7:35 AM Dec 2, 1993

US, EC AGREE ON 'APPROACH', TO MEET AGAIN MONDAY

Geneva 2 Dec (Chakravarthi Raghavan) -- The United States Trade Representative Mickey Kantor and the EC Trade Commissioner, Sir Leon Brittan have said in Brussels, after two-day talks, that they have agreed on an approach "on all major issues" to pave the way for a final Uruguay Round accord.

However, the two sides are to consult -- Kantor with President Clinton and Brittan with EC Council of Ministers before the details of the agreement could be settled -- and meet again Monday.

Both Kantor and Brittan at a press conference in Brussels said they had agreed on the 'big picture', but some details were yet to be fitted in and would be done on Monday. The EC agriculture commissioner indicated that the EC request for clarifications on agriculture had received a good response from the United States.

Kantor also spoke of the US and EC agreements 'inciting' the Asians and Latins to improve their "offers".

Trade negotiators in Geneva have the impression that a deal is in the bag, but that some talks are going on at level of Clinton, Kohl and Mitterand, and that the French are being given time to prepare their public for a settlement which would give them 'something' on agriculture, but less than their public position.

Meanwhile in Geneva, where multilateral processes are marking time, a decision to roll-over the Multifibre Agreement until the Uruguay Round agreement on integrating Textiles and Clothing Trade into the GATT, comes into force has been put off till next week because of US attempts to add some conditions.

The legal drafting group in the meanwhile has been looking through the text of the draft textiles and clothing agreement in the Uruguay Round to fill in the technical details (which have been left blank in the DFA), on the basis that the negotiations would end on 15 Dec. and become effective on 1 January 1995.

These include the dates for various stages of the phase-out, the base years for growths in MFA quotas.

Some of these are also substantive issues, but the group is reportedly only into the technical questions.

The US Commerce Department Undersecretary for international economic affairs, Jeffrey Garten, is due in Geneva this weekend when he reportedly is to press for changes sought by the US on anti-dumping, textiles and clothing and steel sectors.

While the US has called for extensive changes, it is known that one change they are keen on is the demand for a socalled 'standard of review' rule to restrict the scope of dispute settlement panels in such cases, and preserve one of the strongest protectionist trade policy instruments in the US, its own antidumping rules.

Though only one of the many demands from the US in this area -- and one where they are pushing for EC support -- it would be the kind of damage for a rule-based multilateral system that could only be compared with a national system which provides that administrative decisions by the executive in a country could not be challenged in courts and that the courts cannot sit in judgement over the judgements of administrative tribunals or rulings.

The US proposals were greeted with 'outrage' by many, developing countries and the smaller developed countries, when it was aired to them last week, with comments that changes sought would be unacceptable.

But the US process of softening up its opponents, by using its political and security and other non-trade leverages with some of them, is clearly in operation.

There is already talk among some of the NICs, who otherwise have been insisting on no changes to the DFA text, on the need for 'realism' and having to find some compromise to accommodate the United States.

The argument privately advanced by some is that if the US demand for 'standard of review' which would virtually make its own domestic hearings and rulings virtually beyond multilateral challenge is accommodated, then some of the more difficult demands of the US could be staved off -- such as over 'circumvention', third country suppliers of components or exporters assembling from components imported from countries which have been hit for the product for dumping etc.

However, there are others opposed to this.

The United States, in December last during the informal dinner consultations by the previous GATT head, Arthur Dunkel, had proposed such a 'standard of review' change for the AD text, and was roundly criticised by everyone else - with the EC keeping a low profile.

India and a few others said at that time that if the scope of panel's jurisdiction is to be thus limited, it should apply across the board, and not merely to one particular rule area, and all domestic proceedings of all countries in all trade issues (whether on goods, services or intellectual property) should be similarly saved.

Some of the GATT officials have also been privately supportive of the US position and advancing the need for compromises in order to conclude the Round and ensure its overall benefits.

In this regard, Hong Kong has been reportedly holding private consultations with a few others on how to accommodate the United States.

Hong Kong's former GATT representative, Michael Cartland who has been named by GATT Director-General and TNC Chair, Peter Sutherland, as a 'friend of the chair' to consult on DFA issues and changes in the rules area, is reported to be beginning his consultations in this area too.

Though Sutherland stridently told a newsman at his last press conference that GATT was the most transparent organization, such consultations are often organized outside the GATT building, and are not put on the GATT's board announcing various meetings. Even the fact of the meeting is not easily available.

On the MFA issue, while all the other principal parties, exporters and importers, are agreeable to a simple roll-over, as has been done twice since 1990, the United States has been trying to write into the extension protocol the socalled circumvention provisions in the Uruguay Round accord -- which would inject some additional obligations to be undertaken by the exporting countries, but without any balancing rights for them.

The US has been arguing that without this, it would be difficult for the US to accept a simple rollover.

The US is also currently having talks on bilateral agreements with countries like India and Pakistan who want shorter transition and higher growth rates for their exports.

The US chief textiles negotiator, Gennifer Hillman has been in Geneva this week holding consultations with various exporting countries on this question as well as on its attempts to get the 10-year transition for the MFA phase-out in the Uruguay Round stretched to 15 years.

US President Clinton in 'buying' votes in the US House of Representatives to get the NAFTA approved, had promised the textile lobby and Congressmen from States with textile and clothing interests to explore with other countries for modification of the DFA for a longer extension.

Hillman has been apparently telling other negotiators that the administration needs a tightened protocol for rollover and a longer transition was essential to get Congressional support for the Uruguay Round package.

However, some of the exporting countries, including those from Asean (some of whom were cited in reports out of Seattle APEC summit as supportive of the US for a longer transition) would appear to have told Hillman here that they would stick to the current DFA text for a 10-year transition.