SHIP TALKS STALL AS GATT DEADLINE LOOMS

SHIP TALKS STALL AS GATT DEADLINE LOOMS

Talks aimed at opening international trade in maritime services floundered Wednesday as the United States came under attack over its refusal to liberalize ocean shipping.

Japan also came under criticism, for its reluctance to open port and port auxiliary services to foreign competition.The maritime issue has been one of the most controversial segments of the much broader Uruguay Round of trade talks. With the deadline for submitting final offers in services trade only eight days away, the differences on the outstanding maritime issues appear intractable.

The agreed Uruguay Round deadline is Dec. 15.

In negotiating sessions Wednesday, nations argued over procedures for submitting their offers. Japan said it would not put forward a proposal to liberalize port and auxiliary services, such as intermodal transport, unless the United States moves on ocean shipping.

Although Washington is painfully isolated in its opposition to the inclusion of ocean shipping in the agreement, the Clinton administration's hands are tied in the matter. The maritime industry's huge clout on Capitol Hill makes an offer on "blue water" transport a political impossibility if President Clinton wants congressional approval of any Uruguay Round implementing legislation.

The Japanese and the South Koreans face equally strong political opposition from their domestic port and auxiliary service sectors.

"The Japanese are hopelessly deficient on the port and auxiliary services offers. The minute you land your ship, that's where the protection is and shipowners will tell you that's where they make their profits," one U.S. official said.

The official said Tokyo was prepared to liberalize ocean shipping. The reason is that Japanese carriers would not be affected by the abolition of cargo sharing and cargo reservation regimes since ship space allocation is handled between Japanese companies rather than at the governmental level, and would thus be unaffected by any deal in the Uruguay Round.

Despite the private-sector nature of the Japanese cargo reservation system, the official said, the effect on U.S. carriers is the same - little chance to

haul Japanese-produced goods.

While countries like Sweden and Norway - which are prepared to liberalize in all three maritime shipping areas - are dissatisfied with Japan's offer, there is little sympathy for the U.S. position.

Many negotiators here fully expect the issue to erupt into a full blown confrontation next week.

"If there is not an acceptable package from the U.S. (next week), we have a problem," a senior European Community official said.

But U.S. officials shrug off the threat of a clash next week and resolutely insist that ocean shipping will remain excluded from any future U.S. offer.

"They can (complain) until they are blue in the face, but they know what our response is going to be," one U.S. official said.

Brussels has been critical of the U.S. position over the past several years. But given the EC's foot-dragging in other service sectors - notably audio-visual services - and the fact that some of the community's member states are less than enthralled about opening ocean shipping to foreign competition, they could accept a compromise allowing a U.S. exemption of shipping more readily than other trading partners.

"If it were only a bilateral issue (it could be resolved), but these are global talks," the EC official said.