U.S. Negotiators Move to Gain Support for New Trade Talks

The Reagan Administration’s high-level delegation to an international trade conference moved quickly Sunday to consolidate support for convening a new round of trade negotiations, including agriculture and new areas of services and investment.

As ministers gathered here from all over the world for today’s opening of the conference of the General Agreement on Tariffs and Trade, the proposal backed by the United States for a new round of bargaining to liberalize world trade had the firm support of only half of GATT’s 92 members. The convening of a new round was surrounded by bitter disputes over agricultural subsidies and industrial protectionism.

But the U.S. delegation, led by Clayton K. Yeutter, the U.S. trade representative, Commerce Secretary Malcolm Baldrige and Agriculture Secretary James Lyng, said it confident that a combination of pressure and persuasion would win broad support by the end of the week for launching the new negotiating round.

For the Reagan Administration, facing a possible $200-billion trade deficit this year and mounting congressional pressure for protectionist legislation, agreement on new negotiations has been presented by Yeutter as a “make-or-break” situation for the international trading system.

In its first meetings , the U.S. delegates sought out one of the rebel groups, the so-called 14-nation “free traders in agriculture,” including Canada, Australia, Argentina, Brazil, Thailand and other countries heavily dependent on agricultural and livestock exports. They met in Australia last month and adopted a very strong position against agricultural subsidies by the United States and the European Communities.

After meeting with Yeutter and Lyng, John Hawkins, Australia’s trade minister and spokesman for the 14, said at a press conference that they had received promises of support for “fast-track” negotiations on removal of subsidies and barriers to access for their agricultural products.

“We are in a position now to go forward with the negotiations on a new round,” Hawkins said. But priority treatment for agricultural trade in the new round has been publicly resisted by the European Communities.

“The (communities are) ready to discuss agriculture on the grounds of overproduction worldwide, and not just subsidies. We don’t want just one aspect singled out in a complicated dossier,” said Willy le Clerq, the communities’ trade commissioner.

The United States has threatened to walk out of the conference here if there is no broad agreement on a comprehensive agenda for the new trade round that would extend GATT rules and codes of commercial conduct from traditional industrial and agricultural goods to new areas, including such services as banking, transportation and data processing systems.

The U.S. insistence on “new areas” is based on the growth of U.S. competitiveness in the service areas, while it has been losing the edge in industrial goods and electronics to competitors from Japan and Korea and to the emerging industrial countries, such as Brazil and India.

The aggressive U.S. line has had a strong impact on countries that fear even greater damage to their U.S. exports if protectionist pressures lead to closing off access for goods that still are admitted.

“The risks of not succeeding are so dramatic that everyone here is becoming very conscious of the need for doing something,” said Enrique Iglesias, Uruguay’s foreign minister, who is the host for the conference. Iglesias, with long experience as a U.N. official and economic negotiator, is expected to play an important role as a mediator.

If the agriculture issues can be resolved, the other major resistance to a comprehensive trade negotiating round comes from a group led by Brazil and India that oppose inclusion on the agenda of services, trade-related investment and copyright regulations.

Paulo Nogueira Batista, deputy chief of the Brazilian delegation, who has been conducting GATT negotiations in Geneva for four years, said Brazil wants a new negotiating round but with emphasis on unresolved issues affecting current trade rather than exploring new areas.

“We want a negotiation that will be devoted to reversal of the protectionist measures that have been adopted in violation of GATT rules, of firm commitments made in earlier negotiations on a standstill and rollback of trade restrictions, and priority attention for agriculture,” Batista said.

The GATT annual report on international trade for 1985 issued this week showed a significant slowdown in growth of trade among its 92 members. From a 9% increase in 1984, a year of recovery after a trade slump from 1981 to 1983, the tempo of expansion slowed to 3% last year, GATT said, and may be even lower this year.

The trade damage has been primarily to developing countries due to restricted access to markets and declines in the prices of agricultural commodities.

Many of these developing countries, such as Argentina, Brazil and Mexico, are among the Third World’s largest debtors. Servicing the debt with declining export income is creating serious growth problems, GATT’s report said.

“Governments need to demonstrate the same capacity for major policy changes in the area of trade” as they have in coordinating interest rates and monetary policy, said the GATT secretariat, which for 39 years has been the focal point for trade discussions in the non-Communist trading area.

Of the 92 member countries of GATT, 74 were represented at the conference here.