90 Member Nations of GATT Agree to a New Round of Trade Talks

After months of procedural wrangling, the United States on Wednesday won a commitment from the 90 member nations of the General Agreement on Trade and Tariffs (GATT) to begin a new round of multilateral negotiations aimed at reducing world trade barriers.

“If you ask if I am satisfied--yes, very satisfied,” said Michael B. Smith, the deputy U.S. trade representative who headed the American delegation at a special three-day GATT meeting here. Reagan Administration officials hope that the GATT process will result in tighter rules against trade subsidies, tariffs and other obstacles to fair trade.

However, one key issue was skirted: the question of how the new negotiating round will deal with trade in the service sectors--including banking, insurance, shipping and investment.

“A bloody battle still lies ahead,” a senior member of the GATT secretariat said. But, the official added, “we will no longer be arguing endlessly about procedure; we will be able now to get down to substance.”

Led by Brazil and India, a bloc of Third World countries has been holding out for months against any new round of GATT negotiations that would include services along with standard agenda items such as agriculture, high technology, tariffs and non-tariff barriers.

Insisted on Inclusion

The United States, on the other hand, has insisted that services, which account for 60% of U.S. production and jobs, be included for the first time in the 38-year history of GATT. The Reagan Administration has argued that a new effort at trade liberalization would be meaningless for the industrialized world if it did not do something to open up opportunities for the expansion of banking, investment and other service industries.

Brazil’s representative at the GATT talks, Paulo Nougueira Batista, told the meeting: “The services sector is too vital to our economic development and for the preservation of our autonomy in economic affairs to be considered as an area open to international regulation, in mere exchange for vague promises of access to develop markets in the traditional area of goods.”

After agreeing with the other 89 members of GATT by consensus to the adoption of the final communique formally launching the new negotiation, Batista told reporters: “The fundamental issue still remains to be solved.”

Avoids Direct Mention

The compromise reached Wednesday evening simply avoids any direct mention of specific inclusion of the “services sector” on the agenda for the new round of talks and declares that “a preparatory process on the proposed new round of multilateral trade negotiations has now been initiated.”

Senior trade officials will begin meeting Oct. 14 to prepare an outline agenda for the talks, and the matter will then be considered by trade ministers at a general meeting of the 90 GATT members here in Geneva at the end of November.

The November meeting will then establish a full-fledged preparatory committee to work out a detailed agenda. This may take as long as six months to a year, and the negotiation itself could last for three or four years.

Whether it will be called the “Reagan Round” or the “Brussels Round”--as members of the European Community would prefer--remains to be decided. The previous major GATT negotiations on trade liberalization were the Dillon Round in 1961-62, the Kennedy Round in 1963-67 and the Tokyo Round of 1975-79.

Since 1982, when an interim “work program” was adopted, GATT has been concentrating on trying to hack away at various non-tariff barriers and trade restrictions while laying the groundwork for a full-fledged new major multilateral negotiation.

GATT’s director general, Swiss diplomat Arthur Dunkel, cited three factors that he said were instrumental in at last producing a clear commitment to move to negotiations. They were, he said, President Reagan’s speech on protectionism two weeks ago; the U.S. decision on exchange-rate intervention to bring down the value of the dollar, and the forthcoming meeting in Seoul, South Korea, of the International Monetary Fund and the World Bank. These factors, he said, helped to galvanize what looked like a doubtful decision up to early Wednesday evening.

Another factor, clearly, was the increasing isolation of the five nations that have been leading the holdout against any concessions on a discussion of services in the new round of talks--India, Brazil, Yugoslavia, Algeria and Egypt. They had already lost the support of the Assn. of Southeast Asian Nations grouping, led by Indonesia, and their support was also fragmenting among African and Latin American nations.

The five had counted on the support of France. But that possibility disappeared with the drafting of a compromise text Wednesday that blurred the issue by simply declaring that preparatory work leading up to the November meeting “will not prejudge the work on services.”

(In Washington, U.S. Trade Representative Clayton Yeutter praised the agreement to initiate preparations for a new round of multilateral trade negotiations.

(“This is an important step toward the new round of negotiations that the United States believes is essential to build a strong international trading system,” Yeutter said. “We need more enforceable rules governing international trade to make sure that all countries have a fair chance to compete. We want to tighten rules against subsidies, strengthen dispute-settlement procedures and extend GATT rules to cover new areas, such as service industries. The result will be a stronger world economy, which would benefit all countries, whether industrialized or developing.”)