BRUSSELS, Belgium -- With international trade talks at an impasse over agriculture subsidies, negotiations on the 43-year-old international trading agreement known as the General Agreement on Tariffs and Trade, or GATT, appeared close to collapse yesterday.
Even if they manage to make a breakthrough on agriculture -- which is far from certain, or even likely -- it now looks as though it will be impossible for negotiators to meet this week's deadline to reach agreement on some of the most ambitious parts of their agenda.
In particular, a senior U.S. official said, the talks probably will adjourn without an agreement on rules to govern trade in services -- businesses such as transportation, banking, insurance and telecommunications that are expected to generate most of the world's economic growth in coming years.
The official, speaking on the condition of anonymity, said he hopedthat negotiations in that area might continue into next year.
Despite their increasing importance, services are not covered under the existing rules of GATT. As a result, U.S. service companies have encountered significant difficulties in expanding their reach into developing countries.
"I have serious doubts that many of the developing countries are prepared to accept real commitments to open up their service areas," the official said. "It certainly won't solidify this week."
Those countries are not likely to enter an agreement on services unless they are are given an opportunity to sell more of their agricultural products on world markets in return.
Striking an agreement on agriculture remains the most serious and immediate problem confronting negotiators.
The United States and other agricultural exporters have demanded that European countries reduce the subsidies that they pay their farmers subsidies that make it possible for European growers to far undercut the prices that other nations' farmers ask.
The 12-nation European Community has offered to make modest reductions in some of its subsidies but the United States has denounced that offer as falling far short of the mark.
"I feel that we need substantial breakthroughs in the next 24 hours in a number of key areas including, in particular, agriculture, if this meeting is to end with a package of results truly meaningful for all participants in these negotiations," said Uruguayan Foreign Minister Hector Gros-Espiell, chairman of the negotiations.
The talks, which began four years ago, are scheduled to conclude this week, with officials hoping that only minor points would remain to be settled.
The most important deadline, however, is March 1, the date by which the agreement must be presented to the U.S. Congress for its approval.
Without an agreement on services, it would be much harder for proponents of the trade pact to win support on Capitol Hill.