Chances seem good for restarting GATT world trade talks

December 16, 1990|By Graeme Browning

When negotiations broke down recently in Brussels among the 107 nations contemplating changes to the General Agreement on Tariffs and Trade, observers from the U.S. textile and apparel industry opened champagne.

U.S. negotiators were trying to eliminate the Multi-Fiber Arrangement, a blanket of protective tariffs and quotas draped around the industry 16 years ago. As the unofficial deadline for completing the GATT negotiations approached, industry representatives feared that the negotiators would succeed.

"It was becoming clear to us that our industry was just being traded away for other objectives," said Carlos Moore, executive vice president of the American Textile Manufacturers Institute, which represents 75 percent of the textile makers in the United States.

But few of the hundreds of other American observers, representing a range of economic and political interests, shared in the celebration. Many had come to Belgium hoping to see the often-contentious discussions of trade issues, begun four years ago, concluded successfully.

"The disappointment is intense," William E. Brock, a former U.S. trade representative and now co-chairman of a coalition of U.S. corporations backing efforts to expand the 43-year-old GATT, said last week.

"There is a sense that the world is too fragile, the economy too soft, just to leave it all at this," Mr. Brock said.

There are potentially dozens of answers to the questions of who triggered the breakdown and why it happened, observers say. But the far more crucial issue now is whether the talks can, or even should, be salvaged, and what the agenda will be if they are.

GATT suffers as much from obscurity as it does from political intrigue, experts say. Yet it carries enormous potential impact for the world economy.

Countries who are signatories to GATT, an international treaty, represent more than 85 percent of world trade. There is a GATT Secretariat, based in Geneva, with a staff of 400, which administers the rules contained in the treaty among its members.

As commerce became more complex since GATT's founding in the wake of World War II, it has been expanded through a series of intensive negotiations called "rounds." The eighth, and most recent, round began in January 1986 in Punta del Este, Uruguay, at the urging of the United States.

The U.S. agenda for what trade insiders call the "Uruguay Round" included a number of issues never before discussed under GATT auspices. Among them, requests that GATT signatories agree to slash internal agricultural subsidies, liberalize their trading rules on such services as banking and insurance, and agree to broad rules for the protection of copyright, patents and trademarks -- or "intellectual property" -- caused the most controversy.

When the Uruguay Round opened, its initiators expected to conclude it within four years -- a target negotiators assumed to be approximately this Dec. 31.

But on Dec. 7, GATT Director General Arthur Dunkel dismissed the assembled trade ministers, declaring that a standoff between the United States and the European Community over farm subsidies appeared to be unbreakable.

Some observers blame the European Community, whose member countries steadfastly refused to agree to cut the hefty price supports they pay farmers. Others suggest that the United States pushed too hard and wanted too much.

There are even hints from some corners that the Japanese threw a wrench in the works by refusing to play a constructive role in the talks despite their obvious economic clout.

Still, most observers say the negotiations are likely to be resurrected in January, although with continued grumbling and finger-pointing.

"The EC has shown time and again that they're not going to make these decisions until they're standing at the precipice," said Christopher J. Brescia, director of the Baltimore-based World Trade Center Institute, who formerly advised clients on GATT issues as director of Price Waterhouse's international trade advisory service.

Dr. Thomas V. Greer, a professor of business administration at the University of Maryland who has researched GATT operations in Geneva since 1988, said, "I think there's a very, very good

chance that the Uruguay Round issues can be picked up again and at least be selectively addressed."

Even if the talks are revived, the United States faces a crucial deadline: March 1, when President Bush must formally notify Congress that an accord has been reached on GATT. Only this formal notice will preserve the agreement's "fast-track" authority, meaning that Congress may debate it only as a whole and may give only a "yes" or "no" answer.

If that deadline is passed, and fast-track authority is lost, Congress will be free to consider the GATT agreement point by point -- a process that could take years.

Given the pressure to conclude the Uruguay Round in a viable form, experts predict that some issues will simply fall by the wayside.

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