GATT FARM STALEMATE SPREADS TO OTHER ISSUES

GATT FARM STALEMATE SPREADS TO OTHER ISSUES

The long-running disagreement on farm subsidies is undermining attempts to slash global tariffs and reform restrictions on worldwide trade in services in the long moribund Uruguay Round of global trade negotiations.

Countries are balking at the prospect of lowering tariffs and easing restrictions that hinder foreign companies in service-related industries until they know what has been won or lost in the contentious farm trade talks.In an effort to break the logjam in the five-and-a-half year round, Arthur Dunkel, director-general of the 102 member nation General Agreement on Tariffs and Trade, proposed a compromise paper covering the vast number of issues under discussion in the round.

GATT is the Geneva-based body that sets the rules for most trade in goods.

However, the text failed to secure the necessary support on Jan. 13

because the key players in the round - the United States, Japan, and the European Community - failed to resolve differences over reduction of farm subsidies.

Despite criticism of the Dunkel paper, countries have avoided rejecting it outright, preferring instead to use the document as a basis for negotiation. Mr. Dunkel has set an Easter deadline - April 19 - for completing the round.

(In Washington, a senior U.S. trade official acknowledged the Dunkel plan would require the United States to weaken a key punitive trade law. Story, Page 5A.)

U.S. officials stress that an evaluation of the text is not possible without knowledge of what is being offered in three months of negotiations on scaling back tariffs and liberalizing markets for trade in services. Service industries earn roughly $800 billion annually, but are not governed by multilateral rules like those governing most goods.

In fact, for many major U.S. corporations, these complicated talks, conducted through a labyrinth of bilateral negotiations among the 102 member states, are the most important aspect of the round.

But the first few weeks of bilateral discussions on tariffs and removing operational barriers for banks, telecommunications and transportation companies have produced little. GATT officials have scheduled two meetings this week with hopes of injecting momentum into those two areas of negotiations.

Frans Andriessen, EC commissioner for external affairs, said in an interview that the talks on market access were moving very slowly "because they are linked to the agriculture deadlock."

The market access talks are "not getting anywhere because people are not coming forward with realistic and meaningful offers, period" said another senior Western negotiator in Geneva.

While praising the Latin American countries for submitting solid proposals, the EC official said the Southeast Asian nations, Japan and the United States are lagging with their offers.

"The Southeast Asians are not coming forward with anything that is reasonable. They are still playing the developing country card," the EC official said, referring to the traditional reluctance of poorer nations to expose infant industries to competition from the West.

While the Latin American countries are coming forward with proposals on

binding all their tariff schedules - that is to say, fixing import duties at a set level - the Southeast Asians are offering to bind only 25 percent to 75 percent of their tariff lines, the EC official said.

He was critical as well of the stance taken by the United States, which has yet to offer tariff reductions in the sensitive textiles area, currently dominated by high tariff peak levels.

U.S. officials counter that they are not happy with the European Community position on a myriad of issues. Washington was disappointed in their recent bilateral exchanges on access for agricultural products in the EC market, and U.S. officials complain that internal bickering among the 12 EC member states has greatly slowed the process down.

"EC governments must sort it out (among themselves) first," said a senior U.S. official.

Quite a number of negotiators have become worried that, with time short, countries may be reluctant to make initial offers that would help expand world trade in services.

In the financial services component of the services talks, the EC and United States have been particularly disappointed with Japans's stance regarding initial commitments on banking.