7:43 AM May 28, 1996

MARITIME TALKS VIRTUALLY COLLAPSE

Geneva 24 May (Chakravarthi Raghavan) -- The talks at the World Trade Organization for liberalizing maritime services virtually collapsed Friday -- with the United States in effect withdrawing from the talks by announcing that it would put no offers on the table.

The US announcement at a meeting of the Negotiating Committee on Maritime talks was greeted by its trading partners with what was described as anger, disappointment and "annoyance" (from the EU).

Though the US announcement should not have surprised its major trading partners -- the US deputy trade representative having indicated this in a meeting (convened by the US) of key delegations on the Singapore agenda -- the reactions inside the meeting, and relayed by them outside to the media had an air of orchestration.

The negotiating group is to meet at high level on 4 June but there seems little prospect of any change by then. The talks are to be concluded by June.

But the US made clear that not only did it not find the offers from key countries up to the level of the US expectations and the "openness" of its own market, but did not how the US expectations could be met by the deadline and did not how the negotiations would be concluded with a change in US position.

Japan, the EU, Brazil, Singapore, Hong Kong, Australia, Chile and Colombia, were among those who spoke up strongly criticising the US position and demanding reconsideration of its position by the US.

The US dismissed the comments, and said the impact or non-impact of the US offer would be entirely procedural.

While the EU insisted that it would strive to conclude the talks with an agreement, it seemed unlikely (as the US and Japan and some others are striving) that the US would agree to commit its current state of market openings to other nations through a WTO maritime accord -- particularly given the strong position of US maritime unions.

A key sticking point is whether the US would be able to open up to foreign competition its cabotage -- coastal shipping services, now reserved to US ships.

After the meeting, one developing country ambassador however suggested that the offers of the EU and Japan did not really match those of the US, which except for cabotage is probably more open than others, and that there was an element of artificiality in the show of surprise over US announcement and criticism.

At Marrakesh, talks on financial, telecommunication and maritime sectoral services were continued among those interested.

The financial services talks collapsed last year when the US withdrew from the multilateral talks, put in Most-Favoured-Nation reservations, offering only existing access to outside providers. An interim accord to run from 1 July 1996 to November 1997 was finally agreed to (with the US maintaining its MFN reservations), with everyone having an option at end of the period on whether they want to maintain their schedules on an MFN or enter reservations (as the US had done).

The talks on basic telecommunications liberalization collapsed in May, but has been extended till the end of the year, in the hope that a deal could be struck after the US elections.

Whether a similar (procedural) deal can now be struck on the maritime talks is not very clear, but no change in US position is envisaged even after the November elections.

Some 40 countries, including the EU member states, have tabled offers so far.

The US told the negotiating group that it had reviewed the state of play and had determined that the results fell woefully short and there was little indication that the others would be able to live up to the US levels of openness. Only those with acceptable offers were the OECD countries which had no shipping industries to defend. Every offer on the table, from the US view, contained serious deficiencies.

Both Japan and the EU referred to an article in the Wall Street Journal which had predicted the US stand and claimed they were upset by it.

Japan was disappointed over the US position and said this was preventing negotiations from progressing.

The European Community said that the position set out by the US negotiator was incompatible with the assurances the EU had received from the US Secretary of State Warren Christopher.

Singapore, speaking for the ASEAN, said that fundamental principles of trade negotiations were at stake. The negotiations involved countries putting offers on the table and then negotiating to improve them. The US statement would send a bad signal.

Norway felt considerable progress had been made and thought that the 30 June deadline for successful conclusion of the talks could still be met. The US was both substantially and politically wrong and appealed to the US for reconsideration.

Hong Kong did not share the US assessment and appealed for reconsideration of US position.

Brazil too was disappointed, and noted the US positions in the three negotiations (on financial, basic telecommunications and maritime services) was in effect contrary to the Art XIX of GATS which provided for gradual and progressive liberalization.

New Zealand, Australia, Canada, Chile and Colombia also spoke regretting the US position and seeking its reconsideration.

But the US came back and said the responses were mostly on the process and not on the substance. Referring to the EC's claim about the communication it had purportedly received from the Secretary of State, the US delegate he was speaking with the firm authority of the US agency responsible for the negotiations.

In summing up the discussions, the Chairman of the Negotiating Group, Mr. Don Kenyon of Australia saw a clear desire and determination in the group to work constructively for a successful outcome and called for a political impetus to be imparted at the next meeting on 4 June.