Jan 25, 1991

RESUMPTION OF PROCESS OR SHOW OF ACTIVITY?

GENEVA, JANUARY 24 (BY CHAKRAVARTHI RAGHAVAN) – The GATT secretariat has sent out letters to Uruguay Round participants suggesting that secretariat facilities and rooms would be available for bilateral negotiations in market access areas, taking off from where they were left at Brussels in December when the negotiations collapsed.

This appears to be an attempt at nudging negotiators to restart the process at bilateral levels, even if the multilateral process remains blocked in the aftermath of the collapse at Brussels and renewing the process is circumscribed by the mandate for "consultations" given to Arthur Dunkel.

Also, the U.S. is pursuing its efforts to hold "bilaterals" with a number of delegations to explore with each of them their "offers" and "requests" for market access and liberalisation in the area of trade in services. The USTR, Mrs Carla Hills has been directly in contact with ministers in some 20 countries to persuade them to start this process.

The U.S. and EC are expected in pursuance of this to hold consultations this week, though only at level of their Geneva negotiators. The U.S. has also asked for similar consultations with some 20 other countries.

Participants in the Uruguay Round and other observers who provided this information however said that there was some "surrealistic" atmosphere surrounding these, particularly in the context of the overall preoccupations of political decision-makers in most capitals with the Gulf War, as also in the business community.

One private sector representative said that it was providing difficult to get people to come together because of the Gulf War not merely in terms of "security" and "hazzles" of travel, but in terms of the economic uncertainties - with the effect of the war superimposed on a recession already under way.

The attempts to restart the negotiations, at bilaterals, is seen as an attempt to preserve a public image of business as usual, though at low key - since few from capitals seem ready to travel to Geneva for the talks, particularly those from outside Europe.But even the efforts at renewing bilaterals has run into the problem that those major economies in the Third World seeking market access in agricultural products, whether by way of tariff or non-tariff offers or requests, find it impossible to "talk" without removal of the blockages for agriculture negotiations. Others face similar problems without a clear picture of the nature of the agreement on textiles.

While going through the form of holding bilaterals, nothing more than a repetition of positions before and at Brussels could take place at this stage, some of them say.

Privately, several of the delegations admit that holding such bilaterals at this point would merely help to keep the "pot warming on the back-burner" and tell people that the GATT and Uruguay Round are still in business and not dead. It would also enable negotiations to be resumed in all areas, particularly where considerable work is needed, once the agriculture blockage is removed.

The resumption of agriculture negotiations is predicated on evolving a "platform" for negotiations on the basis of the EC Commission's willingness to negotiate in all three areas (domestic support, market access and export subsidies), but without any "figures" (on the extent of reduction of domestic support and export subsidies and border protection).

This would appear to depend on whether this EC formula would be acceptable to the U.S. and whether combined they could force it down on the Cairns Group, particularly its Latin American members like Argentina, Brazil and Uruguay.

And without the EC getting a specific mandate from the Council of Ministers and putting in an "offer", it would be the EC version of the U.S. negotiating without fast-track authority - the Council of Ministers and member-States could seek to modify any agreements reached and send the Commission back to renegotiate!

The EC's own internal reform process, set in motion by the new plan of the EC Agriculture Commissioner, Ray MacSharry is however a process that is likely to be more long drawn-out than originally thought, requiring several months to get approval.

What is known of the details, namely domestic support being redesigned to reduce excess production (which is now dumped through subsidies on world markets) and tie to domestic consumption would appear to suggest that those who are looking to expanded market access in the Community may face problems.The EC Commission's discussions with ministers would now appear to have been put off further to early February. The EC External Relations Commissioner, Frans Andriessen is travelling this week to Punta del Este for talks with some of the Cairns Group members, and later to Washington for consultations.

It is also believed that the EC and U.S. officials from the capital would be coming here next week for talks with the GATT Director-General Arthur Dunkel who, if he gets their agreement on the "platform" for agriculture negotiations, would try to "persuade" others to fall in line and restart the entire negotiating process to achieve the EC aim of "globality".Few have any illusions that any "platform" on agriculture would assure substantive progress of agreements in agriculture and fear it could be no more than a diplomatic phraseology to mask the differences for negotiations. But few would be ready to take a public position of blocking the negotiating process.

The resumption of negotiations in this way, some fear, would merely enable the EC to successfully shift any blame for failure on to others and in other areas and not be blamed for agriculture.

To the extent that Dunkel pursues such a strategy to evolve a mini-package of results - minimum concessions in agriculture, textiles, etc., by the EC and U.S. and major concessions in new areas by the Third World such as in intellectual property it could be an even more high-risk strategy than the one at Brussels.