7:33 AM Oct 22, 1993

US, EC BLAME EACH OTHER

Trade: US, EC blame each other over market access

Geneva 21 Oct (Chakravarthi Raghavan) -- The United States and the European Communities blamed each other in Geneva over what the US chief Uruguay Round coordinator John Schmidt called 'stagnation' in tariff cuts to achieve what the Quad (Canada, EC, Japan and US) agreed upon at the July Tokyo G7 summit.

While the US went public in its criticism, the EC met bilaterally the non-Quad countries actively involved in the market access negotiations to explain its latest offers, how it was an improvement over its last offers (of December) on the table and had carried out the Quad accords, and blaming the US for its own stance.

Initial impression of some negotiators was that both sides were just stonewalling, unable to cut any deal between themselves at this point, and engaging in a propaganda exercise visavis others and the media.

Schmidt claimed that the results were positive in the approach of talks with other trading partners through a global approach, namely, discussing and negotiating at the same time on market access in industrial goods, agriculture, services etc.

However, other trading partners said that beyond going over the same ground as before at one sitting, the socalled US 'global approach' had yielded nothing, the discussions were still fragmented in each area and item of discussion and merely repetitious with the US making no responses to the offers and requests from others but pushing others to join its demand for zero-tariff sectoral approach.

The global approach is as frustrating and fruitless as before, one of the negotiators said.

The EC negotiators meanwhile have told some of their trading partners that in fact they did not expect the negotiations with the US to move forward very much until the NAFTA vote in the US Congress, now reportedly set for 17 November in the House of Representatives where it faces a major hurdle, with democrats deserting the President.

Schmidt however told a news briefing Thursday that the US negotiations was in no way affected or handicapped by the pending NAFTA vote which was a political issue of persuading Congressmen to vote for something in the US interests.

While blaming the EC on its market access offers, and on other questions holding up the negotiations, Schmidt said while the US and EC differed on the question of US cutting tariff peaks in the textiles and clothing sector, the one thing they were agreed upon was that there could be no faster integration of the trade into the GATT and faster phase-out of the Multifibre Agreement (MFA) and that increased market access in these products into the US would depend upon reciprocal access from the exporting Third World countries.

Schmidt claimed that the US had put forward offers for cutting some peak tariffs in the textiles and clothing sector which covered most of the product lines where the EC was the main supplier, but that it did not cover items where others were the major suppliers.

He also said the US might do more depending on what the EC would be prepared to do in market access in other areas, and also if the US and EC industries who were holding direct talks agreed on something.

Schmidt at his press briefing dismissed as 'specious', EC explanations about the Tokyo quad accord and its complaints about the US not complying with it, and said Japan and Canada agreed with the US that the EC was going back on the Tokyo accord, and in its offers and complaints was trying to get what it could not get at the Quad Tokyo agreement on the tariff cutting approach.

Schmidt said that the Blair House (US-EC accord on agriculture) was not an issue on the Geneva scene, though at some point it would have to be multilateralised in the sense that the changes have to be incorporated in the DFA text. Other agricultural exporting countries had reluctantly accepted it, but were not agreeable to further changes.

As far as the US was concerned, he said, the blockage was really that of market access in agriculture and the EC offers on the table, namely how to achieve the minimum access guaranteed by the DFA texts as modified by the Blair House.

Everyone was agreed, he said, that the EC's agricultural schedule for some products actually would reduce existing access, and this entire question of market access in agricultural could be a potential blockage.

Some Cairns group sources said they had the impression that while US was not ready to find accommodation over France's demands on subsidised exports, at some point the US would be ready to modify the Blair House texts to enable the "peace clause" (under which no dispute can be raised over agricultural trade issues, except in terms of the agricultural rules), to be extended beyond the initial period of period of six years, provided they could get more out of the EC on the zero-tariff approach to sectoral concessions.

In services area, Schmidt said in financial services the US might now be willing to provide to everyone a basic level of access on a standstill based on existing access to its financial services market, and seek an mfn-exemption for agreements for higher levels of market openings on the basis of reciprocity, instead of the earlier approach of an across-the-board MFN exemption.

In maritime services, the US would also be readying an offer to put on the table port and ancillary services (but not to actual maritime transport which is governed by the Jones Act).