NEWS ANALYSIS : Allies Have Long Row to Hoe, Despite Settling Spat Over Farm Subsidies : Trade: They must negotiate a complex pact in Geneva and sell it at home and abroad. The world economy is at stake.

President Bush won a significant victory Wednesday when leaders at the seven-nation economic summit broke the impasse over farm subsidies that had stalled global trade talks in Geneva.

Resounding as his triumph in Houston was, however, that was the easy part. Negotiating the actual trade accord and selling it, both abroad and at home, will make Wednesday’s achievement seem simple.

What the leaders did in Houston was essentially jump-start the Geneva negotiations, which had bogged down over the issue of agricultural subsidies. Until now, there was virtually no chance that the talks could end by December, as Administration strategists had hoped. Now, there is hope.

But, as U.S. Trade Representative Carla A. Hills conceded to reporters, there is still a long way to go in hammering out the details of the complex trade accord.

The communique that the seven leaders issued Wednesday is basically “a political statement,” Hills said. “We are meeting at the table to negotiate. We’ll see how far we get.”

Hills’ caution is understandable. The Geneva negotiations, the most sweeping talks ever held on removing barriers to trade, are designed to revamp the world trading system.

Besides writing new rules covering agricultural trade, the new system would impose new regulations for trade in services, investment and intellectual property, such as patents, trademarks and copyrights. In all, it would affect about 15 major trade categories. About 105 countries are taking part in the talks.

With trade tensions already mounting, the stakes are high. William E. Brock III, who held Hills’ job in the early 1980s, warns that if the talks don’t succeed, the failure would throw the world economy into turmoil. Financial markets would gyrate. Trade would slow sharply. And recession could quickly follow.

Worse yet, Congress, already on edge over what it perceives as unfairness on the part of America’s trading partners, seems likely to become even more protectionist if the Geneva talks fail. That, in turn, would help push the world into competitive trading blocs designed to shut out all competition. Economically, Europe, Japan and the United States would be at war.

“This is the first big test of whether the big industrial countries can work out our differences in this new post-Cold War world,” says C. Fred Bergsten, director of the Institute for International Economics, a Washington think tank. “If the negotiations fail, the impact will go far beyond economics.”

What makes the talks especially difficult is that all of the 15 “mini-negotiations”--on agriculture, services and the like--are linked to one another.

Unless the rich countries agree to lower barriers on agriculture and textiles, which are important products in the less-developed countries, Third World nations won’t accept rules safeguarding Western patents, trademarks and copyrights. Failure to guarantee free access for service industries would make any new accord impossible to sell in richer countries.

“The question now is, can the momentum that the summit leaders generated in Houston be translated to the lower-level negotiators in Geneva?” says Michael Aho, trade analyst for the Council on Foreign Relations, the New York-based foreign policy group.

The complex negotiations, which are expected to move into high gear now, will continue in Geneva until early December, when Cabinet-level trade officials are scheduled to meet in Brussels for a final week of bargaining. Most of the serious horse-trading is expected to occur in those final days. Until then, everything will be up in the air.

Even more uncertain is whether Hills--and eventually Bush--will be able to sell any new accord to Congress. Hills is well aware that the lawmakers won’t even consider the pact seriously unless it contains firm rules for reducing barriers in agriculture, services and intellectual property.

But if the United States gets its way on these, it almost certainly will have to give up import quotas and tariffs that now protect powerful domestic industries, such as textiles, sugar and steel.

Representatives of these industries already have begun lobbying intensely against the Geneva talks. Now, even the environmentalists have joined them, protesting efforts to prohibit countries from using what U.S. officials see as bogus health standards to keep out foreign goods.

The result is almost certain to be a major political brouhaha next January and February, when the lawmakers, bombarded with narrow-interest political pressures, begin work on ratifying any new accord.

For now, that time still seems relatively far away. In between, there is much real work to be done.

“We’re going to have further disagreements, further all-night sessions,” said Julius L. Katz, Hills’ chief deputy for trade negotiations. The United States and its trading partners are still far apart.

But the Houston communique is a start. It is aimed at providing the same sort of political impetus that the summit leaders did in 1977 and 1978, when they jump-started the previous round of trade-liberalization talks, known formally as the Tokyo Round.

Those talks, completed in 1979, helped bring about a sizable expansion in world trade and thus contributed significantly to the expansion that is continuing today.

The hope of the seven leaders here was that Wednesday’s action might do the same.

AGRICULTURAL SUBSIDIES Subsidies include cash payments, value of tariffs and tax benefits and other forms of producer supports. In billions of dollars.

1986 1987 1988 1989 United States $44.7 $45.6 $39.3 $32.2 European Community 62.4 68.4 62.5 53.0 Japan 34.1 35.3 37.1 33.7

Source: U.S. Agriculture Department