World trade pact appears on course

December 03, 1993|By Mark Matthews | Mark Matthews,Washington Bureau

WASHINGTON -- Conceived at the Uruguayan resort of Punta del Este, haggled over for seven years in Geneva, and prodded during tense final hours in Brussels, Belgium, the most comprehensive world trade pact ever negotiated appears headed for completion this month.

Racing to meet a congressionally mandated Dec. 15 deadline, negotiators have drawn their biggest guns -- heads of government, foreign and trade ministers -- into late bargaining over the politically sensitive issues.

The pact, negotiated under the auspices of the General Agreement on Tariffs and Trade (GATT), would dwarf the North American Free Trade Agreement, slashing trade barriers overall by one-third among 116 nations and pushing the U.S. economy ever more deeply into the global marketplace.

Backers predict worldwide growth of anywhere between $119 billion and $525 billion a year by early in the next century. Administration economists say cumulative world growth over a decade would be $5.25 trillion, with one-fifth of this gain coming to the United States.

While gaining no major breakthrough toward settling key disputes with Europe in two days of meetings this week, both Mr. Kantor and the European Community's trade chief, Sir Leon Brittan, reported progress.

"We are, I hope, in the final stretch," said Sir Leon, but Mr. Kantor cautioned, "It is not a done deal."

Mr. Kantor and Agriculture Secretary Mike Espy plan to return to Brussels Monday.

The high-level push for a deal, plus late signals of flexibility by the United States, France and Japan, show a strong political will that was absent before previous deadlines.

"All the major players are acting like they're in a closing mode," said I. M. Destler, a longtime Washington trade expert now at the University of Maryland School of Public Affairs.

Gary N. Horlick, a Washington trade lawyer for major American exporters, predicted flatly: "There will be a deal."

Far more than just an agreement to cut tariffs, GATT attacks the whole range of ways in which one country's producers can gain a commercial advantage over another's. Among them: government subsidies of domestic producers; burdensome import regulations; copying one another's ideas; "dumping" of merchandise at artificially low costs; and discriminatory tax structures.

Coming on top of his congressional victory on NAFTA, the deal would be a major political triumph for President Clinton, identifying his presidency firmly with worldwide economic competition.

U.S. officials appear to have convinced their trading partners that failure to meet the congressional deadline could scuttle the deal. If no agreement is reached by then, President Clinton would lose his authority to present Congress with a completed agreement for a straight up-or-down vote.

Some analysts predict less of a congressional battle than with NAFTA, which will end trade barriers among the United States, Canada and Mexico over 15 years.

The United States, already shackled with a serious trade deficit, aims to open up foreign markets to both its producers and service industries, including the growing financial and insurance sectors, while cutting back on foreigners' pirating of American inventions and preserving its laws for resolving trade disputes.

Other nations have a range of interests -- economic, political and cultural -- that conflict with the goal of lowering trade barriers.

Two of the longest-running disputes, which now seem on their way to being resolved, are France's farm subsidies and Japan's protection of its rice growers. Both nations see a precious rural way of life threatened by foreign competition.

France, fearing erosion of its proud culture, also has resisted pressure to cut subsidies to its film industry and allow more American programming on television.

A potential deal-breaker from the U.S. standpoint is the draft agreement's anti-dumping provisions. These have alarmed steel producers and other manufacturers who fear the pact would weaken their ability to challenge cut-price imports.

Once the big countries resolve their problems, they will have to make sure that the others fall in line.

"At the end of the day, countries look at the overall bargain and see whether it's good for them or not," said Jeffrey Schott, of the Institute for International Economics, a Washington think tank. But at this point, he said, "There's a recognition that this is the time to complete the deal."

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