2942 Thursday 29 October 1992

SHORT SPRINT TO FINISHING LINE OR LONG MARATHON TO HORIZON?

Geneva 28 Oct (Chakravarthi Raghavan) -- The only possibility of a resumption of the Uruguay Round negotiations and its conclusion over the next few weeks lies in a Bush win in the US Presidential Elections on 3 November, several GATT negotiators privately say.

And while a Bush win is possible, it still seems to be an outside chance.

But if Bush does win, he might feel inclined to complete the negotiations and push it through Congress under his fast track authority which has a 1 March deadline for sending up the Uruguay Agreement to the Congress.

However, with a win behind him, Bush might demand a higher price than now.

But if Bush loses and Clinton wins, the negotiations would have to be kept on ice until next spring or early summer, while Clinton and his appointee as US Trade Representative, sort out where the

GATT and Uruguay Round fit into their priorities for a strong US economic recovery.

The new administration would also need to win the necessary Congressional fast track authority.

This would mean that negotiations can at best be resumed only in April or May next -- and that too only if the fresh Congressional fast track authority or extension of existing one, without modifications, is obtained.

And if Congress chooses to attach any new hidden protectionist conditions -- whether environmental, or workers rights etc -- the negotiating mandate itself would need to be modified or renegotiated, though this could be done in the Uruguay Round Trade Negotiations Committee.

This would necessarily be a long drawn out affair, with others then demanding their own issues on the agenda.

"All in all," one negotiator commented, "it could be an attempt at a short fast sprint or a long marathon."

GATT Director-General Arthur Dunkel held a 'green room' consultations Tuesday, but this did not result in any decision to summon a meeting next week of the Trade Negotiations Committee (TNC) that GATT officials had been hinting about, though Brazil and one or two other Latin American participants sought one to bring pressure on the two major trading partners.

The general view in the consultations would appear to have been that nothing would be gained in setting a meeting next week, given the US electoral situation. Another 'green room' consultation is expected next week, after the results of the US elections become known.

A meeting of the GATT Council is set for 4 November and while it may provide an opportunity to negotiators, on basis of early results and trends, to informally consult on the sidelines, the Uruguay Round negotiations are not within the ken of the Council.

GATT sources continue to portray the situation as one in which the successful conclusion of the Round as still possible by end of the year (as both the US and EC publicly claim they are committed to), and still talk of the "narrow, but fast closing window of opportunity" between now and the end of the year.

Reports Tuesday night from Brussels said that the US and EC were now resuming the talks and that EC Agriculture Commissioner RayŠMacSharry was leaving for the States to meet Ed Madigan, the US Agriculture Secretary in New York or Washington. However, reports from Washington said that while communication channels were open, no meeting has been set between the two.

However, there is an increasingly cynical view in Geneva that the on-again-off-again talk of bilateral negotiations between the United States and the European Community is more of a diplomatic and public relations exercise, with the European Community trying to head off any US retaliation over the oilseeds dispute before 3 November, and perhaps the US itself finding a way out of the retaliatory cul de sac.

Such a retaliation, and counter-retaliation that the EC would find difficult to refrain from, would complicate even more the chances of agreement by the two sides or the resumption and conclusion of the Uruguay Round, whoever wins next Tuesday in the US.

Reports from Washington suggest that the US side too does not want to undertake any retaliation before polling day lest, as one agency report from Washington put it, the GATT and Uruguay Round trade questions (with some divided perceptions in the US over its outcome) become an issue of uncertainty for Bush.

For, while a last minute deal in which Bush can show he has obtained a market opening for US soya farmers in the EC could fetch him votes, and may be even win Illinois, a retaliation which any event can't get the soya farmers and exporters any opening may be counterproductive and show up the failures of the administration.

The EC external relations Commissioner Franz Andriessen, according to the press reports of his interview over Dutch TV, has accused EC Commission President Jacques Delors with standing in the way of a global trade accord by backing France and that Delors position was different from that of Andriessen and MacSharry. Andriessen is also quoted as saying that he and MacSharry hoped to be able to convince Delors that a deal now with the US was also serves the interests of French farmers.

This, as well as the reported views of the British (now in the EC Presidency) may be part of the tactics of showing the US that the Commission is serious in trying to isolate the French and win their consent and retaliation would block all these, as also part of the internal EC manoeuvres.

But Monday night's meeting of the EC Council of Ministers of Agriculture in Luxembourg has left little doubt also that none of the others are willing to push France into a corner.

Also, the view that France is the only one blocking an agreement is quite misleading. Hiding behind France and its public position, are some of the other EC members who now feel they don't have to come out into the open on their own concerns.

In agriculture alone, within the EC itself there are other disputes and concerns. There is the EC banana regime after the single market and its quotas vs. full tariffication and preferences to the Lome countries. And on this dispute the alliance lines run differently.

The US-EC talks would need to settle the EC banana regime problem. In the latest round of talks (before the US broke off and walked out), the EC has brought up the banana regime, and the continued use of quotas after the Uruguay Round agreements, and the need for a waiver.

If the EC is to get a waiver, then one cannot be denied to the Japanese over rice. Waivers would also need to be given to others: to the South Korea on rice and beef etc. The US itself is known to be looking for a waiver on peanuts, dairy products and sugar; and Canada over dairy products.

And what it will do to the "expectations" of those, particularly in the Cairns group, backing the US and hoping through it to get market openings, or others who are trying to persuade their capitals and legislatures that there is no scope for modification of the Dunkel text and it should be accepted as is, remains to be seen.