7:25 AM Oct 14, 1993

CONFUSION AND UNCERTAINTY AT GENEVA

Geneva 14 Oct (Chakravarthi Raghavan) -- Trade negotiators at Geneva increasingly confess to a feeling of confusion and uncertainty over the prospects for the Uruguay Round negotiations which are currently working to a 15 December deadline for completing substantive negotiations.

At a meeting of the informal group of developing countries at the GATT on Thursday, several of the participants would appear to have expressed concern over the current Sutherland process for the completion of the negotiations where in fact all the negotiations are taking place elsewhere and the so-called consultations in Geneva (by Sutherland or his nominees) have become completely non-transparent and opaque.

The Chairman of the group, Amb. Haroon Siraj of Malaysia, is to hold further consultations within the group to evolve a common position on the process between now and the 15 December deadline.

But a large number of participants would appear to have come out against the consultations in the group headed by amb. Julio Lacarte-Muro (looking into institutional questions) from dealing with substantial changes to the DFA texts or taking up new issues including environment questions.

India, Brazil and a few others reportedly said in the group that a number of countries had put on the table, in November-December last year, their proposals and ideas for changes.

All such changes would have to be taken up considered and dealt with in one place, so that everyone would know the effect of any changes into the overall picture.

There was also general dissatisfaction about the lack of any real multilateral or plurilateral consultations or negotiations in Geneva -- whether on market access or any of the other issues that need to be settled for the negotiations to be wound up substantively by the target date of 15 December.

As one negotiator put it later, despite all the claims and talk of the resumption of multilateral process in Geneva, there are no multilateral or plurilateral negotiations going on here, but levels of negotiations taking place elsewhere.

At one level, there are public comments and statements, at various levels and by various protagonists, which could be part of the negotiating tactic and attempt to influence the other party and its lobbies.

While governments and their negotiators always have tried to influence the other through media, a new element in this has been that of the GATT head, Peter Sutherland.

Since he took over as GATT head in July, Sutherland has taken a different approach to the entire negotiations (than his predecessors who saw their role as only that of facilitators in negotiations among contracting parties).

He has been attempting to talk to ministers and putting pressure on governments through the media, with his almost daily press interview to some correspondent or the other (who is seen as likely to publish it uncritically), and the non-attributable background statements and comments from other GATT officials.

As an observer put it, "these days we have to look at the media reports and the GATT's press summary, not only to know what is being said elsewhere, but to know Sutherland's negotiating process. This, at the moment, appears to involve not negotiations among the contracting parties, but his attempt to negotiate through the Financial Times and Wall Street Journal, International Herald Tribune and other English media"

While an element of pressure from Sutherland to mobilise public opinion (and strengthen hands of trade negotiators against domestic lobbies) is welcomed, some are beginning to wonder whether it was getting out of hand to such an extent that a 15 December deadlock or failure to conclude would have an impact, because of media perceptions raised by Sutherland, more than would be warranted by the content of the Uruguay Round accord or even its psychological effects.

The latest foray into the Press in areas of some serious controversies among governments is his statement Thursday on the trans-atlantic audio-visual services controversy.

In his statement, Sutherland posed the question whether anything in the Uruguay Round (presumably referring to the proposed GATS framework agreement) envisages deregulation, let alone total deregulation of any services sector.

Answering it with a resounding 'no', Sutherland added: "Can anyone imagine, for instance, that a GATT agreement could rule out national prudential controls in the insurance industry?".

If the GATS provisions on regulations and deregulations applied to the entire services area and such as Sutherland has interpreted, one might wonder why a specific provision relating to prudential regulations was put into the GATS annex on financial regulations.

In fact in the negotiations leading to the current stage of a draft GATS text, the negotiators on financial services found the GATS draft provisions to be insufficient and put in a specific provision relating to 'prudential regulations', saying "Notwithstanding any other provisions of the Agreement, a Member shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member's commitments on obligations under the Agreement."

Though this might be explained as merely intended as a provision by way of abundant caution as to what is implicit, it would be a matter for future interpretations and legal doctrines as to the implications of a specific provision in one area alone and its absence elsewhere.

Meanwhile the US and the EC Commission are carrying on their bilateral talks, at senior official levels and the level of the US Trade Representative Mickey Kantor and the EC Trade Commissioner, Sir Leon Brittan, and perhaps some 'Quad talks' involving the US, EC, Japan and Canada.

Even many of their official negotiators in Geneva do not appear to be fully in the picture..

Reports out of Brussels over the Kantor-Brittan talks are also confusing and contradictory.

The remarks of German Chancellor Kohl, at the French Senate, decrying an inward-looking EC and recourse to protectionism, which have been well-received and acclaimed including by Kantor, has been coupled with Kohl's offer of a mediatory role between France and the United States over their differences (on Blair House and agriculture and perhaps audio-visual services).

While the French have quickly accepted it, Kantor's more general remarks of welcome to the Kohl speech, have been also interpreted as US acceptance -- raising a question whether a Kohl mediation (presumably at levels of heads of government) would mean that other parties (than the US and EC) would have to accept it without question? And if, as is implied, someone has to compensate the French, would it be the US or other agricultural exporters?

Any compromise to accommodate the French, would seem to involve easing on the subsidised exports (allowing the disposal of existing stocks through subsidised exports) and there is talk that the EC in market access negotiations could 'front-end' the access to the US in return for US agreeing to such a compromise on the export sector. This would hit some Cairns exporters more than the US.

At Brussels at a Wednesday press conference, Kantor ruled out the Balladur proposal of a partial GATT deal if the 15 December deadline could not be met, but Brittan first ruled it out and then seemed to acquiesce.

A Reuter report said that Sir Leon Brittan who was sitting next to Kantor also said that it (a partial deal) would be difficult, but then appeared to change tack in an interview to French television where he described the French view as "very positive" and added: "We are trying to reach an agreement by December 15. I think it is very important and possible to reach an agreement...But if there is no agreement on December 15, I think there is the possibility to do something else. That is possible."