5:53 AM Jun 6, 1996

MARITIME TALKS HIT US ROCKS

Geneva 4 June (Chakravarthi Raghavan) -- With the United States flatly turning down an EU-led bid to get the US to join an agreement on maritime services (which includes merchant shipping and port services), trade negotiators at the World Trade Organization are mulling over how to end the talks in the face of a US rebuff.

At a meeting of the Negotiating Group on Maritime Services Tuesday at the WTO, countries other than the US participating in the talks put forward a conditional package of offers, and have given the United States time till 14 June to react and table its own offer.

The Negotiating Group itself is due to meet again on 17 June.

But the US, while technically referring the package to Washington for its reaction, made clear in the group, and in comments outside to the press, that it does not consider the collective package of offers on the table to be attractive enough for it to table its own offers and conclude the negotiations. While the negotiating group Chair, Mr. Don Kenyon of Australia, and the representatives from EU and Japan among others, insisted that the package contained new and improved offers, the United States made clear that it did not meet or match its own open market.

Mr. Andrew Stoler, the US Deputy Chief of Mission to the WTO, told the media "There will be no offers from the United States (by the 14 June). The package of offers on the table does not represent any substantial market access and provide no basis for us to make any offer," and there should be no illusion that US would change its position by 14 June, he said.

At the meeting of the negotiating group, with high-level representatives from capitals (except for the US), new and/or improved offers from some 24 countries (treating the EU as one), were put together into a "conditional package" and circulated among the members.

Fortytwo countries are participating in the maritime negotiations.

The conditional package, valid till 14 June deadline set for the US reaction, contains offers from Argentina, Australia, Brazil, Canada, Colombia, Dominican Republic, the European Community and member-states, Hong Kong, Iceland, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Nigeria, Norway, the Philippines, Poland, Rumania, Singapore, Slovania, South Africa and Switzerland.

While the "package" was not officially available for media, WTO sources and trade officials said it contained offers on maritime services and also multi-modal transport -- movement of goods from door-to-door including road or rail transport to the port, across the seas, and further transport by road or rail at the other end.

Maritime services includes merchant shipping and port services, and it was the US that suggested that multi-model transport should also be included.

The EU and Japan all sought to blame the US for the failure of the negotiations and portray such failure as one that will affect the credibility of the GATS and the WTO system.

The EU and Japan which focused on the WTO/GATS credibility because of the US positions on financial, basic telecom and maritime services, however made no mention of the failure of negotiations on movement of natural persons - where they are at fault, according to developing countries who have been seeking an accord and market opening in this area. Japan, some of them noted, did not even engage seriously in the negotiations.

The negotiations on movement of natural persons as a mode for delivery of services also got nowhere -- with Japan and the EU dragging their feet and/or making their offers so conditional on local immigration and other conditions as to make them meaningless for the developing countries seeking market openings.

EC representative, Hans Beseler, noted in the maritime negotiating group that this was one of the three services negotiations continued after Marrakesh and in view of the very limited progress in the other two, it was crucial to succeed for the credibility of the system - a view that was later echoed by Japan too.

At Marrakesh negotiations were continued on financial services, basic telecommunications and maritime services as well as on movement of natural persons.

The US entered MFN exceptions in financial services, guaranteeing only existing access to foreign financial service providers already established in the US market. The offers from other countries on this, were then packaged into an agreement to run till November 1997, with everyone free at that time to reassess their position, and make their commitments permanent in the WTO, or withdraw them, or enter MFN reservations like the United States - guaranteeing only existing access for existing foreign financial service providers.

The basic telecom services talks, where also the US found "offers" on the table not sufficient (and where US companies have been pushing for reciprocal deals) have been extended into the new year, in the hope that the US would change its views after the elections.

Whether a similar attempt would be made for the maritime services or whether the talks would be 'suspended' or ended without any accord is not very clear. All the possibilities were being talked about Tuesday evening.

In the negotiating group, while most countries who have put offers on the table or improved them appealed for constructive response from the US, with several emphasising the GATS provision about "progressive liberalisation" (presumably to justify their not undertaking full liberalisation) Canada suggested that it was perhaps time to make 'contingency plans' if there was no response from the US by 14 June.

Stoler for the United States responded to the debate inside by stressing that the Marrakesh decision on maritime services negotiations had made no reference to "progressive liberalisation". The US delegation had been looking at the 'conditional package' that had been circulated, and would refer it to Washington, though "we are not impressed by the contents". As a result of the review so far, the US did not find the 'critical mass' of market openings they were looking for and there was no reason (for the delegation) to recommend (to Washington) a change of US position, Stohler commented.

"Perhaps it is time to consider Canada's suggestion", he added.