7:21 AM Sep 24, 1993

EC OFFICIALS GIVE AN OPTIMISTIC SPIN

Geneva 24 Sep (Chakravarthi Raghavan) -- Senior EC Commission trade officials tried to project Friday an optimistic picture of the EC 'jumbo' meeting of Ministers having unblocked the negotiations in Geneva, and of the negotiations now going forward in all seriousness and with every prospect of its being concluded by the 15 December deadline.

The prospects of concluding the negotiations by 15 December have increased and have not fallen as a result of the meeting of the Council of Ministers, the officials insisted.

The officials however conceded that there were still a number of unresolved issues which, technically speaking, could be tackled and resolved over the next two months, but that each one of them had political dimensions and could be a hidden rock on which the boat could be wrecked.

"If we again hit some political objection (as happened over agriculture), then everything could beput back and we might be stuck and unable to stick the deadline," the official added.

But if the Council decision had gone the other way, the negotiations would have to a dead halt, an official said. Now the outcome is that the Commission could negotiate to the limit and the result would only be judged at the end and in the context of an overall package.

The negotiations over the coming weeks would involve several parallel negotiations, and none can be concluded and sealed without concluding the others, and this would be a difficult exercise, they added.

This view was to counter the French position (and renewed threat of a veto) that the EC Commissioner Sir Leon Brittan, in his talks next Monday with the US Trade Representative, Mickey Kantor, would have to discuss and come back with solutions on the issues in agriculture that the Council had identified, there would be an impasse again.

The optimistic spin sought to be given by the EC officials, speaking on a background basis, was difficult to reconcile with the public positions, at high levels of government, of the member-countries, and the emerging picture that the French and Germans have in fact done a deal with the Germans giving some backing that a way has to be found to meet the French problems and the French in turn providing support to the Germany to ensure that the ERM breakdown and wider currency bands, does not reduce the value of the 'green' ECU/Mark rate at which the German farmers support is provided.

In Geneva, Third World delegates said that there have been a number of bilateral market access negotiations, including with the EC officials, and that while everyone is now clearer on the bottom line and knew each's other cards, there had been no breakthrough either.

While the EC officials did not see any blockage or excuse of one because of the uncertainties still surrounding the US-EC 'discussions' on the Blair House accords and the concerns that the EC wants to be addressed, some of the agricultural exporting nations gave a different picture.

Some of them said that in the EC's "offers" in agriculture, there was still much difference on the way the Blair House was being interpreted by the EC and the market access offers were being made, in terms of the minimum access to be provided.

Others noted that for them, while they would welcome some market access immediately in the EC markets too, the more crucial was how the export subsidy issue is going to be interpreted -- and what it would mean for them in third markets and how and what the 'peace clause' would mean in terms of disputes and problems relating to market access, impairment of rights in GATT and volume cuts in subsidised exports in third markets.

The general sense of the US-EC peace clause is that participants would not challenge agriculture trade issues, covered by the agricultural accord, in terms of other GATT provisions.

Some of the Cairns group members also leave the impression that there is some difference within the group, in that its 'developed' members like Australia, New Zealand and Canada have accepted and would accept without question (when it comes to a crunch) the US-EC Blair House deal and any interpretations, but that this would not be the case for others who have somewhat different interests.

EC officials, who said they had more than 30 bilaterals on market access, said that while the Tokyo Quad agreement had dealt with the mutual trade of the Quad countries, the formula agreed upon (zero-zero in some sectors, harmonisation of tariffs in some others, reduction of peaks by 15 percent in a few other sectors, and the more general 30% reduction approach for others) provided a framework that could be applied in the market access negotiations involving others too.

The EC officials also said that the discussions and negotiations on the GATS had been nearly finished and while there were three or four articles of the GATS yet to be finalised, these would not be a blocking element at the end. But work on initial commitments and negotiations on them were yet to be done.

In the services, the difficult issues that had to be resolved were the question of transportation services, particularly ocean maritime services -- where, the official said, the US had problems because of the Jones Act and several EC countries would not be ready to accept a deal that does not include ocean maritime services; the telecommunication services where it was more or less agreed that a longer time frame would be needed but the Round had to end with an agreed work programme to complete this in two years; and the audio-visual services which was mainly a bilateral problem between the US and EC, but had some multilateral implications because of interest of others.

Also unresolved in the services area, are questions about taxation and harmonisation in financial services, as well as issues about pricing of basic telecom services.

These were delicate issues involving areas where countries have always insisted on sovereignty and national decisions, while in an increasing internationalisation of the economy, there was need for some global norms.

A solution reconciling these two viewpoints had to be found. These were difficult areas but a balance had to be found through negotiations in the coming weeks.

Another outstanding issue related to the whole range of possible amendments to the Dunkel texts of the Draft Final Act where all the amendments sought by one participant or another had been put on the table in December last year.

Hopefully, since then some would have come to the conclusion that they would no longer have reason to insist on changes, while others want some changes to be made. These areas, identified by one or another, including questions relating to anti-dumping rules, subsidies, phyto-sanitary and sanitary rules, Trips etc.

In this rules area, the anti-dumping issue (where the US wants changes in the DFA text to weaken the multilateral discipline and put beyond multilateral challenge US domestic proceedings and decisions) would be particularly difficult. If there was an insistence on reopening and changing it, there would be strong opposition and things might just unravel.

There was also the pressure for change on Trips (where India has sought some changes and clarifications including on the question of patentability of life-forms like genes, DNA sequences and other 'parts' of the otherwise non-patentable animals and plants, and the US wants tightening of the provisions on pharmaceuticals)

The overall balance in the Trips text now is so delicate that if you touch one, the others will be reopened, the EC officials suggested -- hoping that both the US and India would give up their attempts.

There was also the issue of the Multilateral Trade Organization (MTO) to which the Community attached a great deal of importance and on which a number of countries had come to share the EC view.

The United States has expressed itself against an MTO and has made clear that it prefers a looser arrangement like the present GATT.

"There can be no Uruguay Round package without an MTO", the official said, adding that there had been no US-EC bilateral discussions on these in recent months, though this could figure in next week's Brittan-Kantor talks in Washington.

Two other areas where there was an agreement that the negotiations must have the same time frame as the Uruguay Round related to the negotiations for a multilateral steel agreement and an agreement on aircrafts.

EC officials identified textiles as among the issues that was of concern to one or other key countries and needing solutions to conclude the Round.