8:00 AM Jul 12, 1993

BAITING TO CATCH BIGGER FISH ?

Geneva 12 July (Chakravarthi Raghavan) -- The Uruguay Round Trade Negotiations Committee (TNC) is being summoned to meet on Wednesday, when a programme of work for resumption of the Uruguay Round process and its completion by mid-December, the US fast-track authority deadline.

As a first step in the resumed Geneva process, the participants are going to be called upon to engage in the market access negotiations and "respond" to the package tentatively agreed upon at the Tokyo summit last week by the Quad ministers (Canada, EC, Japan and the US) to get the Uruguay Round process moving again -- both in terms of improving their "offers" on the table on tariffs for goods as well as their "offers" for initial commitments in services.

The market access offers and negotiations on initial commitments are expected to continue in July, with August the traditional 'holiday' month in Europe and for the GATT being utilised for assessments in national capitals on the market access process, as well as for continuance of any bilateral exchanges and negotiations.

The major outstanding questions of substance on the texts of the Uruguay Round accord, the Dunkel texts for the package of agreements in Uruguay Round (the Draft Final Act texts tabled by former GATT Director-General Arthur Dunkel in December 1991) on the table (as well as the informal proposals of several key participants for changes in the texts) will be taken up in September.

An indication of this time-table and program for the Uruguay Round was given Monday at a press conference here by the EC's Trade Commissioner for GATT, Sir Leon Brittan, who said that the GATT Director-General Sutherland who was working out a programme would be making an announcement.

Sutherland, who met the key group of 19 countries at a lunch organized by the Chairman of the GATT Contracting Parties, Balkrishna Zutshi, reportedly advised the group of his decision to convene a TNC on Wednesday and the possibility of another meeting in end July and end August to make an assessment.

Some participants from this meeting came away with the impression that at the moment what was contemplated was only market access negotiations, bilateral and plurilateral, and not other problems. Some of the participants also said that their own "offers" or "revisions" would and could be based, not on newspaper reports of the Quad decisions, but only on the Quad's revised offers in all areas in the light of the Tokyo accord and it was not clear whether this was being contemplated or left to bilaterals.

Some participants also said that the "market access" talk now seemed to be similar to that in July 1992 when blockage developed and it was discovered that no progress could be made on these without a clear picture of the "rules" and agriculture texts being settled. The same could easily come up now too, some feared.

Mr. Germain Denis of Canada who is leading the market access negotiations under the TNC is expected to convene a plurilateral meeting of the group of countries involved very soon, Sutherland reportedly advised.

Earlier in the day, at a briefing for the GATT participants arranged by Japan and with other Quad members, a number of developing countries reportedly commented on the absence in the Tokyo communique of any references to the special and differential treatment on market access, mandated by the Punta del Este Declaration and the Montreal Mid-term accords.

Japan would appear to have said that this could be taken up in the resumed process, while Hugo Paemen would appear to have said that this was not touched upon at Tokyo as it was not within the Quad mandate.

Brittan told his press conference that the tariff cuts and market access package tentatively agreed upon at Tokyo by the Quad countries is "just the first step and a down payment" and there is "more to offer" if others (in the Uruguay Round) offer more in market access in goods and in financial services.

While they had no checklist of what they wanted from the developing countries, they wanted others to follow the example of the Quad and put forward improved offers to expand the size of the market access package.

Brittan came from the Tokyo Summit to brief the new GATT Director-General Peter Sutherland, and met with key trading partners. He had met the Asean countries in the morning, and was due, along with the other Quad representatives and a key group of 19 countries and Sutherland, to confer at a lunch arranged by the Chairman of GATT CPs, Balkrishna Zutshi of India, where some of these details of the negotiating process are expected to be settled.

By the time of the press conference Sir Leon made the announcement, GATT itself had not made any such announcement about the TNC or the program.

Though Brittan, like the other Quad ministers at Tokyo and the G7 leaders themselves, tried to present the Tokyo tariff accords as a "big package" of market access and one that could be expanded even more as a result of contributions from other participants, the EC's own internal assessments in Brussels made clear that it was only a "framework" accord with many details yet to be settled, among the Quad as well as conditional on what others would do.

"The Commission believes that the talks have been successfully concluded without the EC yielding on any of the most sensitive points regarding European industry: the EC's commitment to protecting the audiovisual sector from normal commercial rules remain unchanged, while there is no explicit mention of tariff cuts on wood, paper and pulp, and no mention at all of electronics and non-ferrous metals," an internal assessment of the EC in Brussels said.

No doubt the "internal assessments" of the other three Quad members too would have similar statements of how they had not yielded on their own "sensitive points", as would be the claim made by trade negotiators from other key countries perhaps in November.

Neverthless, the tone and content of the EC internal assessment, as also Brittan's comments at the new conference suggested what has been apparent for keen observers, namely, that the Tokyo package is basically a "bait" to hook and catch other fish by each of the trading partners to further the interests of their major corporations, and use the outcome to enable in future issues of interest to the major industrial countries (whether the socalled competition questions or environment or something else) to be taken up one by one and agreements secured.

Whether the other fish will bite the hook and, after being hooked, be allowed to remain in the pond for a while or will be landed ready to be swallowed up on the table remains to be seen.

Brittan gave no clear answer to the specific question as to whether it was possible to negotiate the market access, for example, for others to cut peak tariffs on textiles and clothing, without settling the differences on the textiles and clothing agreement, or for a clear market access package in agriculture without an accord on the agriculture text or for a steel or other accords without knowing the fate of the anti-dumping and dispute settlement rules.

Brittan merely suggested that the other participants could put forward their "improved offers" making it conditional on the acceptance of the Dunkel text which, in the EC view, remained the basis for concluding the agreements and without making too many changes in them.

The Quad agreement on Tokyo, he noted, had covered only the "market access", an approach he had suggested to his counter-parts in the US early this year, in order to enable some steam to be put behind the resumption of the Uruguay Round and give it a momentum.

The other issues are yet to be resolved and tackled, but such announcements as in accord that beer and spirits or pharmaceuticals would have no tariffs would provide an impetus to trade, he said.

The US had agreed to bring about a reduction in peak tariffs on textiles of upto 50 percent, but much would depend now on other participants. The Quad agreement was only an indication of what they had to offer and that the final package could be bigger depending on reciprocal offers of others.

On the "exceptions" to the accords mentioned in the Quad's Tokyo announcement, the EC official said that in some cases there were clear indications of the extent or nature.

The EC Commission's internal assessment said that the language used in Tokyo about the accords being "subject to agreed exceptions and to other exporting countries" providing effective market access, meant that "exceptions" could be agreed to only if "approved by all sides, which substantially limits the ability of one partner to call for products to be excluded".

At his meeting with the Asean countries, they had recognised the Tokyo accord as an important step forward for the resumption and conclusion of the Round and had promised to come forward with their own improved offers. Brittan stressed in this connection the need for improved liberalization offers on financial services from the Asean and other important trading partners.

Important areas in various parts of the agreement still remained to be tackled, but no one should wait till the end as otherwise the Uruguay Round would end without an agreement.

Asked about the idea that "competition" and "environment" issues, mentioned at Tokyo by the USTR, Mickey Kantor, being put on the agenda, Brittan said that the priority was for the conclusion of the Uruguay Round where there were a number of differences to be resolved. But it would make sense to identified issues like competition to be taken up after the Uruguay Round agreements came into effect and these should be tackled individually and not wait for ten years to start another Round.

These multilateral negotiating Rounds had now become too complicated and difficult to handle and other ways have to be found, he suggested.

On the post-Uruguay Round institutional arrangements, and the differences between the EC and US over an Multilateral Trade Organization or a GATT-II, Brittan said the four had only discussed the market access issues and other differences still remained to be tackled.

There was political momentum behind the proposal for an MTO since the world wanted to end attempts to resolve trade differences by unilateral processes and wants to see the GATT replaced by another more permanent organization.

But while these had not been discussed at Tokyo, the EC had made known to the US its views and the push for an MTO was becoming stronger and stronger, Brittan asserted