Sep 20, 1986

GATT MEET ENTERS MAKE-OR-BREAK STAGE.

PUNTA DEL ESTE, URUGUAY SEP. 18 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The General Agreement on Tariffs and Trade (GATT) Ministerial Meeting entered a crucial 48-hour, make-or-break stage Thursday, with parti-agreeing privately that a consensus would depend very much on U.S. willingness to contribute to a compromise.

Some western delegates said privately that while India and Brazil had come a long way from their original stands on the services issue, the United States had not moved forward an inch.

At the meeting itself, the Chairman and Uruguayan Foreign Minister, Enrique Iglesias, Wednesday night began informal consultations in a small group of some 22 countries knows as "friends of the Chairman" and representing the various viewpoints and interests.

At a new conference Thursday, Iglesias said that at the informal consultations he had taken the Swiss-Colombian draft -- the W/47/REV.2 -- as "a point of reference" around which he was trying to build a consensus.

Other sources said that Iglesias had obtained the consent of Brazil, India and others backing a rival document, the W/42/REV.2 text, in a show of support which they said was a big concession on their part.

Iglesias permitted these countries to put forward informal amendments in the form of "suggestions" for the 47/REV.2 text, the sources said, in order to enable him to focus attention on the various views and formulate his own text.

Iglesias reportedly reminded some nations backing the 47/REV.2 and resisting supporting the other that the text had never been discussed inside the preparatory committee.

The PREPCOM had been shown the text only a day prior to its adjournment, he reportedly noted, arguing that with the committee having referred three text to the meeting here, he had little choice but to adopt his own procedures in an effort to ensure consensus.

On Wednesday night, the group of ten countries reportedly put forward a number of "suggestions" for changes in the 47/REV.2 document in order to strengthen its language.

The suggestions related to the issues of standstill, rollback, safeguards, textiles and clothing trade, MTN codes, and other areas of traditional GATT focus.

The countries also proposed throwing open participation in the new round of trade negotiations to all Contracting Parties and other governments wishing to participate an so notifying GATT by Dec. 31.

This would in effect enable the Soviet Union and as Third World Nation who have not formally moved to join GATT to participate in the new round.

Meanwhile, negotiations are moving ahead to work out a framework for the proposed new trade round.

On the issues of services, there is growing support for a compromise on a "two-track" approach. Only the United States is resisting this, and it is not clear whether the country is willing to wreck this meeting by refusing all compromises.

The two-track approach was put forward in Geneva by the European Economic Community (EEC) in order to meet objections by India, Brazil and others to the proposed inclusion of service trade in GATT.

This compromise would involve the launching here of a new round of negotiations -- including both goods and services -- in two legally separate exercises.

The GATT Contracting Parties would decide to launch a new round of GATT talks on trade in goods while a separate inter-governmental meeting would agree to launch a process of discussion on services in order to create a multilateral framework for the trade.

The talks might involve only limited sectors of service trade and would be subject to some safeguards such as recognition of national regulations.

The United States reacted violently to this idea, which the EEC Commission itself has fully backed -- though not here, as Britain is using its Presidency of the EEC Council of Ministers to block Commission action.

In the committee of heads of delegations, Colombia, a co-sponsor of the 47/REV.2 document, put forward its own version of two-track approach. It proposed separate negotiations on goods and services, ruling out cross-linkages and leaving the talks up to GATT Contracting Parties.

While this did not seem to go far enough to meet the Indian and Brazilian objections, it suggested a movement away from the rigid stand the United States has taken, insisting on the exact formulation in the 47/REV. 2 text.

There are some here who believe that the United States is holding out to the last, when they say it will have to yield to some compromises.

The United States has taken a hard-line approach here, stressing that there are 60 or more behind the 47/REV.2 text in the hope that countries like India and Brazil will get panicky and join at the end.

"If India and Brazil want to stand out, and prevent a consensus let them do so. We shall ignore them and go ahead, since we need only two-thirds majority vote", a U.S. delegate was quoted as explaining privately to reporters here.

The United States hopes to be able to achieve this, especially if it can get agreement on agricultural issues, the subject of talks here between the EEC and the Cairnes Group and between the United States and France.

The EEC itself is privately resisting efforts to move forward on the basis of a vote, however, rejecting possible compromises on services, and ignoring countries like India and Brazil.