Feb 22, 1991

URUGUAY ROUND NEGOTIATIONS TO RESTART – OPTICALLY.

GENEVA, FEBRUARY 20 (BY CHAKRAVARTHI RAGHAVAN) – GATT Director-General Arthur Dunkel managed Wednesday to get an agreement of sorts for agriculture negotiations that would enable him to announce next Tuesday, after a formal meeting of the Trade Negotiations Committee (TNC), the "re-starting" of the Uruguay Round negotiations.

And while this "re-start" would result in some technical work at negotiating meetings and consultations, they would be low-ley and no serious or substantive negotiations can take place before summer or early in September, GATT diplomats say.

The proposals and ideas that Dunkel has been canvassing over the last couple of weeks to provide the basis for the negotiations for reform of world agricultural trade met with no comments or objection at a consultation meeting of over 30 delegations reflecting various interests and trends and GATT sources said this meant that the "understandings" had been accepted by all participants, and that this had cleared the way for consultation meetings on other areas and for resumption of the process.

The exercise, which GATT officials and U.S. and others claimed to be a breakthrough, in reality, was seen by most of the negotiators as no more than "optics" for the benefit of the U.S. administration.

And while the European Community enabled even this to take place, by agreeing not to comment or object to the Dunkel proposals about the basis for agriculture negotiations, privately Cairns Group members said that the new basis was much weaker and vaguer than the Hellstrom text presented at Brussels and would quickly run into trouble once serious negotiations get under way.

The key wording in the Dunkel text about the mandate given to him at Brussels for promoting agreements in all areas of negotiations said: "With respect to agriculture, my consultations confirm that participants agree to conduct negotiations to achieve specific binding commitments on each of the following areas: domestic support, market access; export competition; and to reach agreement on sanitary and phytosanitary issues; and that technical work will begin immediately to facilitate these negotiations".

On Wednesday afternoon, after the agriculture consultations, Dunkel held one on Textiles and Clothing and is due to hold other such meetings before the formal TNC session next week.

Dunkel is to make similar statements (in effect about resumption of the negotiations on the basis of the draft texts that were before the Brussels meeting and taking account, without anyone being committed to them, of the work done in Brussels on these) at separate consultations in the six or seven clusters in which the negotiations in 15 areas were conducted at Brussels.

The consultations are all informal, and all these are to be formally brought on record at an official-level meeting of the Trade Negotiations Committee (TNC) tentatively set for Tuesday.

The TNC meeting would thus formally agree to "re-start" of the Uruguay Round negotiations on the basis of the draft texts that were sent up from Geneva to the Brussels meeting and taking account of the work done at Brussels but without its binding anyone.

The TNC is also to extend the duration of the negotiations beyond the expired four-year terms set at Punta del Este. No new deadlines are to be set beyond stating "as soon as possible".

There could still be some snags. As in the case of agriculture where the Brussels Ministerial meeting had no basis or draft text for negotiations, there are also other areas where there are no agreed basis and some fundamental differences - North/South though.

These include areas such as trade-related investment measures, some areas of GATT rule-making like anti-dumping and GATT rules applicable to Third World countries imposing trade restrictions for BOP reasons and the area of trade-related intellectual property rights where there are again some fundamental differences.

While on agriculture, Dunkel has held private consultations on the basis he would propose for resumption, in all these areas he has not done so.

As a result several of Third World delegates privately say that they have reserved their positions and would carefully look at what he outlines in each of these areas and if necessary voice their views at the TNC. But like the EC they do not also want to take the political responsibility of making any comments or objections that could be seized upon to say they were responsibility for winding up the negotiations in failure.

But all these would help the Bush administration to claim that negotiations have resumed and show prospects of success and seek extension of fast-track authority from the U.S. Congress. This has to be done before 1 March, and Congress has 90 days to say "no" before the authority gets automatically extended for two more years.

However, no serious negotiations can be expected according to most negotiators before summer - until the picture about U.S. fast track authority and the EC reform processes of its common agricultural policy become clear.

In fact even the United States does not want the negotiations to get into any "sensitive" areas but kept at a low-key technical level. This is because they don't want any vibes out of Geneva that would strengthen the hands of their domestic lobbies who would be canvassing Congress to block the fast-track renewal.

None of its trading partners would seriously negotiate with the U.S. either until the situation is clear on this, nor would any of the agricultural exporters be willing to talk seriously with the EC until the Commission's plan for reform of the Common Agricultural Policy (CAP) which has been mooted are clearer.

For the record, GATT Director-General Arthur Dunkel, in a two-sentence written press comment after the agricultural consultations said Wednesday: "This has been a demonstration of a collective will to protect the international trading system and put the Uruguay Round back on track. The biggest single hurdle to restarting the Round has been overcome".

And U.S. GATT delegate, Rufus Yerxa, called the outcome as "a very significant development".

At a consultation with an invited group of 33 delegations (with 12-member EC counted as one), Dunkel had presented a basis to begin the agricultural reform talks which had collapsed at Brussels over the EC's refusal to accept a compromise text put forward there by Swedish Agriculture Minister Matt Hellstrom calling for separate commitments, with specific figures, in each of the three areas of domestic support, border protection and export subsidies.

Dunkel has been holding consultations with various protagonists on this text, and everyone agreed to allow him to put it forward without reservations or comments from them. The European Community was the last to agree to this, after some debate within the Commission at Brussels. Though described as a concession by the EC, the text is probably the vaguest, and has considerably diluted the Hellstrom text, both by omitting the numbers and with no reference to the "rebalancing" concept.

Dunkel has scheduled a second round of consultations for each of the clusters beginning with agriculture on 27 February where the programme and issues for technical and other work are to be set, few expect any serious negotiations of substance in any of the areas to take place until at least June.

No negotiations can be expected until the U.S. administration gets the fast-track authority, and the U.S. itself in fact does not want any negotiations on "sensitive" matters lest it jeopardise the chances of the Congress agreeing to extension or at least keep quiet and not disapprove.

No negotiations in agriculture can be expected either, on the skimpy and vague terms in Dunkel text, until the EC's planned long-term reform processes for its common agriculture policy get under way and its irreversible direction are clear.

Competent observers said that for the negotiations to move forward and succeed, apart from these two points, there are also the imponderables (political and economic) of the Gulf War and its aftermath as well as the nature and duration of the recession in the world economy and OECD countries currently under way.

In the agriculture consultations, Dunkel prefaced his prepared text about the basis for the re-start of the negotiations with the remark that it might not meet the concerns of individual delegations but that collectively it was acceptable to the participants.

He referred to the mandate given to him at the closing of the Brussels Ministerial meeting where he had been requested "to pursue intensive consultations with the specific objective of achieving agreements in all the areas of the negotiating programme on which differences remain outstanding", on the basis of the various drafts and texts that were before the Brussels meeting and taking account of the considerable work that had been done at Brussels, though it did not commit any delegations.

Dunkel said that "my consultations confirm that participants agree to conduct negotiations to achieve specific binding commitments on each of the following areas: domestic support; market access; export competition; and to reach an agreement on sanitary and phytosanitary issues; and that technical work will begin immediately to facilitate these negotiations".

"To assure progress in achieving the results I have just described", Dunkel added, "I can also confirm that participants are committed to pursuing consultations, as necessary, at senior policy-making levels to address outstanding aspects of the negotiations requiring such guidance".

"All participants", he further declared, "are committed to achieving reform of world agriculture trade through the framework approach set forth in the results on agriculture adopted by the TNC at its mid-term review...".

Suggesting the reconvening of the group on 27 February, suggested a tentative agenda of technical issues for the meeting.

These included:

* In the area of domestic support - a means of determining the policies that shall be excluded from reduction commitments, the role and definition of Aggregate Measurement of Support (AMS) and equivalent commitments, a means of taking account of high levels of inflation faced by some participants;

* In area of market access - the modality and scope of tariffication, the modalities of a possible special safeguard for agriculture, the scope and modalities of implementation of a minimum access commitments, the treatment of existing tariffs;

* In the area of export competition - a definition of export subsidies to be subject to the terms of the final agreement, including development of means to avoid the circumvention of commitments while maintaining adequate levels of food aid.

The technical work in each of the three areas would also involve reinforcement of GATT rules and disciplines.

In the area of sanitary and phytosanitary measures, Dunkel said there was also scope for further refinement of a number of technical provisions and procedures.

In each of these areas, the text added, the particular concerns of developing countries, of net food importing developing countries, and those relating to food security would be examined.

The extent of climb-down by the U.S. and other agricultural exporters in accepting this as the basis for further negotiations could best be understood from the fact that at Punta del Este declaration, the U.S. had started with its "zero option" - complete elimination of all support and subsidies.

At the time of the mid-term review (after the break-up of the Montreal meeting on this point) it became "substantial reduction" and this was watered down even more in the Aart de Zheew (chairman of the agriculture negotiating group) text. At Brussels the Hellstrom had accepted the 30 percent reduction "offer" of the EC but spelt it out as specific commitments in each of the areas and covering also the "rebalancing" issue and bringing forward the base period for making the calculations.

The EC refused to accept the Hellstrom text as a basis for discussions or negotiations and Argentina and Brazil (with support of the U.S.) broke off the talks, collapsing the negotiations.

The Dunkel text now has omitted the figures and numbers in the Hellstrom text leaving only an understanding of sorts to negotiate separate commitments in the three areas but the EC baulked at allowing even such a weakened text to go forward without a comment from or reservation and ultimately acquiesced only when it became clear that the EC would then have to bear the political responsibility for ending the Uruguay Round.

GATT officials said that for the present Dunkel planned to chair the consultations in all the seven clusters.

Many Third World delegations have already questioned this and have called for maintaining the structure of the negotiations and to ensure that the Punta del Este mandate and mid-term review accords - for separate "goods" and "services" negotiations and later determination on international implementation of agreements in services, TRIPs, TRIMs, etc.