not rule out France walking out of this meeting", Noire declared in response to a question.

The U.S. and EEC differences came out at separate news conferences on the second day of the GATT Ministerial Meeting, where the plenary heard some 30 speakers present their views.

Separately, a committee of the whole began trying to tackle the hard core issues and attempt to negotiate a consensus declaration.

The Chairman of the meeting, and of the committee, Enrique Iglesias of Uruguay, has identifies six major issues to be addressed by the committee: standstill, rollback, safeguards, agriculture, textiles and clothing, services, counterfeit goods and other intellectual property issues, and trade-related investment issues.

According to participants in the committee, the views presented by the protagonists were essentially a restatement of known positions, though some of those backing a so-called majority view made statements that suggested differences on their part, even with the formulations in their own text, even in traditional areas.

At a press conference, EEC deputy Director-General for External Relations, Paul Luyten, said that both the speeches in the plenary and the views advanced in the committee had confirmed the EEC's views that there were serious differences, even among those supporting the Swiss-Colombian text, on its formulations in the new themes and issues, as well as in the old GATT issues. The square brackets in these texts are "serious" and not "cosmetic", Luyten declared.

For the U.S., Mike Smith, Deputy U.S. Trade Representative, and Samuels, the U.S. Delegate to GATT in Geneva, both claimed that there be accepted without any changes, unless there was overwhelming support for a particular change.

The U.S. view implied that the text should be used to adopt a declaration here launching the new round of negotiations.

The U.S. sought to ignore or not answer questions on some differing views expressed in the plenary by Colombia, a co-sponsor of the Swiss-Colombian text, over the services and other new themes, suggesting that Colombia itself wanted some major changes in the formulations over services, to agree on a consensus document.

Both Smith and Samuels at their press conference avoided answering a specific question over the Colombian view for its own version of a "two-track" approach, insisting that Colombia was a sponsor of the 47/REV.2 text.

Colombia, Monday evening, had told the plenary that the general agreement did not cover services, and in the new round there should be no effort at trade-offs between trade in goods and services.

At the same time, Colombia recognised that the new trade round, to which it attached great importance, could not be launched without dealing with services.

Therefore, the Colombian Delegate suggested as a compromise that the GATT CPS should launch the new round including goods and services, but that the services issue should be negotiated in a different group than the negotiations in goods under the supervision of the Trade Negotiating Committee --that the group negotiating on services should do so under the authority of the CPS and should be directly responsible to them.

The Colombian delegate to GATT in Geneva, Felipe Jaramillo, later confirmed this view, pointing out that in the text it had cosponsored the formulations on services and other new themes had been put within square brackets, meaning that there was no agreement and differences had to be reconciled.

While publicly the U.S. ignored the difference at its press conference, privately the U.S. delegates let it be known that they were opposed to this "two-track" approach.

Luyten, when asked to comment on this, said the Colombian or other positions (including the Asian insistence on delinkage) came as no surprise to the EEC, since it had viewed the square brackets in the 47/REV.2. text as real and not cosmetic.

Among the other speakers Tuesday in the General Debate, both Brazil and India made clear their continued opposition to include services and other new issues in the new trade round or as part of GATT, and that they would object to any forced consensus on this issue at Punta del Este.

The speech of the Indian Minister was pretty sharp and tough, and EEC and other sources suggested that the sharp language was perhaps a reaction to the kind of tactics the U.S. has been adopting here and talking of "isolating" India and Brazil, or "leaving them out in the cold" in the international trading area.

The Indian Finance Minister, Vishwanath Pratap Singh, told the plenary that he was expressing Indian opposition on behalf of a country with 800 million people, and potentially the largest market - a sharp reminder to those who seek to ignore India that they would be doing so to their won cost in this future market.

In his speech, Singh listed several areas of trade in goods - standstill, rollback, safeguards, agriculture, etc. - where the U.S. and other industrial countries have taken rigid positions, and have not yielded to the viewpoints of the third world countries, whether those behind 41/REV.1 or 47/REV.2 paper.

His sharp listing of those boa points, India sources suggested, was intended to show that contrary to the impression formulated by the U.S. that India, Brazil and others were taking "a hard line" and blocking the new round, it was the industrial countries who were taking a "hard line" in traditional areas of interest to the third world.

The areas listed by Singh included: the proliferation of grey area bilateral trade measures, the collapse of commodity prices and markets, the increasing resort to restrictive business practices by TNCS, and the increasing efforts to tackle imbalances resulting from failure of the international monetary and financial system through trade policy measures and restrictions against third world exports, and the recently concluded more restrictive MFA-4.

Apart from dealing with the firm Indian position on new issues, Singh also suggested that it was time that GATT, based on concepts largely applicable to market economies, could deal with trade between countries with different social and economic systems /(East/West and East/South trades).

On the new issues - services, investment and intellectual property issues - Singh that these were not part of the GATT, and could not be dealt with in the new round.

In restating firmly, the position outlined by it already in GATT, Singh pointed out that GATT was "only an agreement", and not an organisation under whose auspices disciplines could be developed in other areas than those covered by the agreement. The GATT approaches and principles dealing with trade in goods just could not be transposed to the services sector, and negotiating on services in GATT WAS "UNTENABLE".

"When i say so i express the will of 700 million people of my country who constitute one of the largest potential markets of the world economy", Singh declared.

The people of India were asking whether their long struggle for freedom, and post-independent efforts and policies to build a strong and sound economy, based on their own strength and national aspirations, would now be condemned as "obstacles to trade", and whether they would not be confronted with fierce retaliation in goods, once the linkage between goods and services were established, because Indian national perceptions found itself unable to retailer Indian policies in the services sector.

The Indian Minister, in words addressed to other third world countries, suggested that by agreeing to put goods and services together in GATT, they would be subjecting their policies for socio-economic transformation "to the vagaries of the market place", give legitimacy to protectionism in goods on the plea of "insufficient opening up" by them of their services sector.

The Brazilian Minister for External Relations, Roberto Abreu Sodre, outlined the important linkages between trade and monetary and financial issues, and the need for open markets for third world countries and their exports, in order to enable them to service their debts, while at the same time restoring growth in their economies and meeting the social and economic aspirations of their peoples.

On the issue of new themes, and specially services, the Brazilian Minister said his country's position was well-known. The results of discussions on services in GAT and other Forums had only confirmed Brazil's conviction that there was "no clear concept of the subject-matter and much less a consensus concerning multilateral action in GATT".

The Brazilian stand, Abreu Sodre declared, remained unchanged. "We shall not cease to work indefatigably for a consensus but we shall object to any MNPT to impose solutions", he declared.

"In a constructive spirit, we shall not reject consideration of an approach to the question of services which, while taking into account the priority that some attribute to multilateral action in that area, would wholly respect the position of those who, like Brazil, reject the inclusion of services in a round concerning goods within the scope of the GATT", the Brazilian Minister added.