Oct 14, 1992

GATT NEGOTIATORS STILL HOPE FOR URUGUAY ROUND BREAKTHROUGH.

GENEVA, 13 OCTOBER (CHAKRAVARTHI RAGHAVAN) --Though top level U.S.-EC negotiations at Brussels on the Uruguay Round have apparently failed to break the deadlock and clinch an agreement, negotiators in Geneva still seem to believe that a breakthrough would soon be reached and announced.

Talks in Brussels between U.S. Trade Representative Carla Hills and Agriculture Secretary Ed Madigan with EC external affairs Commissioner Franz Andriessen and Agriculture Commission Ray MacSharry ended Monday, with EC officials claiming that some progress had been made but an agreement had not yet been reached.

Some U.S. observers say that there is enough technical progress for the EC Heads of Governments, at their Birmingham summit on 16 October, to be able to send the signal to the Commission to conclude a deal.

Such a scenario would appear to be based on the view that the French opposition at various levels is essentially for domestic consumption and that at Birmingham, Chancellor Kohl of Germany would be able to persuade French President Francois Mitterand to give in and not block an agreement.

U.S. newsmen who were at the Brussels talks say that the deal would involve the EC's compensation policies to farmers under the CAP reform being put into a green box, whether permanently as MacSharry demands or for a sufficiently long time, and thus put beyond GATT challenge.

The Americans would appear to have more or less agreed to this.

Such a "green box" cannot be limited only to the EC and its support and direct payments. Some U.S. practices and payments too would be thrown in, just as any agreement might need similarly exceptions to tariffication of rice by Japan etc.

What the final outcome would mean in terms of the benefits for those in the developing world, and in the Cairns group including Australia and New Zealand, who have staked so much on this and compromised in other areas is not clear.

But several of the others say that the Cairns group or other developing countries would have no option but to sign an agreement cooked up by the U.S. and EC.

In terms of an EC agreement to accept a compromise, under EC practices and rules, the trade agreement can be adopted by the EC with a qualified majority and does not need unanimity, though France could invoke a little used device of declaring it to be an issue of vital national interest and thus subject to unanimity rule.

However, even the major critics of France do not envisage the possibility of a decision being taken against French opposition or even of Kohl being able to flex his muscles and push France too much.

The French referendum over Maastricht may be out of the way, but in the overall context the Bonn-Paris axis is important for Germany, European sources suggest.

While Paris has denied earlier reports which had said that Mitterand would boycott the Birmingham meeting, if France was isolated and pushed on the Uruguay Round, the denial is more a form than substance, and a warning to partners in the EC that France could dig its heel on other issues making a compromise difficult.

Thus, the issue appears still to depend on what France, isolated though it is, would do, and how far others in the EC, particularly Germany, would want to push France to reach a deal with Bush, when a Bush defeat seems even more certain.

Technically, in GATT and the Uruguay Round, while the EC Commission (in terms of the Rome treaty) negotiates on behalf of the member-states, it is the member states who are the Contracting Parties.

Nevertheless, many negotiators in GATT seem to feet that an U.S.-EC outline agreement would be reached and soon announced, and that the negotiators would all be pushed in Geneva to complete the remaining items and issues that need to be resolved.

Among these are the market access issues, where the bilateral and plurilateral negotiations on tariff and non-tariff concessions have not made any headway, the U.S.-EC differences on intellectual property questions, the services issue where apart from U.S. and EC differences (on telecommunications, financial services and maritime services), the two are also expecting and demanding more concessions from the developing world, and issues relating to the multilateral trade organisation.

There are also the questions relating to the Textiles and Clothing sector, where some developing countries still hope and seek better and faster integration.

But in the current recession and unemployment, none of the industrialised countries seem likely to yield.

Apart from the Birmingham meeting of the EC heads, the four major trading partners (U.S., EC, Japan and Canada) are also due to meet in Toronto for the periodical "quad" confabulations. But none of the agricultural people are so far scheduled to meet there.