US-EC DEADLOCKS STILL UNRESOLVED

9:02 AM Nov 24, 1993

US-EC DEADLOCKS STILL UNRESOLVED
Geneva Nov 24 (Chakravarthi Raghavan) -- With the United States and the European Community set to continue their bilateral talks to resolve their outstanding differences over the Uruguay Round till atleast next week, the multilateral discussions in Geneva seem to be hanging fire.

The United States Trade Representative Mickey Kantor and the EC Trade Commissioner Leon Brittan discussed in Washington Monday and Tuesday, but without reaching any accords, the range of issues on the Uruguay Round agenda where the two sides have serious differences.

Officials on both sides are continuing their discussions this week, with Kantor and Brittan set to meet in Brussels on 1 December.

Kantor's deputy, Deputy USTR, Rufus Yerxa (who was the US Ambassador to the GATT under the Bush administration) is expected here next week to pursue the negotiations at the multilateral level.

The EC's Council of Ministers is set to meet on 2 December -- with Brittan mandated by the last meeting of the Council to produce the entire package for their consideration.

But whether the US-EC discussions at official level, and the Kantor-Brittan meetings on 1 December, will in fact result in a package seems very unclear.

Both sides clearly want to conclude an agreement, and both sides have a great deal to gain at the expense of the developing world, in a large number of areas such as intellectual property, services and conformity with the entire range of rules by the developing world.

Yet the differences between the two sides still loom large, and time is running out -- with the negotiators at the GATT already running behind their many targets for market access offers in goods and initial commitments in services.

Reports reaching here from Washington, after the two-days of Kantor-Brittan talks spoke of the atmosphere at the talks having been good, but with no agreements so far.

The Europeans appear to have come away or atleast giving the impression that the American side was not yet ready to negotiate and cut deals.

On his way back, Brittan stopped in Paris, where he met two French ministers at the airport to brief them on his talks.

He told journalists in Paris that the possibilities of changes in the Blair House text (on the US-EC agreement over agricultural subsidies) was not excluded and that the two sides were still talking on agriculture in a positive way.

Earlier, in Washington at a joint press conference with Brittan, Kantor repeated there would be no re-opening of the Blair House accord.

Other reports said that the US might be ready to have side agreements or exchange of letters to meet some of the French objections over agriculture -- there is talk of greater flexibility within the six-year period for cutting down on the export subsidies, market access and domestic support -- but that the 'price' to be paid by the EC would be very high and would involve sectors of interest to the French.

Mentioned in this regard are:

* the US not making the tariff cuts on textiles and clothing (which Clinton, in buying the Nafta votes, has anyhow promised not to make and even try and extend the MFA phaseout period to 15 years);

* keeping pat over refusal to liberalise maritime transport services (where again the European shippers have suddenly come out against liberalisation); the EC moving forward on audio-visual services (where otherwise the US seems ready to agree to accept existing quota restrictions as in France, Spain and Italy, and to accept right of the State to subsidise domestic industry, but to insist on keeping cable television or satellite reception out of any cultural specificity);

* deep EC tariff cuts on electronics, mainly chips, and not necessarily consumer electronics where Japan and Asean would benefit;

* and a number of other areas where the EC has been resisting zero-tariffs or peak tariff cuts.

However, the two sides are also still far apart on a number of other issues and areas including on aircraft subsidies (where the EC is insisting that indirect US subsidies via its military programmes should also figure) and the US demand for 'tax carve-out' on services, the MTO, anti-dumping rules etc.

With just 21 days to the 15 December deadline, and so many issues pending to be considered and resolved, several of the negotiators say that the only approach would be to refuse changes in any text and putting off any problems, even those on which there is widespread support, to the post-Uruguay Round phase.

Meanwhile, the US Asst Secretary of Treasury for tax policy left for Washington after two rounds of discussions here where he failed to win any support for the US position that in its schedules of initial commitments on services it would now take a blanket reservation (from requirements for national treatment and MFN) its entire tax legislation and administration.

The view he sought to put across that the US treasury chief, Lloyd Bentsen and the congressional committees of both sides are not ready to accept such a curb and would need some accommodation did not appear to have elicited any sympathy, with some of the negotiators politely telling Samuels that he should not waste their time by coming back to Geneva for further talks.

Samuels has gone back to Washington with a strong message from the GATT head and its interlocutors in the services negotiations that the US move just would not fly.

But whether the others would merely emulate the US example or block final accords is not clear at all.

Some Third World negotiators fear that the two majors are in fact setting up too many 'strawmen' and would knock them down at the last moment to show how far they have made concessions, but in fact yield little on their fundamentals, thus reducing even further the overall benefits of the agreements.