May 28, 1991

U.S. FAST TRACK AUTHORITY PUTS FOCUS ON EC AND THIRD WORLD.

GENEVA, MAY 27 (BY CHAKRAVARTHI RAGHAVAN) The Uruguay Round negotiations, re-started in February but marking time in "technical work" is now expected to pick up pace in Geneva, following the approval by U.S. Congress of continued fast-track authority for the Uruguay Round negotiations.

Pressure will now be on the European Community to be more forthcoming on Agriculture and on the EC as well as Third World countries in the new areas including intellectual property, investment and services issues, according to Third World sources.

The re-started negotiations have no formal "deadlines", but the EC as well as several other Industrial Nations and the GATT secretariat want to complete the negotiations as quickly as possible and wind it up by the end of the year.

According to Third World sources, the U.S. and EC are already holding bilateral consultations on these and other matters.

The European Community commission has been telling the Americans and others that they would be preoccupied in 1992 with the integration of the Community into a single market as well as over its relations with EFTA countries and Central and East Europe and hence the urgency of concluding the Uruguay Round before end 1991.

The United States has reportedly said that it might be willing to agree to some such deadline, but depending on progress being made between now and end of July (when the negotiators would take a summer break in Geneva).

From this U.S. perspective, in the next six or seven weeks, there should be progress on settling the "framework" Agreement for trade in services as well as over the question of initial commitments of countries (on establishment, national treatment and market access in service sectors), and for completion of much of the so-called technical work in agriculture.

In respect of the latter, the U.S. wants the technical work and options to be settled quickly, leaving only the "numbers" to be negotiated and set later.

The "technical work" would involve working out the options on the question of "tariffication", of existing import barriers and connected issues, the "items" to be put in various categories of "domestic support" (the permissible ones under the so-called "green box" category, the prohibited ones in the "red box" and those that could be actionable or subject to phased reductions to be put in an "amber box"), and definite commitments on export subsidies.

Though they are described as "technical" the difficulty lies in the fact that the "option" chosen in "technical" work would in fact determine the final outcome in substance.

While the EC over the weekend appears to have succeeded in overcoming its immediate problems (of support and budgetary ceilings and prices in this sector), these do not have direct relations to the EC stand on agriculture in the Uruguay Round.

The Commission publicly continues to talk of need for its trading partners (and antagonists in this area) to moderate their ambitions and proceed on the basis of its "offer" of 30 percent reduction, subject to some minor adjustments in bargaining.

However for the U.S., and for some of the Cairns Group members, it would be difficult to sell any Uruguay Round package domestically unless it provided substantial advances and concessions from the EC. Connected to the Agriculture issue is also one relating to the situation of the Third World countries and their agriculture and rural development where the proposals for time-derogations and exempting these countries from domestic support, so long as the domestic prices do not exceed border prices (which are set by the still considerable domestic support and export subsidisation of the U.S., under so-called offset programmes, and the EC's own measures).

Side by side, the U.S. and EC and others are also expected now to step up pressures, bilaterally and in the Round, on the leading Third World countries to make the concessions to open up their markets and set "level playing fields" for the TNCS, as well as for enhanced protection and rights of foreigners in investments and intellectual property and services.

These pressures come at a time of considerable political and economic uncertainties in leading Third World economies, making it both difficult for several of them to stand up to pressures or be able to "deliver" at home if they yield.