Dec 16, 1986


GENEVA, DECEMBER 12 (IFDA/CHAKRAVARTHI RAGHAVAN)— The U.S. Trade Representative, Clayton Yeutter, after talks here this week with a cross-section of GATT negotiators, has left the impression that the U.S. is trying to back out of or play down some of its commitments at Punta del Este, whole seeking further concessions and compromises from its trading partners on issues of interest to the U.S.

If the U.S. succeeds in its objective, the Uruguay round may end up, as a round on new issues only, as some of the third world countries had feared, one third world source said.

Yeutter, who was in Geneva Wednesday, is reported to have held informal discussions over lunch and dinner, with key negotiators and representatives from industrial and third world countries, and with senior GATT officials.

Some of those present said that Yeutter used the prospect of protectionist moves next year by the new democratic controlled congress to press for early decisions to get negotiations started on issues of interest to the U.S. – agriculture, intellectual property and investment issues, and services.

With some key democrats heading important committees, there was a distinct prospect of legislation for import tax on petroleum, textile imports, and specific measures against countries that have large bilateral trade surpluses with the U.S., Yeutter is reported to have said.

Without committing himself as to whether the White House would veto such legislation, and whether it would be upheld in the congress, Yeutter is reported to have stressed that the prospect of such protectionist actions meant that there was need for "positive outcome" in Geneva in the negotiating process, and particularly in matters of interest to the U.S. so that protectionist actions in the congress could be headed off.

At the same, Yeutter is reported to have suggested virtually shelving for the present, at least until after the next presidential elections in 1988 and a new administration, negotiations on issues like returning trade in textiles and clothing to GATT, or a strong surveillance mechanism to oversee strict compliance with the standstill commitments at Punta del Este.

Yeutter is also reported to have suggested that the administration would also want to go slow on some of the negotiations now, since it would not like to tie the hands of the administration, which would take office in 1989.

Industrial and third world diplomats are critical of this concept, underlining that international obligations and commitments of countries and states could not be allowed to change with every

election or change of administration.

Some of them argue in this connection that it was all the more reason for the other negotiating partners to insist on the administration obtaining "a negotiating mandate" from the U.S.

Congress, covering all the subjects on the agenda, before serious negotiations could begin.

The administration’s current mandate to negotiate on tariffs expire in January 1987, and the administration is reportedly hesitant to go before congress for any new mandate.

Yeutter is reported to have explained that though the Administration would have authority to negotiate on trade matters even without such a mandate, in its absence the congress would be able to tinker with the final outcome.

But if the congress were to give a mandate for negotiations, as had been the practice in earlier rounds, it could only vote "yes" or "no" to the final package, and cannot amend it.

Those who heard Yeutter at the two meetings appear to have come away with mixed impressions.

Some of them saw the Yeutter visit as mainly aimed at ensuring that the current GATT consultations would lead to the adoption by December 19 of negotiating plans for the Multilateral Trade Negotiations (MTNS) in goods under the Uruguay round, as mandated by the Punta del Este declaration.

But others noted that Yeutter was also visiting some of the European capitals, and saw it as part of effort of the administration to refurbish its badly damaged image over "Iranigate", and underscore that despite its preoccupations the burgeoning domestic scandal, the administration was still interested in its foreign political, economic and other relations and initiatives.

Third world diplomats say that in the eight weeks of formal and informal discussions and negotiations here since Punta del Este, U.S. efforts to resale from its commitments have blocked approval of an adequate surveillance mechanism or approval of negotiating plans and the structure of negotiations for goods.

One issue has been the role of the GNG itself in the negotiations in goods. The U.S. has been reportedly seeking a very secondary role for the GNG, merely setting up negotiating groups, formulating a broad plan, and leaving it to each group go modify and change the plans and settle its own programme.

Others insist on the GNG’s central role in the negotiation on goods, and in ensuring compliance with the standstill and rollback commitments.

A second issue relates to the various negotiating groups.

The U.S. wants separate groups on issues of interest to it, like intellectual property and investment issues, but combine several others of interest to the third world into one group. Also though it agreed at Punta del Este to put textiles and clothing on the negotiating agenda, now it says that the issue should not be reopened in the GATT round, but kept in the context of the MFA and any negotiations at the end of MFA-4 (in 1990) for its extension.

Several of the textile exporting third world countries insist that there should be a separate group on textiles and clothing, and the issue of return to GATT rules should be tackled in the new round as agreed.

They note that at the meeting on November 12, the GNG agreed by consensus that there would be a negotiating group for each of the subjects "except where the GNG agrees to combine more than one subject in one negotiating group" and the U.S. knew that this formulation was to enable a separate group on textiles without saying so, but was now trying to go back on it.

On the surveillance mechanism, the U.S. has been for a loose and inchoate mechanism, with the secretariat largely acting as the mechanism to receive and collate the various notifications and complaints on non-observance, and referring them to the TNC for periodic assessment.

Third world countries, and several of the industrial countries, want a separate surveillance body. Brazil has put forward a proposal for a small "fact-finding body" that would assess the complaints, without going into the legal or contractual obligations under GATT, but in the context of the political commitment of Punta del Este, and with its report to the GNG and the TNC.

There have also been efforts by the EEC and U.S. to tie progress in the GNG to progress in the group of negotiations on services (GNS), which is a separate negotiating exercise outside of GATT framework under the Uruguay round.

Thought the negotiations in goods and services are generally acknowledged to be part of "a single political undertaking" third world countries are opposing efforts of the U.S. and EEC to make progress at every stage in the various subjects under goods conditional on parallel progress in services.

In several areas in goods, they noted, enough work has been done in GATT over the years, and negotiations could immediately start.

In the case of services even the problems of definition and statistics, and even the problematic of a multilateral framework on trade in services, and the sectors to be covered within it, have to be studied before any kind of negotiations or plans could be formulated.

Third world sources said that efforts to adopt a so-called "negotiating plan" for services at a meeting of the (GNS) on Friday, net with strong resistance from most of third world countries, particularly since they saw no particular deadline to be kept in this case, unlike in the case of goods where negotiating plans have to be formulated by December 19.

There was also reportedly objection to efforts to "smuggle in", through the secretariat, concepts about that had been given up at Punta del Este.

These include, sources said, efforts to challenge the national objectives in domestic regulations and laws relating to service activities, despite the stipulation in the Ministerial declaration that any multilateral framework "shall respect" the policy objectives of national laws and regulations applying to services.

Third world sources said informal and formal consultations are continuing both on areas of differences in the area of goods, and in the GNS, though in the latter there is reportedly now a broad understanding not to formulate any "negotiating plan" now, but merely agree on a programme of work for 1987.

The GNG is due to meet on December 16, as also the TNC, but both meetings could be put off to December 19.