Nov 16, 1988


GENEVA, NOVEMBER 14 (IFDA/CHAKRAVARTHI RAGHAVAN)—"The Montreal mid-term review is not an exercise for rewriting history and rewriting the Punta del Este agreement, and if one or the others (of the Uruguay round participants) think so it will not be a great success", the European Community's Commissioner for External Relations and Trade Policy declared here monday.

Willy De Clercq who was addressing the "world economic forum", an Organisation of European managements, was responding to questions about what could be achieved at Montreal an agriculture issues in the Uruguay round and whether the Community would compromise to achieve a consensus in the light of the stands of the united states and the cairns group.

Earlier, De Clercq in his address had said: "Montreal should take stock, consolidate progress, give political guidance for the negotiations to come and launch an unequivocal message of determination to carry them forward.

"And hopefully," he added, "we can achieve results on tropical products the one area which we agreed to give priority treatment".

But there could be no "premature agreement from an unfinished process", and the community, as many other participants, would not be "pressed into sticking-up a rapid deal without due regard for the pursuit of negotiations in 1989 and 1990, and outside the framework adopted in Punta del Este," De Clercq said.

The EC Commissioner complained of "unrealistic positions" an the table, particularly in agriculture, and warned "those who disregard the agreed objectives of the mid-term review must realise that they will carry a very heavy responsibility if Montreal fails."

Earlier, underscoring the concept of "globality" in respect of the Uruguay round De Clercq said "anyone who weighs this daunting agenda against the widely ranging interests of the countries who participate in the negotiations ... can only draw one conclusion: not a single country can impose its priorities without wrecking the whole exercise".

Any departure from this principle of multilateralism and globality agreed at Punta del Este would create serious risks. "The stakes are high. If we get it wrong, the future of multilateralism hangs in the balance."

After decrying efforts of others, a reference to the U.S., to lay down priorities for Montreal mid-term review, De Clercq however appeared to go ahead to lay down his own priorities in terms of what the community hopes to achieve at Montreal.

He listed foremost the institutional questions - being negotiated in the group on the Functioning Of the GATT System (FOGS) - to make GATT more credible, and ensure coherence between trade, economic, monetary and financial questions.

Next, he underscored the need to "broaden GATT’s scope" by enabling GATT to deal with "new subjects", and said "it should be possible in Montreal to prepare the road for significant agreements during the final negotiations."

De Clercq also said that the industrialised world must "shoulder" its responsibilities on tropical products and "prepare" progress in the textiles sector, but did not elucidate further.

A number of GATT participants present in the audience later noted the "careful choice" of words, both about shouldering responsibilities in tropical products and preparing for progress in textiles.

In both these areas, they noted, the EEC too had been dragging its feet in the actual negotiations.

In tropical products, the EEC is insisting an "burden sharing" and "reciprocity" - implying that other industrial and "more advanced" third world countries should also "liberalise" on tropical products, including those of export interest to the EEC, while in textiles it has not agreed so far to negotiate modalities to end the Multifibre Arrangement and set a date for this.

The delegate of Sri Lanka to GATT later wondered why De Clercq's "good ideas" were not reflected at the technical level in the negotiations, and why they were not being put into practice.

De Clercq replied that he did not think there should be some problems in tropical products, particularly since this was one priority fixed at Punta del Este and could not be linked to progress in any other (presumably in reference to the U.S. which has linked progress in this sector to progress in agriculture).

"Even if there I no other agreement in Montreal, we want to have one on tropical products. No agreement will be a catastrophe."

In his address, referring to agriculture, De Clercq said the Punta del Este mandate had been drafted with great care and difficulty, and the community would stick to it and expect its partners to do the same.

The community would be willing to seek agreement on a package of short and long term measures, including - in the short term stabilisation of sensitive international markets and a freeze on support, and - in the longer term - "a-significant and concerted reduction of support".

He could not see any easy solution to the U.S.-EEC dispute over hormone treated meat. He pointed out that the EEC directive applied both to domestic as well as imported meat, and was not a protectionist device aimed against imports, but a health regulation.

Both the European parliament and the Council of Ministers, susceptible to public opinion on these matters, had moved unanimously in this matter.

De Clercq noted that countries had special regulations about environment and health standards for automobiles and their emissions. But the EEC had not run up to GATT that the regulations affected its exports, but complied with such regulations.

On the U.S. dollar, a subject which had been combined by the questioner with the hormone question earlier, De Clercq said, "we will need a lot of hormones to solve the dollar problem."

The problem was that of the U.S., but it also had an effect on others. Too much drop in dollar value would have trade repercussions, since the U.S. had to import goods too, he said.

A balance had to be struck, somewhere, as it would be dangerous to overshoot. There would be political repercussions if the dollar were to shoot down sharply.

But the most important question was not whether the dollar was high or low, but that it should be stable and not fluctuate like an yo-yo.

In a reference to 1992 and the European single market, De Clercq said Europe would not become "a fortress Europe", and had more interest than any of its trading partners in maintaining multilateralism in trade.

But when they talked about "reciprocity" or balance of rights and obligations, it meant nothing more or less than "a fair deal".

What the Community was saying was that the greater economic dynamism flowing from removal of structural and regulatory rigidities would automatically create benefits for those who traded with the Community.

But in areas where international cooperation was still developing - as in services or government procurement rules - "benefits can only be obtained by negotiation where we strike a deal which brings benefits to all parties."

Reciprocity thus was synonymous with "mutual opportunity". The Community was holding out to its partners the prospect of further liberalisation and expansion of trade, "but there has to be something in it for everyone."

In a single market of 320 million, the national Quantitative Restrictions (QRS) and compartmentalised regulations would have to be ended.

In trade matters the community would fully respect its GATT obligations.

But 1992 could create some problems in some areas, De Clercq conceded. This would have to be a subject of negotiations where different equations had to be taken into account, one of which was full respect by EEC for its GATT obligations.

In respect of QRS there might some "sensitive" areas and others "less sensitive", and there had to be negotiations with trading partners.

In the area of services, the EEC would not be able to wait for complete harmonisation of all regulations, as for example in banking.

Hence the Community directive that any bank established in one country, and licensed to function under its banking regulations, could open branches and conduct business throughout the Community.

A Belgian Bank operating in West Germany, in such a case, would be obeying Belgian banking regulations, and if it were less restrictive the West German Banks would no doubt ask their government to modify the rules to enable them to be equally competitive.

In this process, De Clercq suggested, the banking regulations would gradually get harmonised.