10:22 AM Oct 29, 1993

EC ATTEMPTS OPTIMISTIC 'SPIN'

Geneva 29 Oct (Chakravarthi Raghavan) -- "For the first time, and with just 30 working days left for the 15 December deadline, I am convinced we are going to make it and conclude the negotiations", the European Community's chief official negotiator Hugo Paemen said Friday.

Assessing the state of negotiations, on the eve of Monday's meeting of the Uruguay Round Trade Negotiations Committee (TNC), Paemen said that while the EC's market access negotiations, on the basis of its latest 'illustrative offers' was going well with the non-Quad countries, there was little progress or movement among Quad partners, who now disagree on what exactly was agreed at the Tokyo G7 summit.

The lack of movement on market access negotiations among the Quad was a matter of worry, Paemen said, but envisaged that these could be completed, if not by the 15 November date (originally set for the market access negotiations), atleast by the 15 December.

Paemen also said that the negotiations on a sequential or sectoral level had gone on as far as they could and it would now be necessary to set up a process to deal with all the issues at the same time.

"You can no longer complete one thing and put it in a freezer, and move on to the other," he said in a reference to the sequential approach favoured by the GATT head, Peter Sutherland so far.

Paemen also indicated that before the process could get further it would be necessary to find from everyone the changes that they sought in the various parts of the Draft Final Act so that everyone would have a clear idea of what was being sought.

On the market access among the Quad countries, Paemen cited some figures as to the effect of their latest 'illustrative offer' to contend that the EC was cutting more peak tariffs than the others, that they were still willing to move forward on the basis of cutting peaks without exception, but that they had to take account of political realities of others.

The EC official also said that Japan was not cutting its own peaks, and it was particularly unwilling to do so on leather and leather products and shoes -- areas of interest to the EC.

According to the EC's calculations of peaks, the EC had some 101 peaks (excluding fish and fish products which, if included, would be abut 250), the US had 663 peaks, Japan 457 and Canada 918.

In the other areas of negotiations, Paemen said that the Lacarte group (the informal group under Julio Lacarte looking into institutional questions -- the MTO and integrated dispute settlement) had gone as far as it could and the remaining issues "have to be taken up in a somewhat wider context".

"We have to globalise more and more the issues and it is no longer possible to deal with them separately; and before we deal with them together we need to know what people want to change in the Draft Final Act texts," he said, adding that it was now for Sutherland to decide on the process he would set in motion.

The major problem areas remaining he said were the market access negotiations among the Quad countries, some of the issues in services.

These were identified by Paemen's deputy, Falkenberg as the audio-visual question, maritime transport and 'consolidating' the financial services sector where a two-tier approach had now been proposed but which has had some 'nervous reactions' from others.

A reasonable compromise had also been evolved on 'taxation' questions, Falkenberg said, excepting for the US which wanted to take an across-the-board reservations in its schedules, but something that others did not seem ready to agree.

If the US were to stick to its position, there would be a real problem.

Other Uruguay Round participants said that the text now evolved did permit differing tax treatments between resident and non-resident service suppliers, so long as it was for specified and identified purposes, but would subject the actual differing treatments to multilateral scrutiny to make sure that the actual measures were for the purposes intended.

But the US Treasury has now gone back and does not want any of the tax laws and decisions to be subject to multilateral scrutiny, the source said, adding that the US was also seeking a similar approach to multilateral scrutiny in dispute settlement matters.

It is part of the US unilateralist syndrome, that its actions are beyond challenge multilaterally.

Paemen said that with only 30 working days left, and the general feeling that not much progress in market access or others issues likely by 15 November, this left very little time to wrap up things.

It would not be difficult, since all the technical work had been done, but would strain everyone, he noted.

Paemen did not also think it was feasible for the US and EC to postpone decisions till the very last, and then come up with an agreement among themselves, as during the concluding stages of the Tokyo Round, and ask others to take it or leave it.

Far too many participants and differing interests are involved and in several areas, he said.

In expressing his confidence that it would be possible to conclude the negotiations by 15 December, Paemen said he was basing himself on the fact that people were serious, were concerned about the consequences of a failure, and did not want any finger-pointing at them for any failure.

But Paemen and others would not speculate on what effect or impact the pending vote in the US Congress over Nafta would have on the Uruguay Round discussions and whether a negative vote on Nafta would help or hurt the Round itself.

The US House of Representatives is due to vote on the Nafta on 17 November, and the Senate a week or so later.

A number of active participants in negotiations in Geneva have been suggesting that there is a paralysis of sorts in the US on the Uruguay Round because of the NAFTA vote and problems.

But some EC sources have been suggesting that the NAFTA issue and pending vote did have an influence on the negotiating process in Geneva, but that such a domestic political problem was not unusual.

However, this did inject an element of uncertainty into the process and it was for Sutherland and others to decide how best to proceed now or continue to mark time until the US vote was over.