Oct 21, 1992

WILL THEY OR WILL THEY NOT?

GENEVA, 20 OCTOBER (CHAKRAVARTHI RAGHAVAN) Will the U.S. and EC spring a last minute deal and try to force it down the throats of other participants in the Uruguay Round over the next week or so?

This has become a 60,000 dollar question to which all rational considerations would give a "no" answer, but which few are willing publicly to assert given the irrationality that now governs international relations.

Only the French Finance Minister, has been quoted Monday assaying that while an agreement could be concluded by end of the year, there was no way any deal could be made before November 3 (U.S. elections).

The optimistic and reassuring statements from United States and European Community negotiators about a likely agreement between them on the impasse over agriculture trade issues, and likely imminent breakthrough in the Uruguay Round negotiations, so far is eliciting only some flickering hopes tempered by scepticism and doubts among Uruguay Round participants in Geneva.

While there have been many newspaper stories of the likely compromises being talked about between the two majors on the agricultural trade issues, particularly the cuts in domestic support and volume cuts in subsidised exports, negotiators of other key countries involved in any agricultural deal have had little of factual information.

Following last week's ministerial talks between U.S. and EC at Brussels, the Birmingham EC summit, and the "Quad" (Canada, EC, Japan and the U.S.) Ministerial meeting over the weekend in Canada, both the EC external relations Commissioner Franz Andriessen and the U.S. Trade Representative Carla Hills have made public comments about a possible breakthrough that would enable the Round to be concluded before end of the year.

The U.S. Trade Representative Carla Hills was optimistic but slightly non-committal after the Quad meeting and provided little details of what had been achieved. She merely said (according to an U.S. Embassy bulletin) that the U.S. was "determined to press ahead and complete the Uruguay Round by the end of the year" and that she expected U.S.-EC differences on agriculture to be narrowed enough to get the stalled Uruguay Round negotiations back on track soon.

Issues on agriculture, she was further quoted as saying, have been narrowed. And on the non-agriculture issues (market access, services and government procurement) "there are no prevalent differences between the United States and EC with respect to how to succeed. We'll try to move forward ... quite conscious of the fact that to complete this negotiation by the end of the year will require us to move very rapidly".

The EC officials for their part have been quoted Monday as saying in Luxembourg (after a meeting of Finance Ministers) that a breakthrough was imminent and the talks could be concluded by end of the year, but that the EC wanted developing countries (principally the far eastern economies, as also some of the major third world countries) to be more forthcoming in their "offers" on liberalisation of financial services.

The Canadian minister, who briefed the press after the Quad meeting, said the Quad ministers "expect sufficient progress will be made on agriculture in the days ahead between the United States and the European Community, so that at an early date the negotiations could be brought back to Geneva within the multilateral process".

This underlined the anxiety of the other two members of the Quad (Japan and Canada) that the U.S.-EC talks and agreement should be "multilateralised" and they should be brought into the picture, but did not provide any solid information or clues.

After the Brussels meeting, the U.S. officials came to Geneva and briefed the Cairns group members, none of whom were ready to discuss in detail about the briefing (which left the impression on some of their other colleagues that it wasn't so much a case of their having information which they were withholding, but lack of solid information on nature of the deals being cooked up), but expressed optimism that an agreement could be reached, that the EC Commission and other EC members were ready to cut a deal and only France was blocking.

For practical purposes, with now only 13 days (including Sundays) left before the U.S. poll, and the enormous amount of work needed even to fill in some details of the many pending issues, there is no practical way of reaching an agreement that will hold after the U.S. elections, whoever wins and it looks increasingly to presage a Clinton win.

Any deal to bring about an agreement, would need not only a satisfactory solution of the U.S.-EC impasse on agriculture, but also one on the separate but linked issue of the dispute between them over the EC oilseeds regime and import of Soya, and at this stage clearly would involve some further U.S. compromise as also of EC's.

It would in any event probably be too late to provide that cutting edge to enable a Bush victory in key agricultural mid-West State like Illinois, but may even cost Bush some farm votes, and it is difficult to see why Bush would engage in such a deal.

Bush for his part, many GATT participants fear, may be so desperate at the last moment that he might order a major retaliation (against imports from EC of one billion dollar worth of products).

Such an eventuality may or may not win him the elections, but would complicate the hands of his successor as well as the hands of the EC and, even more, throw one more road-block in the way of the conclusion of the Uruguay Round negotiations and complicate relations with Europe at a time when the economies of U.S., Europe, Japan and other major industrialised countries are all in trouble, heading towards a possible depression, and one that can be averted only through cooperation and concerted measures.

However, one U.S. columnist (in explaining the Bush anxiety to complete the Uruguay Round and do a deal in GATT which is a "proven room emptier" in the U.S.), has suggested that Bush knows he will lose the elections, but that the deal "when made will count in history".

This suggests that both sides are playing a public relations cum diplomatic game.

The EC is clearly trying to edge off any Bush retaliation in the last few days before the poll over the oil seeds issue. Any such last minute action, and one that would be aimed most probably against French exports to the U.S. (cheese, wines etc), would give the EC itself little time to counter-retaliate against the U.S.

But it is also becoming clear that whatever the agreement, hopes of developing countries to make some "gains" in market access areas or in textiles and clothing sector, will not materialise and in addition they will be faced with the prospect of acceding to whatever demands are made on them (in services, intellectual property etc) or be ready to be blamed for blocking an agreement.