Oct 22, 1990


GENEVA, OCTOBER 18 (BY CHAKRAVARTHI RAGHAVAN)— Argentina threatened Thursday to disrupt the Uruguay Round talks if the European Community does not improve substantially on its proposals, yet to be tabled in the talks though, to cut farm subsidies by 30 percent.

"Argentina is not going to negotiate on any of the other points being discussed in the Uruguay Round, if there is no positive outcome on Agriculture in the Uruguay Round", Argentina’s State Secretary (Minister) for Agriculture, Felipe Sola, told a press conference.

Sola said that while he was only speaking for his country, he was confident that Argentina's position would be upheld by the other members of the Cairns Group, who would be meeting in Geneva at Ministerial level on November 5 and 6.

"If a crisis has to be created, we will create it here in Geneva and not wait till we go to Brussels", Sola said replying to questions whether Argentina planned to repeat the performance of Montreal where accords were blocked when the Agriculture talks between U.S. and EEC broke down and the two agreed to continue the talks but wanted other accords to move forward.

Earlier, Sola had indicated Argentina’s willingness to compromise and yield to several of the demands of the U.S. and EC in other areas (like intellectual property, services, investments, etc.) provided it was able to get satisfaction on Agriculture on which depended over 60 percent of its export earnings.

He had also said that Argentina would continue to negotiate, as it was doing now, in other areas but would not sign any accord finally unless there was a satisfactory outcome in agriculture.

Argentine diplomats privately agreed that while at the moment the views of the U.S. and Cairns Group were close, they would not rule out the U.S. and EEC at the last minute coming to a deal and trying to force it down on others, as they had done in the past, in the Tokyo Round.

"But this time it will be more difficult", they noted. Envisaging the possibility of governments refusing to sign any particular accord with which they do not agree, the U.S. is reportedly canvassing the idea of wrapping up all the Uruguay Round accords into a single protocol which, when signed and becomes effective, would virtually replace the present GATT and try to force those opposed to quit GATT.

This, some participants said, could complicate the negotiations even more. Several of the Third World governments have taken a low profile in many areas, leaving the fight to one or two, in the belief that in the final analysis they could just not sign these accords - whether on subsidies, intellectual property, investment or services, etc.

When they realise the full implications of the U.S. move, several of crises in individual areas could coalesce and the negotiating tactic of the secretariat could backfire, they said.

On Thursday evening senior GATT officials admitted that the outlook was bleak and "things are in one big mess", but that it was better to have a mess in Geneva than when they reached Brussels.

"Everyone will suffer if the talks fail, but some more than others", the official said presumably implying that the Third World countries would suffer more.

Even as Sola were speaking to newsmen, reports from Brussels showed that the Community has been unable to resolve its own internal disputes and would not be able to table even the unsatisfactory offers to cut agricultural support.

The Uruguay Round negotiating group on agriculture has scheduled a meeting on Friday, but it is not clear what it can do in the absence of an EEC offer, and perhaps even more, EEC flexibility and willingness to improve on it in negotiations.

The EEC Agriculture Ministers, who have twice failed to endorse the Commission's proposals, are due to meet again Friday, but it seems clear that no agreement is likely even then and the issue could perhaps only be resolved at an EC summit.

Several of the EC members have refused to agree to even the very modest cuts proposed. External Relations Commissioner, Frans Andriessen, has said the Commission would not modify its proposals. But he also indicated no offer is likely to be tabled on Friday either in the GATT talks - five days after the agreed deadline.

Within the EEC, only Britain, Netherlands and Denmark have reportedly been willing to back to the Commission's proposals. The opposition from France and Germany have been quite strident, with the German Agriculture Minister, Ignaz Kiechle, making clear that if he has to choose between his farmers and GATT's future, he would have to opt for the farmers.

Chancellor Kohl has now reportedly endorsed his farm Minister, as against his economy Minister, in insisting on modification of the Commission’s proposals. German general elections are scheduled for December 2, and Kohl is not prepared to offend the farmers, though questions from German newsmen at Sola's press conference indicated that Germany might change its stand after the polls, and a compromise could be reached at Brussels. But Germany is not the only opponent.

Other participants in the talks said that while the agricultural disputes have got wide visibility, the negotiations in almost every other area, even those which were thought to be relatively simpler, like those on rules of origin, have become complicated.

At Thursday's meeting of the informal group of Third World countries in GATT, where delegations reported on the state of the "green room" consultations, Hong Kong reported that far from helping to resolve hard issues, these consultations were complicating them, mentioning reportedly the latest EC stand on textiles and clothing trade.

At Thursday's green room consultations, the EEC reportedly said that the transition period for a phase-out of the Multifibre Arrangement should be a minimum of fifteen years.

In Services, apart from some serious unresolved problems over the draft multilateral framework, the U.S. apparently has thrown another spanner into the works when, under pressure from its domestic lobbies and giant enterprises like the AT & T, the U.S. made clear that it could not accept most-favoured-nation treatment principle for a sectoral annex on telecommunications and its market in this regard would have to be governed by bilateral accords.

The U.S. has already sought total exception for its maritime, civil aviation and some aspects of banking services from the multilateral framework.

The U.S. has also reportedly taken the stand that the multilateral framework to be negotiated and concluded must contain initial liberalisation commitments from signatories and those who could not would only be able to "accede" to the accord later, thus having to pay an initial higher price and face the prospect of use of non-application clause against them.

Underscoring the importance of agriculture to the entire Argentine economy, Sola said at his press conference that his country was looking for a positive outcome and this would depend very much on the negotiating spirit shown by the European Community and some Far East economies like Japan and South Korea.

The EC Commission's proposals for a 30 percent cut, but with possibility of "rebalancing" could even leave the situation worse than now, and its idea of a commitment for only five years, without indicating what would happen after that was totally unsatisfactory, Argentina negotiators explained.

An Argentine farmer, Sola said, got one-third of the price that the French farmer got for his wheat, and yet he was out-priced in international markets by subsidised exports.

Argentina, Sola said, had been recently negotiating with Iran to sell wheat at a price of $80 per ton (as against earlier prices of $115-120). But the French, who had lost the market in Iraq because of the embargo, had told the Iranians that they would sell at $5 a ton below the final price agreed to by Argentina.

"There is no way we could play by these rules of the game", the Argentine Minister declared.

While Sola aimed most of his criticisms at the EEC, he noted that the U.S. too was subsidising exports to match the EC, but claimed it was doing so only in particular markets in competition with the EC. But there was only one world market, whether the U.S. sells its wheat by subsidy in Algeria or elsewhere, Sola said.

"We are opening up our economy and are willing to negotiate very flexibly on all the subjects being discussed, provided bur agriculture interests are taken into account", Sola declared.

"If there is no positive outcome we are not going to negotiate on the other points or sign any accords... If we have to produce a political crisis over lack of progress in agriculture negotiations, we will not wait till the last date. We will provoke it before we go to Brussels. Such a crisis will help advance negotiations in all areas".

Argentina, Sola said, would not be agreeable to extend the Uruguay Round talks, or agree only on "basic outlines" at Brussels and leave details to be negotiated later, or negotiate reductions in support for a shorter period (which would enable reviews to be done after that).