World Trade Body OKs New Round of Talks

The United States and 73 other countries launched by consensus Saturday a new round of negotiations on liberalizing world trade, including talks on agriculture, services and investment.

Clayton K. Yeutter, President Reagan’s special trade representative, said the outcome of the six-day ministerial meeting here was “a major victory for the principles of free and fair trade.”

Yeutter, who arrived here threatening to walk out of the conference if the United States was blocked in putting services and investment on the agenda, said he expects the new round of negotiations to be “rolling full speed ahead” by early next year.

The Reagan Administration hopes that the amplified trade negotiations agreed upon here will eventually contribute to reducing the U.S. foreign trade deficit, which is approaching $200 billion this year.

Eighth Round Upcoming

But the deep disagreements that forced this meeting into marathon post-midnight negotiations before the consensus was reached pointed to even harder negotiations when the new talks begin on tariff reductions, mutual concessions and removal of obstacles to commerce, such as protectionist regulations and subsidies.

Those forthcoming negotiations, which will be the eighth round of multilateral trade bargaining since the 92-nation General Agreement on Tariffs and Trade was set up in 1947, will shape global trading relations into the next century.

In agriculture, one of the areas of deepest controversy, the European Communities--under pressure from France--resisted to the end any explicit commitment to remove export subsidies that have caused a severe drop in the price of grain, beef and dairy products.

A group of 14 agricultural exporting countries--led by Canada, Australia and Argentina, who have charged that the European and U.S. agricultural subsidy systems cause them damages--said the text approved here provides for an early start on negotiations--as early as November--to consider a rollback of “the massive subsidies producing the surpluses which are distorting world trade.”

But the final declaration launching the new GATT round retained language on which France would not budge. This said that the negotiations would be guided by a commitment to “increasing discipline on the use of all direct and indirect subsidies” with a “phased reduction of their negative effects.” This was less than a clear commitment to remove subsidies to farmers and their exports, toward which both the United States and the European Communities invest $25 billion a year.

On the critical issues for the United States--extending GATT negotiations to services, such as banking, insurance, data processing, engineering, transportation and tourism--a last-ditch compromise was reached between the United States and India and Brazil, the two main opponents to including the services in the trade talks.

Agreed to Swap

The ministerial meeting set up a special negotiation category on services, open to all GATT members but under rules that do not automatically extend concessions made to one country from another to all GATT members, as happens in the case of trade goods.

Yeutter swapped this limited negotiation on services for Brazil’s and India’s acceptance of trade-related investments and protection for copyrights and patents as proper new areas for negotiation in the next GATT round.

“We got what we wanted, which is a consensus to launch a new round of negotiations without including services on the same footing as goods,” said Paulo Nogueira Batista, Brazil’s chief negotiator at the meeting here.

The compromises worked out here improved the climate for future negotiations, according to Michael Aho, chief economist of the New York-based Council on Foreign Relations. “It was a surprisingly clean launch, and much more constructive than the inconclusive results of the last ministerial GATT meeting in 1982,” said Aho, who came here as an observer.

But numerous delegates left this beach resort on Uruguay’s Atlantic Coast saying that years of hard negotiations must follow the agreements reached here if the tide is to be turned in worldwide tendencies toward protectionism.

The agenda for the new GATT round includes removal or reduction of tariffs and non-tariff barriers in general and specific treatment of tropical products, textiles and clothing, natural resource-based productions and agriculture.

A trade negotiation committee formed by member states will be set up in Geneva. It will coordinate the work of sector negotiating committees under GATT rules and procedures. The group to be set up on services will also report to the trade negotiation committee, but the members must first agree on a “multilateral framework of principles and rules for trading in services,” under the terms of the final declaration, before negotiations can actually begin on making concessions in services.

Services is an area in which the U.S. negotiators believe that the United States has possibilities for expanding exports significantly. The countries that opposed placing this area into the GATT system are newly industrialized developing countries, such as India and Brazil, that want to protect their own service industries and are fearful of unregulated competition with richer industrial countries.