US, EC HIT FOR IGNORING DEVELOPMENT TRADE ISSUES

US, EC HIT FOR IGNORING DEVELOPMENT TRADE ISSUES

A group of developing nations has warned the United States and other industrial countries that the multilateral trading talks may be in jeopardy unless a greater emphasis is given to development issues.

The developing countries' message comes as the Uruguay Round of trade talks under the General Agreement on Tariffs and Trade heads into a critical stage. The talks are due to end with a meeting in Brussels in December; yet progress in the 15 areas of negotiation has been slowed in recent months and there is growing concern that the deadline may not be met.GATT is the Geneva-based organization that governs most world trade in goods.

With time running short, many developing nations, including India, Brazil, Mexico and Indonesia, believe it is important to shift attention to issues like textiles, tropical products and agriculture, where they can compete effectively in world markets.

But these countries complain that the United States, the European Community, Japan and other wealthy countries are focusing more on the "new" areas of trade in services, trade-related investment and better protection of patents, copyrights and trademarks.

That "lack of balance" in the talks has led some officials of developing countries to declare that interest in the round will sag without greater commitment to these issues on the part of the industrial world.

"We don't like to make threats, but there is a momentum of enthusiasm which, when it is frustrated, can be not very helpful," one Geneva-based Indonesian negotiator said. "There are moments in discussions when really serious political decisions must be made . . . The global system is a very fragile one that cannot stand too many shocks, and lack of progress is a shock."

U.S. negotiators regard the developing country message principally as a bargaining position. Yet there are concerns that if the United States is perceived as unreceptive to the views of moderate developing countries, those nations may align themselves with hard line states like India.

The U.S. goal is to isolate India - which has been more intransigent on intellectual property and services than any other country - and to convince the Southeast Asian nations and Latin America of the merits of trade liberalization.

U.S. trade officials believe they have been successful in pleading their case to these countries and want to avoid any defections to the Indian camp.

For this reason, there is little chance that the United States will slap sanctions on New Delhi when the investigations into Indian restrictions on foreign investment and piracy of patents conclude in June.

"The stupidest thing in the world would be to make them a martyr, because we've got them on the run," one U.S. official said.

There is a perception in Geneva that the Indians, under new president V.P. Singh, have hardened their position in the negotiations. The Uruguay Round was an issue in the campaign, and Mr. Singh scored well by painting former president Rajiv Gandhi as a man too willing to compromise with the industrial nations.

"The Indians won't agree to anything that weakens the sovereignty over their economy and that sovereignty is based on a system that is highly restrictive," one U.S. official said.

Indian officials deny they are out of line with the other developing nations. Nor do they see themselves as an impediment to progress.

In fact, one Indian official pointed out that the U.S. services proposal would allow for certain industries to be exempt from GATT coverage.

"We want an agreement that covers all sectors," the official said.

One GATT official, dismissed U.S. complaints that the Indians were taking an obstructionist role.

"They have been some very forthcoming proposals from the Indians particularly in services," the official said. Moreover, he said, the United States should not expect the developing countries to roll over and accept all U.S. proposals.

But the Indians are sticking to their guns on the question of intellectual property protection. Agreeing to sanctions for intellectual property piracy would raise costs for Indian firms and Delhi does not believe the issue belongs in the GATT.