Nov 20, 1990

A BRUSSELS-PLUS SCENARIO FOR URUGUAY ROUND?

GENEVA, NOVEMBER 19 (BY CHAKRAVARTHI RAGHAVAN) - Consultations are continuing in the GATT on a possible scenario for Uruguay Round negotiations to be carried on beyond the Brussels Ministerial meeting of the Trade Negotiations Committee 3-7 December.

The GATT Director-General is to hold "green room" consultations on Monday, to be followed by an informal meeting of TNC to provide information to other participants.

Meanwhile U.S. and the EEC are engaged in finding ways to resolve their impasse over agriculture. On Friday at Brussels, the U.S. and EEC have conferred at Ministerial level. In Paris, President Bush is also holding consultations bilaterally, on the sidelines of the European Security Conference, on the Gulf issue as well as the Uruguay Round and a likely trade war if there is no agreement.

It is now increasingly accepted that there is no way the Round can be wound up by reaching accords in all the 15 areas on the negotiating agenda and any compromise would have to involve reaching some limited accords in the Round and concluding it and pushing all other issues on to a further work programme and negotiations.

In such a scenario, the Ministers at Brussels would provide political direction and agree on a number of crucial issues and the negotiations would resume on these in Geneva to reach detailed agreements and ready them for signature by late February.

All other issues would go to the work programme and for continued negotiations within the GATT framework.

Any scenario, it is argued, would have to take into account, the deadline of the U.S. "fast track authority" according to which the U.S. administration would have to notify Congress early March about the agreements it plans to enter into, and shortly thereafter send the texts and the proposals for changes to be made in U.S. law.

U.S. negotiators have said that there is no way the "fast track authority" for the Uruguay Round could be extended, but that if the U.S. was able to secure some "package" in what could be "sold" to Congress and the negotiations shown to have "concluded".

In such an event, it might be possible to roll over the remaining issues into a work programme for further negotiations and the administration could obtain "fast track authority" for this as part of its efforts to secure such authority for the U.S.-Mexico free trade area negotiations.

Any such "credible package" for the U.S. would have to involve agreements in agriculture and in a few other areas including TRIPs and TRIMs, the subsidies agreement. The range of agreements already foreseen in respect of GATT articles and dispute settlement and the Functioning of the GATT system could be thrown into the package.

The U.S. administration, as part of its Budget compromise has cut back some agriculture subsidies, but the law provides that if no agreement is reached in the Uruguay Round, the U.S. domestic support measures would be restored.

To avoid this, the U.S. argues, it must have an agreement that could be sold to the Congress.

Everyone appears agreed that despite the U.S.-EEC talks now going on in Brussels and elsewhere, it would not be possible to reach agreements, involving fundamental changes in approach of the EEC, before Brussels or even at Brussels, but only some kind of a firmer commitment by the EC on an "approach to an agreement".

This it is clear could not be too far off from the EC's "offers", but "sweetened" to take care of U.S. and some of the Cairns Group in terms of market access and export subsidies. Whether this could be "sold" to the U.S. and to the Cairns Group members still remains to be seen.

Though the U.S. Agriculture Secretary has warned of the possibility of Argentina and Brazil doing so, the Cairns Group appears split with many of its members as well as the U.S., which has been behind the Cairns Group, appear ready to "walk out" of the talks.

But within the Cairns Group, Argentina and Brazil appear to be insistent that without an agreement in agriculture, and one involving changes in the EC approaches on export subsidies and on "rebalancing", there could be neither progress towards Brussels nor an any packages in others. They also appear to be pressing for a decision before the end of this week.

But in any compromise between the U.S. and EEC, the price will be paid by all Third World countries, not merely the Cairns Group members, in the form of a TRIPs and perhaps a TRIMs agreement.

Argentina over a period of time has been repeatedly saying it could reach compromises on other issues if it got satisfaction on agriculture. It is not clear what Brazil would do.

To make the TRIPs palatable to the other Third World countries like India, some "sweetener" on Textiles is also sought to be worked out. But the basic framework for the Textile agreement put forward by the Chairman of the group, and information from the importing countries like EEC, suggest that about 40-50 percent of the existing restrictions would be phased out over a ten-year period, and the balance over another 5-10 year period. The provisions for monitoring and review and the "costs" under TRIPs would make all these "gains" illusory.