Aug 30, 1990

URUGUAY ROUND NEGOTIATIONS RESUME.

GENEVA, AUGUST 29 (BY CHAKRAVARTHI RAGHAVAN)— The Uruguay Round negotiations have resumed at the GATT this work after nearly a month-long summer recess, but is yet to pick up pace.

Under the work programme agreed to in July, individual negotiating groups are to meet, formally and informally, from last week of August till first week of October to resolve outstanding issues and define them clearly in texts.

This week, a working group of the Group of Negotiations on Services (GNS) has held a two-day meeting on Audio-visual services. The GNS itself is holding a one-week meeting, beginning Wednesday, to do work on the multilateral framework.

The negotiating group on Agriculture has also been holding a meeting to deal with the issues in this group relating to "rules", but without any of the protagonists showing any signs of having made any moves from their positions in July, Third World sources said.

Under the July TNC work programme, participants are to table by 1 October country lists providing information on their agricultural support in terms of a GATT secretariat format and by 15 October their "offers". However, with no common understanding on many of these issues, including on the question of domestic support and export subsidies (with both the Community and Japan firmly maintaining their positions), GATT sources said the information is likely to be on basis of perceptions of participants of the "framework" and not a common one.

GATT sources said the Gulf crisis has not figured in the talks so far. Kuwait is a GATT contracting party, Iraq is not.

However, Third World delegates said that while it is too early for the economic consequences of the crisis to be reflected in the GATT and the negotiations, several of their capitals are very much concerned both over the consequences and the impact on the negotiations.

The GATT secretariat and its economists do not so far appear to have made any assessments of the economic implications. A GATT spokesman however said that soon the secretariat will be publishing the first part of its annual review and this may provide some indications.

Some GATT officials appear to be of the view that the crisis may not have any medium- to long-term effects, and need have no consequences for the negotiations.

However economists in other international organisations, as well as private sector analysts hold some contrary views.

Most appear to think that the investor confidence shaken by these uncertainties would take a long time to recover, that the energy prices would not fall back to those that prevailed before the Iraqi invasion of Kuwait, and that coming on top of the economic crisis in many of the Third World countries, most of the latter would not have any resilience to overcome the consequences.

Also, if the crisis is not quickly resolved and if, as generally forecast, it is a trigger that will ensure a recession (inevitably or already under-way) in major ICs, it too would have some consequences. Several of the oil-importing major Third World economies would find their balance-of-payments situation even more adversely affected, and would be unable either to carry through with their intentions of import liberalisation and/or compromise in other areas. Their resistance to changes in GATT articles on bop provisions could be heightened.

But the ICs, in a situation of recession, would press even more on Third World countries to open up their markets while drawing a web of non-tariff grey area measures to protect their own, some Third World observers predicted.

At the minimum one source said, the gap between two sides, instead of narrowing, would remain far apart.

However, at the same time, in several of the major ICs, the Uruguay Round would take a backseat in the priorities of governments and some of them may be less inclined to apply pressures on their Third World partners whose support they are seeking in confronting Iraq in the Gulf. But with the EC playing host to the final meeting scheduled at Brussels in first week of December, and having a vested interest in showing success and winding up negotiations quickly even as it has to face to its many more important priorities (Community wide integration of internal markets by 1992 end, the problems of East Europe, as well as the impact of the energy price rises) - there could be some contrary pressures to wrap up some framework agreements and agree on an institutional framework for GATT as an international Organisation and forum for negotiations on all outstanding and new issues.

The negotiations in GATT have resumed this week against this general background.

The working group on Audio-visual services had been convened at the instance of the European Community. The intention has been to draw up a sectoral annotation or annex to these services, but the Community has not so far presented any paper or ideas of its own, nor had the secretariat done any general concept paper as it did in respect of other sectors.

The Community, as well as a number of other participants (both among ICs and in the Third World), wants to ensure protection of national cultures.

The chairman's text of a draft multilateral framework on services has already a general exception clause (in square brackets, indicating differences) on a provision that would enable participating countries to institute regulations on the ground of "cultural protection", in addition to others like "national security", "health", "public morals", etc. The U.S. and Japan are opposed to any such exception in the agreement and do not also want any annex in this sector.

The U.S. film industry is one of those pushing Washington on a framework in services to facilitate their exports.

Japan - whose language script and nature of its society acts as a powerful non-tariff barrier against outsiders - is also opposed like Washington: Japan has a flourishing export trade in audio-visual children's cartoon and comic programmes where it has been using high-tech (computer drawn cartoons and programmes) to dominate the market. Both are eyeing the post-1992 Europe and its single market for TV, films, etc., and have already been objecting to the EEC's own plans to reserve a portion of the market for domestic production of films and programmes.

But others - ranging from Australia and Canada, Nordics in Europe and most Third World countries - too want to ensure their "cultural protection" from the onslaught of imported services. Several of them see it as going beyond issues of audio-visual and extending to other areas too.

While many want specific "exceptions" some like Australia believe it can be dealt with through the provision for "reservation", with countries being able to permanently "except" their audio-visual services from the framework obligations.

The U.S. in a paper to the group said that it believes audio-visual services are "a vital element of global trade in services" and that the framework agreement should fully apply to this sector "with very limited exceptions". A footnote in the paper shows that U.S., while opposing cultural exceptions or a separate annex, wants to preserve what it calls the "wide-spread" restrictions on ownership of TV and radio broadcast facilities "for reasons of national security". As other participants noted, the Australian media tycoon, Murdoch (with extensive print and audio-visual media ownership in UK and Australia) who owns also print media in the U.S., when he wanted to acquire TV stations, had to renounce his Australian nationality and (quickly) acquired U.S. nationality. But the U.S. has also been adept in using "national security" to block foreign ownership in many sectors (goods and services).

While the U.S., with its large motion-picture and video exports, is opposed to both a separate annex and "cultural" exception in the main framework, other leading film producer/exporters, like Egypt and India, favoured the "cultural exception" clause but saw no need for any particular sectoral annex or annotation.

"Culture", India reportedly said, went beyond audio-visual issues and every nation had the sovereign right to protect the cultures of its peoples.

Some countries like Switzerland, Austria joined India in also underlining the "public service" aspects in the audio-visual sector. The community wants through a sectoral annex to deal with production, distribution of films, video and TV. The U.S. has been arguing that these days with so much of co-production and joint production, it was not possible to restrict on the basis of origin. Also, some of the restrictions on these services would also have impact on goods.

A more general argument of Japan was that since the GATT had no "cultural" exception clause, there was no need for one in the proposed GATS (General Agreement on Trade in Services).

This view is not shared by others, and cutting across the normal North-South divides, who underscored the qualitative difference in these matters between "services" and "goods". The working group is expected to meet again at a future date, by when perhaps the EC might put forward its own draft. Meanwhile the secretariat too is to look into the past history of GATT Art. IV (special provisions relating to cinematography films) and also prepare a general concept paper.