DUNKEL WANTS TO RESTART NEGOTIATIONS IN ALL AREAS.

Jan 16, 1991

DUNKEL WANTS TO RESTART NEGOTIATIONS IN ALL AREAS.

GENEVA, JANUARY 14 (BY CHAKRAVARTHI RAGHAVAN) – GATT Director-General Arthur Dunkel is apparently "encouraged" by his recent visits to Washington and Brussels and wants to restart the Uruguay Round negotiations in all areas - if possible as early as next week, but at least by first week of February.

However, his game plan seems to be meeting some resistance.

He has scheduled an informal meeting of the Trade Negotiations Committee for Tuesday afternoon.

But it is not clear whether it will be a mere information session or whether he would attempt to get backing for restarting the negotiations in all areas, "global" negotiations as the EC prefers to call it.

However, the Cairns Group does not appear to favour this and is insisting that there should first be an agreed basis for negotiations on agriculture before negotiations are started "globally". Dunkel is reportedly preparing a new text on agriculture. It is expected to be a revised version of what the Swedish Agriculture Minister, Mats Hellstrom had put forward at Brussels but which the EC had declined to accept as a basis.

The structure of the Hellstrom paper itself was one that the GATT secretariat had prepared through the "numbers" were filled in by Hellstrom, according to participants at the Brussels meeting.

Dunkel is visiting Washington again this week where he is expected to discuss the agriculture text and hopes to get U.S. backing. All this attempt to restart the process comes against the background of the Gulf crisis and the prospect of hostilities unless there is some last-minute miracle to avert it.

With all capitals and policy-makers minds concentrated on the Gulf crisis and grave issues of "war and peace", and its possible aftermath in economic and others irrespective of how this "war or peace" issue plays out, some see a bizarre coincidence in the Dunkel efforts, unless some GATT officials and trade negotiators feel that in this atmosphere anything can be put through.

Dunkel has been mandated in his personal capacity as chairman of the official-level meetings of the Trade Negotiations Committee to hold consultations with a view to promoting agreements in all areas on the Uruguay Round agenda.

The Uruguay Round talks collapsed at Brussels in December over the agriculture reform issue.

He visited Washington just before Xmas, and was in Brussels last week where he had talks with the EC Commissioners involved (External Relations Commissioner Frans Andriessen, Agriculture Commissioner MacSharry and the EC President Jacques Delors).

On Monday, he met with a small group of Third World diplomats whom he reportedly briefed on his Washington and Brussels visits and his assessment of the EC intentions.

After Dunkel’s visit to Brussels, reports current here suggest that the EC might be willing to enter into negotiations in all three areas of domestic support, border protection and export subsidies, but that it would not put forward any new offers.

Though this is being presented as something "new", it appears to be no different from what the EC had said at Brussels on 6 December - cut in domestic support, excluding oilseeds and soyabeans from its "'rebalancing" concept, increased market access through a three percent growth in imports and volume-related ceiling on export subsidies.

This was rejected at Brussels as offering any basis for negotiations and it is difficult to believe that the same can be repackaged and made a basis for restart of negotiations.

The talk of EC "flexibility" in agriculture itself is purportedly related to the vague ideas put forward by the Agriculture Commissioner Ray MacSharry for changing the dual pricing system under the CAP to a deficiency payments system (like the Americans) and direct payments to farmers.

But given the EC's complex decision-making process, any such reform is not likely to be "immediate" but at least a year or more in the future. Whether the EC's other trading partners would base their stands on agriculture and a variety of other issues on the basis of this future prospect of reform is a big question. In terms of the Uruguay Round negotiations, the EC Commission is stated to be not planning to seek any new mandate in agriculture from the Council of Ministers, but that it is ready now to interpret its existing mandate broadly and enter into negotiations in all three areas, but that it envisages this happening only in the context of negotiations and agreements in all the 15 areas.

The U.S. is reported also to be favouring negotiations and agreements in all areas, but insists agriculture is the key.

The U.S. "fast-track" authority deadlines require the administration seeking an extension before the current deadline (for notifying intention to reach agreements) expires on March 1.While at Brussels, the U.S. tried to put at rest any talk of extending the negotiating authority (even though the USTR Carla Hills had come to Brussels armed with an internal legal opinion on ways to do it), since then the talk is much less strident.

There is even talk that the current Gulf crisis could be used by the administration to seek an extension from Congress.

The EC itself is not known to be keen on extension of the Round for another year or two, but wants to wind it up with "modest results" quickly, but creating a framework for further negotiations in the future (through its concept of a Multilateral Trade Organisation and Forum).At his meeting with some of the Third World diplomats Monday, Dunkel would appear to have suggested that the resumed "global" negotiations should be conducted in six or seven clusters (rather than the 15 individual negotiating groups as hitherto).

He would appear to have indicated that he would make use of his deputies and some of the GATT negotiators to chair and hold the consultations: on agriculture, market access, textiles, services, rules, Trips and Trims and the "final act". Through this last, the GATT secretariat and the EC want to smuggle in their ideas for institutionalising the GATT and its secretariat and create an overall umbrella Organisation and Forum for administering and cross-linking all Uruguay Round agreements and for future negotiations on unfinished issues.

At Brussels the EC had refused to agree to take the Hellstrom paper on agriculture (conceptually providing for commitments in all three areas, rather than for reduced domestic support being reflected in reduced border protection and subsidised exports).

Dunkel is expected now to prepare a revised paper and go to Washington for further consultations, and on this basis restart negotiations as early as from next week, though realistically this does not seem feasible, particularly in the light of the planned consultations of the EC with some Latin American Cairns Group members at Punta del Este January 25-26, and later in Washington.

A wider meeting of the Latin American Ministers with the U.S. and EC has also been planned by Uruguay and its Foreign Minister (and TNC Chairman) Gross-Espiell for 30 January, though the meeting has been announced as being under the technical assistance programme of UNCTAD, and to which some of the ministers who held consultations in Brussels are being invited.

While some of the Latin American Cairns Group members have been privately talking of procedures that would "help" the EC to face its internal problems, others do not seem to be in a mood to repeat their Brussels experience where they went for serious negotiations on the basis of the "draft final act" and till the last were arguing about a basis for negotiations. Some like Brazil, for example, have been saying that while as a measure of goodwill to the EC they may be willing to explore the prospects for an agreement on agriculture, and see whether a basis for detailed negotiations could be agreed upon, they are not ready to restart negotiations on all issues without such a basis.

This difference, as in the wider Cairns Group itself, is a reflection of the fact that this somewhat strange "coalition" of the countries of the North and the South is now proving to be one where its individual members have different interests - based on temperate and tropical agriculture and their substitutability in some products, and their interests in access to the EC market vs. other markets where EC subsidised exports hurt them.