US Prods Europeans To Wrap Up GATT During October
American and French elections could hamper bid to complete Uruguay Round
BOTH European and United States trade negotiators are hoping the French "oui" vote on European unity will clear the way for a push next month on stalled world trade talks.
If the talks, which are to be convened in Geneva, are not successful, negotiators believe the entire Uruguay Round of the General Agreement on Tariffs and Trade (GATT) may fail. The negotiations began six years ago in Punta del Este, Uruguay.
In order to succeed, the negotiations will have to overcome some sizable hurdles. After six years, both sides are still deeply split over the issues of agricultural subsidies. The issues involved in the split are complicated by politics: the US election this fall and a spring election in France. Because of the potential political difficulties, US Trade Representative Carla Hills is encouraging the Europeans to develop a strategy to complete the round. On Sept. 23, Ambassador Hills phoned Frans Andriessen , commissioner for external affairs of the European Community (EC), suggesting that the Europeans develop a strategy aimed at reaching a deal next month.
"I suggested to him that there was a window of opportunity in the month of October and assured him that our elections were no impediment to moving forward. I had heard that some people in Europe were saying it was an impediment," Hills said in an interview. After the phone call with Hills, Mr. Andriessen met with reporters and stated that the French vote "may have a positive impact," since it removes a major uncertainty. Echoing Hills, Andriessen said October may be the last chance "to strike a political
After October, negotiations would be hampered by the US election and its aftermath. For example, if Arkansas Gov. Bill Clinton were elected, he would not be sworn in until Jan. 20. "Promoting GATT is an important priority for Bill Clinton," says Paula Stern, a Clinton international economics and trade adviser.
Negotiations will effectively be halted until the new president can get Congress to approve a new US trade representative. The new trade representative will face a tight deadline, since "fast track" approval, under which Congress essentially must vote yes or no on the new treaty, expires May 31. Since it will take at least 90 days to get treaty details to Congress, this means the final negotiations deadline is March 1.
Once the fast-track approval deadline expires, Congress can make changes to the treaty - potentially delaying its final approval for years. For this reason, Hills says, "October is really crucial."
IT is considered unlikely that Congress would vote for fast-track approval again, since fast-track approval limits Congress's ability to respond to interest groups. "Congress is essentially fed up with fast track," says Michael Aho, a trade specialist at the Council on Foreign Relations in New York. It took two years for the Reagan administration to convince Congress to give it fast-track authority for the GATT round.
Some analysts believe reaching an agreement will be very difficult, since France has elections in the spring. "With the Socialists way behind in the polls, they may reason: Why alienate another farmer or two by going very far in agriculture?," Mr. Aho says.
However, Hills says her message to the French is: "I would do everything I could to strengthen the French economy, and the best thing you can do to that is a successful conclusion to the Round, since trade is the best motor."
Agricultural subsidies remain the balkiest item to negotiate. The US and free traders such as Australia want to move toward elimination of all subsidies. However, the US provides at least $25 billion in subsidies to its farmers. On Sept. 2, President Bush said he would spend an extra $1 billion in new export subsidies for farmers. Initially, the EC, which heavily subsidizes its farmers, objected. But, on Wednesday, Andriessen said, "The $1 billion is less disquieting than at first glance." Without agreem ent on agriculture, there has been slow progress in other areas such as services and intellectual properties. "No one is showing their bottom line until agriculture breaks," explains Aho.
The EC, as part of its negotiating strategy, maintains that a total package must be negotiated. Andriessen calls it "indispensable" to reach agreement on market access and services. Hills says the US also wants a total package. But, without agreement on agriculture, she says, "there are at least 50 nations who will not allow access to service providers, construction companies, bankers, or lawyers." She notes that France is the second-largest provider of services in the world. "If I were [French President ] Mitterrand, I would do everything possible to ensure a successful outcome to the Round," she adds.
The next major round of talks will begin Sept. 29. At the moment there are no ministerial talks scheduled. Hills says: "At the high level is not where we make all the progress." However, if the negotiations get into high gear, Hills and possibly President Bush will have to become involved, since they will have to make political decisions.