9:21 AM Nov 19, 1993

US POSITIONS IN SERVICES, RULES ASSAILED

Geneva 19 Nov (Chakravarthi Raghavan) -- The United States was pretty isolated Friday at a meeting of the Uruguay Round Trade Negotiations Committee when almost every participant warned that some of the US stances in the negotiations could unravel the agreements already reached and endanger the Uruguay Round package.

Several delegations who spoke criticised the US position on financial services, where the US is now planning a two-tier non-MFN approach to liberalization of access to its markets and for a 'tax-carve' out -- right to have a discriminatory tax treatment of foreign service providers in relation to domestic providers and as between foreign service providers.

The US positions on socaled 'standard of review' in the dispute settlement understanding and its moves for changes in the anti-dumping and countervail rules towards the same end also came for sharp criticism.

TNC Chair and GATT Director-General Peter Sutherland, in his statement (a sanitised version of which was made available to the press) again pointed the finger at the EC and the US and urged that they should bring to the table a "decisive contribution" to enable achievement of a balanced package necessary to conclude the Round, and specially offer solutions to market access issues.

He identified five outstanding issues: agriculture where DFA related issues remain to be resolved; textiles and clothing tariffs and improving market access opportunities for exporting developing countries; outstanding tariff elimination or harmonization proposals; tariff reduction and market access offers on electronic products sought by several developing countries; and leather and footwear products where some participants (mainly the European Community) have made their offers conditional on others reducing their high tariffs and also addressing issues of access to supplies.

Speaking for the developing countries as a whole, Malaysia's Amb. Haroon Siraj also made the point that any changes or proposals should not be sprung on negotiators at the last moment, leaving little time for consideration or negotiation, and that any proposals should be put on the table now and discussed to see whether it would command a consensus.

The US Uruguay Round coordinator, John Schmidt, said that US treasury official Samuels was coming to Geneva next week for discussions.

Several negotiators also expressed concern outside over the reports of 'deals' made by the Clinton administration to win the NAFTA vote and its impact on the Round -- in terms of increased demands from the US or even lack of US flexibility to clinch deals.

But Schmidt told newsmen outside that the administration assurances, particularly over a longer transition time-frame for the textiles and clothing agreement was merely an assurance to explore the possibilities and in no way had reduced US flexibility.

But some negotiators who did not want to be identified said this assumed that the negotiators had previously 'flexibility'. But very little of it had been visible even before the Nafta vote and the various purported deals.

India's negotiator, Balkrishan Zutshi told newsmen that India had not been officially advised of the US wanting a 15-year transition period, "but there is no way we can agree to this".

US sources said that the Congressmen from textile areas had asked the President why the US was not supporting the demand for a longer extension period which had been put forward and the President had merely assured that the US negotiators would explore the extent of support for a longer extension.

The US itself, during the Rossi process (of informal discussions on the changes to the DFA texts) last December and January had not put forward any proposal for extending the 10-year period to 15. However, Jamaica and Sri Lanka (who were not in the consultations) had sent in such a proposal.

Some of the key participating countries said there was no chance even of such a proposal being considered seriously, unless the US itself sponsors it and brings it up, and if it did the existing package would quickly unravel and a overall conclusion might be blocked.

Most of the participants, inside the TNC and outside too, felt Friday that a successful conclusion was within reach and likely. However, they said, time was running out, there were enormous number of problems and difficulties that remained to be sorted out and unless the US and EC not only had to resolve their differences but engage in multilateral process to resolve issues and conclude the negotiations.

It was clear from the remarks of many Third World delegations that despite the NAFTA hurdle (which has paralysed US negotiators) being out of the way, negotiations over the Uruguay Round in Geneva were still marking time, with everyone in effect waiting on the US and EC who are to meet at level of USTR Mickey Kantor and EC Trade Commissioner, Sir Leon Brittan Monday and Tuesday -- after the APEC summit in Seattle. US and EC officials dealing with agriculture are also meeting Friday in Brussels to prepare for the Kantor-Brittan meetings.

As the details of the various deals struck by President Bill Clinton to win the Nafta vote has begun to seep in -- and some are probably yet to be revealed -- there is much concern among developing countries.

However, it is also clear that none of them seem able or willing to take a stand -- though everyone believes that if the US now pushes for a longer transition for the phasing out of the multifibre agreement, the entire deal may unravel and the negotiations breakdown.

India and Pakistan have long been warning about this, and insisting that without some improvements in market access on textiles and clothing, it would be difficult for them to sell the agreement back home.

US and EC sources have been privately admitting that they have been taking Indian warnings seriously and looking to see how some market access openings could be found.

If the Clinton assurances result in an even lower level of benefits, several participants said it could create serious blockage and at the minimum force some of the participants like India to take back their offers in goods and services. An EC official said even if the US does not press a longer MFA phase-out, but uses cuts back on its vague promises to India and Pakistan, it could create major problems.

The agriculture issues, including the multilateralisation of the Blair House text -- and changes that some others are seeking -- are expected to be taken up here from Monday.

On the US-EC impasse over agriculture, and the French demands on Blair House, statements by the US under-secretary for agriculture, suggest that some accommodation would be found by side accords.

These will not amount to amendments to the Dunkel Draft Final Act text, as further proposed to be changed by the Blair House, but would achieve the same through some fudging, and also be acceding to the French/EC demand that the socalled 'peace clause' should be made permanent.

Under the peace clause of the Blair House, the agriculture trade issues are not to be challenged during the difficult implementation period by raising disputes under some other provisions. The French have demanded that this peace clause so far confined to the period of transition should be permanent.

Some of the compromises being talked about imply hat after the six-year implementation period for reduction of support, there should be further reductions and new round of implementation periods during which the peace clause would prevail.

But this is not what the French have in mind.

In addition to the peace clause, an idea that has been floated and kicked around is that compromises -- such as is seen to be necessary over rice imports and tariffication by Japan and South Korea, or the questions of market access and other commitments by EC -- would be incorporated by the countries concerned in their schedules and would not be challenged by others.

Related to this is the general proposal that schedules of concessions -- whether on tariffs, agriculture or other areas -- once filed and accepted should not be allowed to be challenged by participants later on.

At the TNC Friday, Malaysia's Haroon Siraj said the proposals for setting up a committee on trade and environment in the MTO text to be wrapped up in the negotiations was not acceptable to the developing countries as a whole.

Developing countries, he said, had shown considerable flexibility in the discussions in the Lacarte group on the MTO and dispute settlement understanding, but could not agree to the proposal on trade and environment as a part of the MTO. The issue had to be carefully addressed later and proper terms of reference and mandate would have to be negotiated -- and this could not be done within the Uruguay Round.

On Thursday morning, at the meeting of the informal developing country group, several delegations expressed concern over the attempts by US and EC to bring in trade and environment issues -- as a cheap way of satisfying their environment lobbies -- without proper discussion and negotiations, into the MTO through a Committee on Trade and Environment. Several of them noted that there were already two bodies in GATT dealing with these questions.

Delegations said they were not opposed to consideration of environment questions, but these had to be in the proper context and after adequate discussions and negotiations, and not at the last minute rush over the conclusion of the Round.

At an informal meeting of Heads of Delegations Thursday night, there was reportedly exchange of views on the draft texts on the Multilateral Trade Organization and the Dispute Settlement Understanding put forward by the Lacarte group.

The US is reported to have voiced its own objections to the concept of an MTO and an organizational structure. However, it did not put forward in this group its 'protocol' for a GAT (General Agreement on Trade). It has previously provided to a few delegations an informal text and US acting chief of mission, Andrew Stoler had said on 15 November (after the Lacarte group had ended its work on institutional questions) that the US would incorporate some of the agreed provisions that had emerged into a new GAT protocol proposal and circulate it. The US would also appear to have indicated that it will put forward its revised market access offers by Friday evening.