6:36 AM Nov 22, 1993

WAITING ON KANTOR-BRITTAN TALKS ?

Geneva 22 Nov (Chakravarthi Raghavan) -- With 24 days to go for the 15 December deadline, and a week behind schedule on market access negotiations and filing of the schedules of 'offers', negotiators in Geneva are still stalled and waiting on the US and the EC.

US Trade Representative Mickey Kantor and the EC Trade Commissioner Leon Brittan are meeting Monday in Washington and the agriculture officials of both met Friday in Brussels ahead of these talks, but with little known on whether or not the two can reach a compromise over a number of issues dividing them.

Over the weekend, French President Franois Mitterand (after a meeting with Spanish Prime Minister Felipe Gonzalez) and the French Prime Minister Edouard Balladur, in public pronouncements both took a tough line, warning that no agreement was possible without US concessions. While these are partly attributable to the media war by both sides, such positions at the level of Heads of State/Government make compromises difficult.

While agriculture and the EC's attempts, under pressure from France (and one or two others within the Community), to get changes in the Blair House accord -- even if they be described as clarifications or interpretations or other semantics -- occupy the media attention, there are also a wide number of bilateral differences that cast a shadow over the Uruguay Round.

Meanwhile on Saturday, negotiators met on agricultural issues, including the DFA text issues, but appear to have stayed away from the problems around the Blair House accord (the US-EC agreement of November 1992 on changes to the agriculture texts in the DFA, and which were formulated and put forward informally in December by the EC in legal language) pending the Brittan-Kantor talks.

The negotiators though would appear to have resolved the problem raised by India and a few others -- about the implications of the DFA on the food security and public distribution systems in developing countries.

The Dunkel DFA text on exemptions from domestic support reduction commitments, exempts public stockholding for food security purposes and for domestic food aid, but have some conditions.

On food security, government expenditures or revenue foregone for accumulation and holding of food stocks, including government aid for private storage, and forming an integral part of food security programme us exempt from domestic support reduction commitments.

But the volume and accumulation of stocks is to correspond to pre-determined targets related solely to food security; the process of stock accumulation and disposal is financially transparent; and food purchases by government are to be at current market prices and sales from such stocks should be at current domestic market price.

Government expenditures for provision of domestic food aid to needy sections of population is also exempt. But the eligibility for receiving food aid is subject to clearly-defined criteria related to nutritional objectives -- with aid directly provided in the form of food to those concerned or by provision of means to enable eligible recipients to buy food at market or subsidized prices.

Food purchases by the government for this are to be at current market prices and financing and administration of aid is to be transparent.

India in December 1992, when the textual changes to the DFA was being addressed informally, had said that these provisions would make virtually impossible the operation of the subsidized public distribution systems for the poor and needy.

Both the US and others had then said that this was not the intention at all and that the provisions had been aimed at blocking use of food security and food aid as 'escapes' from domestic support reduction commitments in the EC and other industrial countries.

At Saturday's meeting it would appear that there was general agreement on the need for an interpretative note to the DFA provisions in this area to make clear that developing country actions to store foodstocks for food security or for use in public distribution systems would not be hit by the provisions.

The other issues in the agriculture text, including those relating to the multilateralization and incorporation of the Blair House accord in the DFA texts, and other issues relating to full tariffication etc are to be taken up later this week, on Nov 26-27, after the Kantor-Brittan talks.

Some negotiators believe that some of the changes that one or other of the participants are seeking could be accommodated by the country concerned filing a schedule (on agriculture) based on its interpretations, and others not challenging it.

The idea is that all the schedules, unless challenged or objected to at the time of filing (before 15 December), could not be subsequently agitated through a dispute settlement process on the ground either of the schedule not being in line with the agriculture texts or even other grounds.

These last would mean for example that any schedule filed by the EC, incorporating its new banana regime -- for a tariff quota a little over two million tons for banana imports from Latin America at a minimum rate and a heavy penal rate for all imports over that, and for zero tariff (under the Lome accord) for imports from ACP producers -- cannot be challenged later on.

The EC's preferential tariff on banana imports (in the regime that prevailed till June 30) was challenged by Latin American exporters and was upheld by a panel as violative of Art I (MFN treatment) of GATT. However the adoption of the panel ruling has been blocked by the EC and the ACP countries.

The new regime is also under challenge before a panel, which is yet to give a ruling.

In the post-Uruguay Round, the dispute settlement process, for disputes arising after the Uruguay Round accords are in place, is more or less automatic from start to finish, reversible only through a consensus.

Thus unless, for e.g. Colombia or Costa Rica and others dissatisfied with this (and their views were voiced at the TNC last Friday), specifically object to the EC schedules and thus hold up the conclusion of the Uruguay Round accords by 15 Dec, the EC banana regime would survive atleast till the implementation period under the peace clause.

Similarly, any modification of full tariffication etc over rice or other commodities, put in the schedule by Japan, Korea or others would remain above challenge.

Negotiators are weighing the implications of these, particularly the schedules filed at the last minute reflecting 'compromises' including in the area of services -- 'an unknown territory' as one negotiator put it. The needs of concluding the agreements within the deadline of 15 December, and need to give negotiators time for scrutiny, are being weighed.

But some negotiators say that in these matters, by mutual understanding, the 15 December deadline would probably be extended.

On Monday, the US Asst. Secretary of Treasury for tax policy, Lesley Samuels was due to meet service negotiators to explain the US position on its move for tax carve-out.

The United States had suddenly put forward in the services negotiations its proposal to enter a reservation on its services commitments allowing supply of services via investments and subsidiary branches of foreign suppliers, reserving to itself the right to discriminate in taxing incomes of national and foreign service suppliers and as between foreign service suppliers. The US is pretty isolated on this and the US treasury position, clearly not shared by its trade negotiators, has created an uproar.