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World Trade Talks Collapse in Brussels

TIMES STAFF WRITERS

An ambitious four-year international effort to rewrite the rules governing world trade collapsed Friday as a bitter dispute over European agricultural policy forced 107 nations meeting here to adjourn their formal talks without agreement.

“No useful purpose can be served by prolonging the Brussels meeting,” U.S. Trade Representative Carla Anderson Hills said after the meeting broke up.

Officials said the nations might meet again in Geneva if new hope for a deal emerges. However, with the differences over agriculture remaining almost as deep as they were at the outset of the talks, impetus for a compromise will be difficult to find.

Prospects would be further dampened if hostilities erupt in the Persian Gulf, because that would put a trade agreement far lower on the list of priorities in global relations. Meanwhile, U.S. participation in any agreement is contingent upon the Bush Administration submitting it to Congress by a March 1 deadline.

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Firmer signals from heads of governments could help unstick the talks. President Bush, traveling in Venezuela on Friday, said that the United States “remains committed to maintaining and strengthening the (world) trading system.”

European leaders will have an opportunity to send a similar signal when they meet in Rome next Friday and Saturday.

Negotiators had hoped that by removing or lowering trade barriers, they might build a powerful new engine for world economic growth--generating $4 trillion over the next decade, by some of the more optimistic estimates. The U.S. share of the bonanza, the Bush Administration has said, would be $125 billion in the first year alone, or $600 for every man, woman and child in the country.

Failure to forge an agreement risks a new round of protectionism, which would further weaken the world economy. Instead of all nations operating under a single set of internationally approved rules, they could instead continue to form belligerent blocs of nations that wage economic war against the others.

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The final week of talks also had been seen as the first major test of how well the world’s top economic powers will work with each other now that the Cold War has ended and they are not so tightly bound by a common fear of the Soviet Union. If the sessions here are any indication, the future holds tension and acrimony.

One senior U.S. trade official described the 12-nation European Community, which is to become a single market in 1992, as “an economic behemoth that has no capability to make political decisions.”

The Europeans, though slightly more diplomatic, found just as much fault in the U.S. approach. “Negotiation is give and take, and there was not much given,” said Franz Andriessen, the European Community’s trade negotiator.

Negotiators also accused the Japanese and South Koreans of intransigence, saying they had rejected outright a proposal that would begin to open areas of their markets.

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“People had a feeling they had been caught in a trap,” said Brazilian trade ambassador Rubens Ricupero, who led a group of 70 developing countries at the talks.

With the negotiations suspended, the participating nations will have to find other ways to settle countless pending disputes that had been put on hold in anticipation of an agreement.

There are many areas where tensions could erupt.

Developing countries, which see textile manufacturing as an early step toward industrialization, are pressing richer nations to lift quotas. Rice producers in California and elsewhere have demanded that the U.S. government take steps to force Japan to open its airtight market. And U.S. film and television producers are protesting a European directive that could put quotas on the broadcast of foreign-made programming.

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Over the next few years, failure to reach a trade agreement could also add billions to the U.S. budget deficit. In anticipation of an agreement cutting worldwide farm subsidies, Congress and President Bush had agreed to sharp reductions in U.S. agricultural support programs. However, absent a commitment to significant cuts by U.S. trading partners, at least $3 billion of that support ultimately will be put back in place.

The just-ended round of negotiations got under way in 1986 in Punta del Este, Uruguay, as an effort to make major revisions in the General Agreement on Tariffs and Trade, the international trading system established after World War II.

The general agreement had chipped away at tariffs for decades and is credited for the fact that international trade grew half again as fast as industrial output. However, the system had started to fray in the 1970s and member countries, including the United States, increasingly went outside the international rules to protect their markets and settle disputes.

Negotiators had hoped to repair the system in several ways:

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* Expand the agreement to include service businesses, such as banking and entertainment, that account for a formidable and growing share of world economic growth.

* Make developing countries fuller partners in the overall agreement.

* Put greater protection on copyrights and trademarks.

* Tighten procedures for punishing those who violate the rules.

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* For the first time, apply the agreement to agriculture.

In many of these areas, negotiators had made progress during the week of talks. However, agriculture remained the crucial stumbling block--one that isolated the Europeans from the United States and much of the developing world.

Europe spends nearly $100 billion a year on subsidies to ensure the survival of its farms, many of which are small and inefficient and could not survive on their own.

“You are exporting your problems to the outside world and expecting us to pay for them,” U.S. negotiator Hills said.

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However, agriculture is a politically sensitive issue in Europe. Even the relatively small concessions that the EC had offered in the negotiations were enough to enrage European farmers.

An estimated 30,000 descended on Brussels during Monday’s opening session to demonstrate. They uprooted trees, set rubbish fires, exploded firecrackers and vandalized bus stops until Belgian police in riot gear dispersed them with tear gas and water cannons. They were joined in the protest by a few U.S. farmers, who also stood to lose their subsidies if negotiators reached an agreement.

Other countries, however, insist that Europe’s huge subsidies distort the worldwide market for agricultural goods. U.S. farmers, who generally receive far lower payments, say that although they are efficient, low-cost producers, they have been unable to compete against the Europeans.

Developing countries also had argued that Europe’s agricultural policy makes it impossible for them to sell their goods on international markets. With industrialized nations pressing them to open their markets to service industries and demanding overseas protection for patents and trademarks, the poorer countries had warned that they would offer no concessions unless they got greater opportunities to boost their farm exports.

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Times staff writer James Gerstenzang in Caracas, Venezuela, and Times researcher Isabelle Maelcamp in Brussels contributed to this report.

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