Nov 19, 1990

IS URUGUAY ROUND SALVAGEABLE OR HAS IT ALREADY PETERED OUT?

GENEVA, NOVEMBER 16 (BY CHAKRAVARTHI RAGHAVAN)— "The Uruguay Round probably came to an end, after its scheduled four years, without any of us knowing about it", a junior diplomat from Brazil suggested Thursday at the weekly meeting of informal Third World group in GATT, providing the only relief to the gloom at GATT headquarters.

The diplomat's comment or question came when the informal group was conducting its weekly assessment of the state of negotiations and possible scenarios for the 3-7 December Ministerial meeting at Brussels, originally set to conclude the negotiations.

The Uruguay Round was launched at Punta del Este on 20 September 1986 and the Ministerial Declaration launching it established the Trade Negotiations Committee (TNC) to run the negotiations, directed it to hold its first meeting no later than 31 October 1986 and stipulated that the "Multilateral Trade Negotiations will be concluded within four years".

Whether calculated from the date of the launching at Punta del Este or from the first meeting of the TNC, the four-year time limit has run out.

But GATT officials and the major trading partners have been working on the basis of "negotiations" having begun in February 1987, when the TNC was able to complete the Organisation for negotiations in the 15 areas covered by the Declaration.

And over the last two years, the only deadline that has been in public eye has been the March 1991 deadline stipulated by the U.S. administration to enable it to take advantage of the "fast-track" authority to get the accords through Congress.

In a situation where negotiations were moving to a successful and smooth conclusion, no one perhaps would have looked to the fine print of the "four-year" time span.

But the jocular comment or question at the informal Third World group meeting perhaps served to put everyone on notice that there were other deadlines too.

GATT observers said that the diplomat's comment aptly summed up the state of affairs: negotiations have run out of steam, and the "green room" consultations no longer even serve the purpose of hard bargaining among the few to conclude agreements that could be thrust on others.

At the informal Third World meeting, the Chairman, Amb. Rubens Ricupero of Brazil would appear to have informed the participants that he had been "consulted" informally on various possible scenarios for the Brussels meeting.

Some key Third World delegations have already apparently impressed on Dunkel the need to quickly hold green room consultations and decide on the nature and format of the Brussels meeting. Such a meeting is now expected for early next week.

Three scenarios appear to be figuring in discussions now:

* One is of a successful conclusion of the Round at Brussels, with perhaps the actual task of drawing up legal texts and signing them to be done at a meeting in Geneva early in the New Year.

* The second is of the Brussels meeting undertaking a review of the state of negotiations (as was done for the mid-term review in Montreal) and adopting a political declaration for continuing the negotiations to conclude remaining issues.

At the informal Third World meeting Thursday the term "three-quarter" review was mentioned - though it would not be one whether in terms of "time" or in terms of "progress" in concluding agreements, some observers noted.

* The third is for Ministers at Brussels not addressing any legal texts or agreements but providing answers and political guidelines in several of the areas of negotiations so that negotiations could be continued and concluded with another Ministerial meeting or in some other format.

In this last scenario, the Ministers could be called upon to answer as many as some 100 questions, some observers said.

The first scenario would appear to be predicated on a successful outcome of the current U.S.-EEC exchanges and consultations.

On Tuesday in Washington, President Bush held consultations with Italian Prime Minister Andreotti (as current chair of the EC Council of Ministers) and the EC Commission President Jacques Delors and both sides spoke of their desire to conclude the negotiations successfully.

The U.S. and EEC are holding Ministerial level consultations at Brussels on Friday and attended on the U.S. side by Secretary of State Baker, and the Commerce and Agriculture Secretaries and the U.S. Trade Representative.

Agriculture Secretary Clayton Yeutter and USTR Mrs. Carla Hills have also been visiting European capitals in the effort to persuade the EC to move forward in the agricultural negotiations. While the U.S. continues to insist that this is the road bloc for a successful conclusion of the Round, the EEC has been underscoring the U.S./EC differences in other areas too including Services and Trade-related Intellectual Property Rights (TRIPs).

This weekend Bush is expected to take up with European leaders in Paris, where he is attending the 35-nation Conference on Security and Cooperation in Europe, the Uruguay Round issues.

Whether, as a result of all these, the U.S. And the EEC would be able to patch up their differences over agriculture sufficiently, and find compromises that they could "sell" to the Cairns group remains to be seen. If one were to go by the comments being made publicly by Yeutter in his visits to capitals, it is difficult to see the how the two positions can be reconciled.

However public posturing may be different from private talks. The EC itself is known to be trying to offer "sweeteners" to some of the Cairns Group members, particularly from Latin America, as also to some other Third World countries to prevent a broad coalition against the EC emerging or persisting over agriculture.

In the market access groups, according to reports, the EC has been reportedly willing to offer in respect of tropical products to some of the Andean pact countries (who are sources of drug production and trade) the same zero tariffs on some of their products as is enjoyed in the European market by some of the ACP countries.

There is also talk that Argentina and Uruguay could be persuaded to fall in line with a U.S.-EEC compromise that would provide these two countries with increased access to their exports to the EC market of meat and perhaps even of some grain products.

The "rebalancing" issue that would hit nearly a billion dollars of annual Brazilian exports to the EC could be more difficult.

(Meanwhile, participants are to hold this weekend bilateral negotiations in the market access groups - except on agriculture and textiles - to reach agreements over various offers on the table, participants said).

In such a scenario of U.S.-EEC arrangement on agriculture, with some EC commitments to pursue the reform process in negotiations even after the conclusion of the round, there would be a joint pressure and effort by them to take up and conclude agreements in other areas where they have a much larger common interest against the Third World countries.

These include areas like intellectual property rights, investments, or so-called rule-making - prohibition of subsidies by Third World countries on exports of industrial products, greater leeway to the U.S. and EEC in anti-dumping actions, etc.

However, there is such an impasse in almost every area of negotiations that it is difficult to see how the Ministerial meeting in Brussels could plough through such details and give decisions.

Even as it is, junior diplomats say, in the green room consultations the negotiations are said to be handicapped because of lack of grasp of the important details at level of senior officials, even of major trading blocs.

To expect Ministers to be able to decide on so many issues would be a nightmare, they say.

But the calculation of GATT officials is that once the U.S. and EEC agree, then they can do enough arms twisting of Third World Ministers and their governments to make all of them fall in line.

Even as it is, the U.S. pressures in capitals, including reportedly almost weekly complaints in some Latin American capitals to heads of governments about their individual negotiators in Geneva, would appear to have demoralised many of the negotiators.

But no one seems to be counting, in terms of social repercussions in already fragile societies, the real costs in the Third World when such accords with far reaching effects on economic and social life are sought to be implemented or enforced.

The two other scenarios for Brussels are on the basis that the U.S. and EEC would not be able to solve their agriculture problem, at least by Brussels or in Brussels.

Any solution to the agriculture deadlock in this view is not possible before or even at Brussels. Apart from the stand of Germany, the French too are opposed - already facing considerable unrest from their farmers and the government facing parliamentary problems over its efforts to reform the social security system.

The second and third scenarios or a combination of them - involving ministerial review and providing further guidelines for continuing negotiations - would also run into the problem of the U.S. administration losing its "fast-track" authority to negotiate.

This would require the administration notifying Congress about the agreements in early March, and sending up the agreements and proposed changes in domestic laws to give effect to it, within 90 days for an "up-or-down" vote.

Along with these scenarios, there is also some move to pursue further the issues of institutionalisation of GATT by some kind of decision of GATT Contracting Parties towards the establishment of a multilateral trade Organisation (suggested and being canvassed by the EEC) which would become the forum to negotiate all the outstanding issues - including intellectual property, investments and services.

For the U.S. and EEC, if they could force it on the Third World countries, this would be a distinct gain. It would have achieved an important goal - putting these issues into the GATT.