Apr 15, 1992

AND NOW DUNKEL TALKS OF THE "LAST LEG".

GENEVA, APRIL 13 (CHAKRAVARTHI RAGHAVAN) Trade Negotiators and GATT officials acknowledged Monday that they have missed one more deadline for concluding the Uruguay Round, that the negotiations have lost momentum and cannot be brought to a successful conclusion without basic change in positions of the United States and the EC.

Arthur Dunkel, GATT Director-General and Chairman of official level meetings of the Trade Negotiations Committee (TNC), told an informal heads of delegations meeting Monday that he would renew bilateral, plurilateral and multilateral consultations after the Easter holidays, as he put it, "to set the scene for what I hope will be the last leg of our negotiating process".

Participants said that while much of the time at the meeting was taken up over the "banana issue" (the new proposed EC regime for continued quota restrictions to preserve the Lome Pact rights of ACP suppliers), the general thrust of comments made clear that everyone was pointing the finger at the U.S. and EC and urging them to make substantive movements from their rigid stands to enable the round to be concluded.

The EC negotiator, Amb. Tran Van-Thinh reportedly told the meeting that the EC was engaged at the highest political level with the U.S. in finding a solution and they would do their best. While he could not say anything more, he hoped it would succeed.

EC sources said that U.S. and EC officials were currently continuing their discussions and hope some understanding could be reached which could be sealed and announced at the Bush-Delors meeting set for April 22. The Bush-Delors meeting cannot really negotiate, but could only bless and announce agreements, they said

Dunkel, over the last two years, has been using so many metaphors "last sprint", "last window of opportunity" to cite only a few recent ones - to suggest (at the instance of the majors) that things were on course and the negotiations would soon be concluded that he has been ceasing to carry any credibility with GATT negotiators and the media.

Aware of this, at a press conference Monday Dunkel told journalists that he had "abandoned the game of time frames ... and deadlines", and make the best use of each day's progress to bring the negotiations to a successful conclusion.

GATT officials and negotiators are now looking to the ongoing bilateral talks between the U.S. and EC and hoping that this would produce a compromise that could be clinched and announced at the April 22 meeting between U.S. President George Bush and EC Commission President Jacques Delors.

While there is still some public talk by GATT officials that a successful Bush-Delors meeting could restore momentum and enable the negotiations to be concluded by May or June, with the results "frozen" and U.S. Congress endorsement under fast track obtained after the November elections, few seasoned negotiators who understand politics are prepared to endorse this in private.

Many of them believe that if at all the negotiations could be concluded only after the U.S. elections in November.

No U.S. President running for re-election in a sluggish economy and facing criticism over his economic policies is going to allow a new issue or controversy to be injected into campaign politics, one of them observed.

If the Uruguay Round package is to go before Congress only after elections, Bush would see no reason to conclude the negotiations - whatever his public utterances about the conclusion being one of his top priorities - and help opponents and lobbyists to target him on one or the other parts of the package where the administration could be seen as having compromised.

The only way he could allow the Round to be concluded would be if the U.S. were to gain its points - in agriculture, services, etc. - vis-à-vis the EC, Japan and major Third World economies and demonstrate to the U.S. public that he was defending U.S. interests.

Despite the desire of the EC and others to conclude the Round and get rid of an unnecessary embarrassment, many negotiators said they could not see such a compromise and, in its absence, if the two sides had to compromise it could only be after U.S. elections.

Having unsuccessfully set so many deadlines and relied upon various high level meetings to resolve the deadlocks in the Round, Dunkel refused to set any new deadlines.

Dunkel denied that he had ever set a mid-April deadline at his mid-January press conference when the TNC launched the four-track process for concluding the Round on the basis of his Draft Final Act (DFA) package of proposals.

And, while Dunkel had not used the term "deadline"- he had drawn newsmen's attention to the international calendar of events to suggest to them that the period after Ramadan and before Easter were possible dates for a final Ministerial meeting on the Round.

In effect Dunkel shifted the responsibility for the 1 March and 31 March deadlines on the chair of the market access and services negotiations. But since these two act under his authority as TNC chair, it did not convince anyone.

While agricultural subsidisation is one of the major points of difference between the U.S. and EC and a few others, Dunkel noted that there were other issues too like services, where a major hurdle was in the scope and nature of the intended exemptions from most-favoured-nation principle sought by the U.S. Dunkel did not name the U.S., identifying it only as "one major participant".

While a solution to the agriculture would not mean that everything else would be quickly settled, an agreement in agriculture would act as a catalyse added.

Underlining the agriculture tangle, where several of the participants have not presented offers or schedules, with complete tariffication as required under the Dunkel package, the informal TNC spent over 45 minutes Monday arguing over the EC's latest banana regime or policy.

In an effort to resolve the conflict between the ACP suppliers and the "dollar" suppliers from Central and Latin America, the EC Commission has not tariffied its existing banana restrictions, but has suggested quotas to be digressively phased out over the years.

At the Monday meeting, a statement on behalf of the Latin American group focussed on the dangers posed by the drift on the Round and the indirect efforts of some to reopen substantive parts of the package through the market access negotiations.

Several individual Latin American countries intervened to support this and focussed on the banana issue, with Colombia insisting that the EC proposals not only did not conform to the DFA package, but violated also the mid-term accords on tropical products and the standstill and rollback commitments.

But many of the ACP countries countered these views on bananas, in effect supporting the EC's quota system rather than the tariffication called for.

The EC itself noted that this was only the Commission's proposals and it was yet to go through the EC decision-making processes including approval by the Council of Ministers.

However, the EC move for continued quotas (even as an exception), rather than tariffication on bananas, would open the way for similar quota restrictions being maintained by others like Japan and Korea on agricultural products like rice.

The informal meeting had before it the reports of the chairmen of the first three tracks of the Dunkel process (negotiations on market access in goods, initial commitments in services and the legal drafting exercise), outlining the progress made, the loss of momentum and difficulties faced in completing the three tracks.

On track four, namely a TNC level global process for making changes of substance by consensus in the package, Dunkel noted that there was no report on this fourth track for the simple reason that, given the situation in the other three track "I see no evidence to suggest that work under track four would be meaningful" in terms of carrying the work under the three tracks to fruition.

"To the contrary, opening track four would bring us back to where we were before December and I do not therefore see any reason to change the global approach we have followed so far", he told the informal meeting.

Before the meeting, several delegates told newsmen that if track four were used to reopen any part of the package (like agriculture or services) by the EC and or U.S., then others too would be at liberty to insist on reopening other parts of the package to suit them.

In the reports, Germain Denis of Canada chairman of the track one market access negotiations noted that complete line-by-line draft schedules of concessions and commitments for all products were to have been submitted by 1 March, but despite continuous bilateral and plurilateral negotiations and regular multilateral stocktaking this task had been "slower than expected".

In providing a detailed review of the status on agriculture and, non-agricultural products, Denis underlined that a political breakthrough in the major bilateral market access negotiations would be needed to allow commensurate multilateral progress.

The Chairman of the Group of Negotiations on Services (GNS), Felipe Jaramillo of Colombia said that while there had been considerable progress in the first two rounds of negotiations for initial commitments, the positive momentum evident at end of February had not been carried over into March. "The impetus has been lost and at best the negotiations can be characterised as having reached a standstill".

In the stocktaking in March, the scope and nature of the intended MFN exemptions proposed by one major participant (the U.S., which has sought to exclude financial, maritime, audio-visual and telecommunication basic services,) had "called into question the structure of the GATS and risked undermining the overall level of commitments".

While the U.S. felt that to reduce its MFN exemptions others would have to improve their offers, others felt that a scaling down of their own offers was appropriate.

In outlining the status of work in the legal drafting group, its chairman M. G. Mathur reported that the completion of its task "would depend on a readiness to take decisions on outstanding issues and on the existence of a clear time-frame for concluding its efforts".