Oct 29, 1990

DUNKEL PUTS OFF SUMMONING FORMAL TNC MEET OVER DEADLOCK.

GENEVA, OCTOBER 25 (BY CHAKRAVARTHI RAGHAVAN)ó Uruguay Round negotiators, mostly in small informal groups, continued their efforts Thursday, but with little success, to narrow differences in what are termed peripheral and relatively less difficult areas; while awaiting moves to unblocked the agricultural negotiations.

A move by GATT Director-General Arthur Dunkel to convene a formal meeting of the TNC for November 6 to tackle the deadlocked negotiations had to be put off at the instance of the U.S., Third World sources reported.

"We are how in a situation where we have to choose between bad alternatives", one OECD delegate said Thursday evening. "We can now either aim for and have very modest results to hide the failure at Brussels or extend the Round. In either case we will lose credibility with the public".

The EEC has been publicly discounting any possibility of postponing the scheduled 3 December ministerial meeting of the TNC at Brussels, with some of their delegates privately telling others that if the round is to be extended, it should be for at least two years, presumably until the EEC completes its own arrangements for the post-1992 single market.

However the French agriculture Minister, Louis Mermaz, evoked in Paris Thursday the possibility of extending the round beyond the December deadline saying "We would be better off accepting a delay than in rushing to sign a bad agreement".

Dunkel had apparently broached the idea of a formal TNC, Wednesday night with a small group of key delegations, after the EC delegate, Amb. Tran Van-Thinh had made clear at that time that the Community might be unable to put forward any offer on farm reforms.

Dunkelís idea apparently was to take advantage of the expected presence in Geneva at that time of Ministers (for the Cairns Group as well as for the G15 Southern countries) and find a way out.

Dunkelís meeting with the small group came after the informal TNC meeting on Wednesday. Sources privy to the discussions in the small group said that the U.S. at that time seemed to favour the idea, and there had been a general expectation that this would be cleared through "green room consultations" and announced.

In fact the GATT secretariat had scheduled a briefing for Thursday evening and this was cancelled later, with no official inexplanation.

However, other sources said that at Dunkelís consultations on Thursday, the U.S. was against any such formal TNC meeting, arguing that the Community which was due to hold Friday in Luxembourg a meeting of its Trade and Agriculture Ministers, and its summit in Rome this weekend, should be given another chance.

Third World sources however said there was perhaps more than this behind the U.S. second thoughts over a formal TNC now with participation perhaps of available Ministers here.

They note that the blockages and difficulties over the round, and increasing doubts about whether it would be possible to arrive at accords in time for Brussels, went beyond agriculture or the EC's failure to put forward offers, and that in many areas the U.S. and other ICs are also at fault.

If a formal TNC with participation of Ministers, particularly from the Third World were to convene, then the focus of attention would not stay, as the U.S. has been trying to, on the EEC alone. There would be much finger-pointing at the U.S. too.

Third world representatives are bound to raise other issues like Textiles and Clothing where neither the U.S. nor any of the other major importers have engaged in any serious dialogue, or in other areas where they are making neo-mercantilist demands, contrary to the mandate, on Third World countries and giving them the choice of either surrender to the demands of U.S. TNCs or withdrawal from the multilateral trading system.

They refer in this connection to reports coming out of the U.S. indicating that aware of the many problems, to which the U.S. too has contributed (such as over textiles and shifting positions in services and other areas), the U.S. might be positioning itself to blame the EC and its position on agriculture for failure of the Round.

Even the U.S. offer or demand in agriculture for 70 percent reduction in domestic support and border control measures and 90 percent in export subsidies, which has split the U.S. farm lobby itself, these Washington reports suggest are with an eye to shifting blame for failure on the Europeans and Japan.

In other developments, the U.S., EEC and a few other leading ICs have begun pushing for negotiations and initial commitments from all participants to enable them to join any multilateral framework on services that might be evolved.

With still no clear picture of the fundamentals of such a framework - and serious issues like conditional or non-conditional MFN treatment, coverage etc unsettled, and with U.S. and EC and others wishing to exclude sectors not to their advantage - Third World countries have been resisting any initial commitments.

The U.S. and a few others have been saying that only those with initial liberalisation commitments would be able to sign and join the multilateral framework at Brussels, and those "acceding" afterwards would have to pay a higher price.

The U.S. has also made clear that even those who make some initial commitments and sign any accord evolved at Brussels would be excluded by the U.S. through the "non-application" clause.

Both in the GATT articles group and in the services framework, the U.S. wants a general non-application clause not only to deny benefits to parties who had not "entered" into direct negotiations with each other on specific commitments (the current GATT provision), but also if the commitments are not found to be sufficient.

The initial commitments issue was reportedly discussed Thursday at the "green room consultations" but with no agreements. The secretariat is being asked to prepare a factual paper on the question of initial commitments, some participants said.

In separate discussions, in an ad hoc group of the GNS, over sectoral annexes and their possible contents, proposed annexes for telecommunications, construction, professional services and labour mobility have been discussed. The group is due to take up on Friday the proposals for a separate annex on financial services.

In the telecommunications sector, the U.S. and other ICs want provisions under which parties to the multilateral framework would be obliged to, provide access to their domestic telecommunications network to service providers from other parties, charging them only what are described as "cost oriented" fees.

In many countries, and particularly Third World countries, the common practice is for cross-subsidisation of various services, with higher fees for some of the services like telex or fax, etc., used by business or well-off customers in order to subsidise needed services, particularly for rural areas.

The U.S. and others want to prevent this cross-subsidisation.

India has reportedly taken the position that there had to be symmetry in treatment of modes of delivery and there could be no obligations for telecommunications as a mode of delivery if labour service as a mode was not available either.

The U.S. and other ICs oppose any provisions or annexes for labour services enabling mobility (as different from individual immigration) and for visa and work permits for labour and professional services or for construction services involving labour mobility. There are also some Third World participants like Asian countries who want derogations from the general MFN principle for such services.

In the area of financial services, India and other Third World countries have blocked consideration or tabling of a sectoral annex drawn up by treasury officials from a small group of countries, laying special rules and obligations on countries to open up their entire financial services sectors, including insurance.

India and others made it clear that the financial services annex proposals which under the guise of an annex is really a separate agreement in this area, would have to be owned and put forward on behalf of delegations and not as a report on non-paper from the working group that was appointed.

In the working group itself the Swiss chairman reportedly had been accused of blatant partisanship in allowing a small group to formulate proposals and seeking to put them forward on behalf of the working group to the ad hoc group.

In the consultations in a small group on TRIMs, where the Chairman of the group, Tomohiko Kobayashi, has been persisting in his approach to an agreement based on "prohibition" of measures rather than dealing with the trade-distorting or restrictive effects, as provided in the mandate, the U.S. has been vehemently opposing any proposal to bring in balancing provisions against corporate practices, though the European Community has been receptive.