Frustrated negotiators are placing their dwindling hopes for a completion of global trade-liberalization talks on the meeting next week in Washington between Secretary of State James A. Baker III and his European Community counterpart, Frans Andriessen.
Negotiators representing 103 countries at the General Agreement on Tariffs and Trade here say that if the U.S.-EC stalemate over farm subsidies isn't resolved by the end of June, the Uruguay Round of trade talks will not be completed before early 1993.The Baker-Andriessen meeting comes as embattled German Chancellor Helmut Kohl, seen by the Bush administration as the key man in moving the talks forward, faces increasing pressure from German industry to cut a GATT deal this year.
GATT, based in Geneva, is the organization that governs most world trade in goods.
As one senior Western diplomat put it: "The game is not being played anymore in Geneva even at the highest technical levels, but at the highest political spheres on both sides of the Atlantic," he said.
"There must be a dramatic breakthrough in the GATT talks," said William Draper III, administrator of the U.N. Development Program and former president of the U.S. Export-Import Bank.
Speaking with reporters in Geneva Thursday, Mr. Draper underscored that the talks are the best vehicle "to wiping out protectionism around the
globe," and emphasized that it was urgent to liberalize trade in farm good and textiles, which are "anathema for developing nations."
In December 1991, Arthur Dunkel, GATT director general, produced a carefully balanced text that tried to balance the interests of those countries taking part in the round by juggling the loss of protection in some areas with greater market opening opportunities in others.
His text has been held ransom for the last six months by the U.S.-EC deadlock on farm support.
Senior EC officials admit some of the 12-member countries are pushing harder than others for a political breakthrough. The test will be whether any progress can be obtained before leaders of the world's seven largest industrialized nations meet in Munich this July for their annual summit meeting.
The officials observed that "there is continued optimism at the highest levels on a U.S.-EC breakthrough on agriculture before the Munich meeting."
The Europeans want a concession from the United States, which would involve holding back U.S. exports of cereal substitutes. Without this compromise, which Washington is thus far loath to make, Brussels will be unable to summon the political courage needed to accept greater cuts in export subsidies.
In the crucial market access area, many nations will not reveal their schedule of reductions until they know what they will get in return from Washington and Brussels in the agriculture and textiles domain.
The farm stalemate is also putting on hold the vital exchange of schedules between the two trading superpowers.
Bush administration officials say they must know the market-opening offers proposed by the EC for U.S. farm exports before Washington can reveal its own schedules on items of interest to the EC, such as duty reductions in the highly protected sectors of textiles, clothing and ceramics.
Similarly, developing nations are withholding initial commitments to open up their markets in the fast growing trade in services until the dust settles in the U.S.-EC scrap.
Emerging economic powers in Southeast Asia and newly industrializing countries like Korea have been reluctant to open up their financial sectors, for example, until they know where they stand in other market-access negotiations.
The talks are also stalled because of continued differences among the industrialized nations on opening up their domestic markets to foreign competition in such areas as telecommunications, air transport and maritime services.
The United States appears to be applying pressure behind the scenes, at the highest levels, to obtain a lowering of the 10-year grace period for developing countries, which have not as yet tightened up rules protecting intellectual property rights.