Sep 19, 1986

U.S. STICKS TO ITS HARDLINE, AT LEAST IN PUBLIC.

PUNTA DEL ESTE SEP. 17 (IFDA/CHAKRAVARTHI RAGHAVAN) -- While accusing India, Brazil and others of taking "hardline positions" endangering the GATT system, the U.S. showed today that it was unwilling to make any compromises of its own to secure compromises and agreement here to launch a new round of trade negotiations.

The U.S. Trade Representative, Clayton Yeutter, at a press conference with the U.S. Secretaries for Commerce and Agriculture, insisted that the U.S. should have its way here on all the three new themes it was seeking to bring into GATT, and for a modality of negotiations that would enable "trade-offs" among the various issues for negotiations in the new round.

Yeutter also dismissed the various ideas for compromise on the services issue, proposed informally by several delegations, for a process of negotiations in services that would ensure delinkage between negotiations on goods and negotiations on services, and for adoption of a two-track approach in this regard.

Apart from rejecting the idea of a separate track of negotiations on services, outside of the GATT, Yeutter also appeared to reject the proposal of Colombia for a two-track approach -- involving a decision by the GATT CPS to negotiate on services, but through a separate Committee, independent of the Trade Negotiating Committee for the new round, and directly responsible to the GATT CPS -- but within GATT.

Perhaps the only concession he appeared to give to the overwhelming view here that any decision should be by consensus, was in his response to a question on whether he was ready to call for a vote on the services issue.

"I hope not", Yeutter said, "because it is not the method of administration in GATT".

Even here, he left himself an opening by adding "we might need to consider this on Friday evening, though I hope it does not arise".

Earlier, Yeutter claimed that there seemed to be strong support at the meeting here for the W/47.REV.2 text (the Swiss-Colombian draft), but that there were major differences between and among some of the delegations and groups on issues like agriculture and services. He was however "cautiously optimistic" that these could be resolved before the end of Friday (when the CPS Meeting is scheduled to end).

The discussions that the U.S. Government had had with the French Government before the GATT Meeting suggested that conceptually there was some prospects of agreement, but the more difficult task of agreeing on precise language and worlds remained.

Asked what "concessions" the U.S. was willing to make to secure the inclusion of the new themes, Yeutter declared, "We are not ready to make any substantial concession. We do not believe it is necessary. There are pressing reasons to have these new issues in GATT, and therefore we should not have to pay any price for their inclusion".

As far as the U.S. was concerned, investment and intellectual property rights were as important as services, and the U.S. was not ready to drop its demand for inclusion of these two, if services were included.

Asked whether he had seen any movement in the positions of India, Brazil and others opposing the inclusion of services, Yeutter said that while he had seen and effort to talk in an amicable language, and that there was a desire on the part of everyone including the group of ten to reach agreements, it was not clear whether there would be additional flexibility to obtain agreements here.

Yeutter was asked whether he would also make some compromises, given the willingness of a large number of third world countries to talk about and negotiate on services, provided there was no linkage with trade in goods and there would be no impact on their socio-economic or development goals.

Would the U.S. be willing to jeopardise the launch of a new round here by its insistence on a single track approach, and not compromise by accepting the two-track approach?

Yeutter insisted that as far as the U.S. was concerned, services must be an element of the new round, and must have an equal footing with all other negotiations, so that there could be possibilities of trade-offs.

He claimed that the fears of cross-retaliation and worries about linkages were unjustified, and said that trade-offs would be in the best interests of the third world countries, since it would enable the U.S. make concession to them in goods in return for concessions in services. He expressed difficulty in understanding the opposition on this score.

Yeutter was reminded that the opposition to linkage and trade-offs came, not only from India and Brazil as he implied, but also from some of the U.S. supporters and countries behind the 47/REV.2 document -- such as the Asian countries, Sri Lanka, Colombia and others -- and that even some industrial countries like the Nordics seemed to appreciate this viewpoint.

He was also asked whether the U.S. did not need to examine its own stand if, after two years of its efforts, so many countries -- including its friends -- seemed unconvinced and worried about the linkages.

Yeutter merely said "there are a lot more countries that agree whit my position than yours".

When pressed about the genuine fears of a large number of third world nations that the inclusion of services in GATT would enable the U.S. to retaliate against them in trade in goods, Yeutter said this question should be taken as part of the new round in the group on GATT dispute settlement mechanisms.

When the rules and principles on services were agreed upon and put into GATT, perhaps in the form of a code, it could itself provide for disputes in this area, as was done in the subsidies code, or the wider GATT dispute settlement mechanisms could be invoked.

Yeutter's answers did not seem to respond to the question about fears of U.S. retaliation in goods and what he could do to remove such fears. The question was put by U.S. newsmen.