Last-Ditch Try to Break Trade Talk Impasse : Economy: The crucial Uruguay Round of global negotiations could be called off in November if nations haven’t reached an agreement by then.


With American support, international authorities have launched a make-or-break effort to revive the crucial round of global trade negotiations, which has been stalled almost a year amid a bitter dispute between the United States and the European Community.

In a private session in Geneva last week, Arthur Dunkel, director-general of the 107-country General Agreement on Tariffs and Trade, warned negotiators that he will call off the talks entirely if they cannot agree on the framework for an agreement by early November.

Dunkel’s apparent ultimatum marked the first time that he has threatened to shut down the negotiations, which are now in their fifth year, and U.S. officials say they are backing his effort to breathe new life into the talks.

Meanwhile, President Bush, who has called the trade negotiations this nation’s top international economic priority, used a speech before the United Nations on Monday to bolster Dunkel’s campaign to revive the talks, which are known formally as the Uruguay Round.


“If the Uruguay Round should fail, a new wave of protectionism could destroy our hopes for a better future,” the President warned. “History shows all too clearly that protectionism can destroy wealth within countries and poison relations between them.”

Bush said negotiating countries should “redouble their efforts,” adding, “I pledge that the United States will do its part.”

Dunkel, clearly exasperated by the lack of progress in Geneva, told delegates last week that if they cannot reach an accord by November, he will offer his own proposal for a framework agreement reflecting what he believes to be “the best result.”

Dunkel’s proposal will be “put to governments on a take-it-or-leave-it basis,” one negotiator said.


U.S. officials said that would give participants only a few weeks to come to an agreement before Dunkel formally shuts down the Uruguay Round. “The real interesting thing will be to see whether the European Community plays or doesn’t play in the exercise,” they added.

The talks, which represent a major effort to overhaul the rules under which worldwide trade is governed, were launched in 1986 in Punta del Este, Uruguay. They were to have ended last December, but negotiators stormed away from the bargaining table when the 12-nation European Community rebuffed demands that it reduce its agricultural subsidies and restrictions.

Besides reducing agricultural subsidies, the negotiators are seeking to write rules covering trade in services, investment and intellectual property such as patents and trademarks, which are not included in the rules now governing the world trading system.

Europe’s massive agricultural subsidies have remained the biggest obstacle to an agreement. The United States and other agricultural exporters say those subsidies give European farmers an unfair advantage on world markets, and cost consumers an extra $250 billion a year.


The United States has demanded that the Europeans reduce their export subsidies by 90% and other payments by at least 75%, but the Europeans have balked, arguing that such a move would be politically unrealistic. They are now working on a counterproposal.

Dunkel, who chairs the agricultural negotiations, offered no details of what he might propose in his own final offer.

Although farmers make up only 8% of the European Community’s work force, they are enormously influential. Moreover, many Europeans fear that if the small and inefficient farmers lose their payments, they will abandon their land, tearing the fabric of rural life.

In recent years, however, those subsidies have proven a mighty budget drain, particularly after the unification of Germany brought formerly East German farmers into the system. European officials concede that they now have no choice but to cut their agricultural spending.


European agricultural ministers were meeting Monday to consider various agricultural reform proposals.

“Right now, we’re waiting to see if they can do it. I know it’s politically difficult,” U.S. Trade Representative Carla Anderson Hills said Monday. “We’re really watching, since this is something only they can do for themselves.”

Written in the late 1940s, the General Agreement on Tariffs and Trade--a 107-country compact that administers global trading rules--has become outdated. It does not cover at least a third of trade flows today, including agriculture, banking and protection of copyrights and patents.

Dunkel believes that “dragging on the negotiations would seriously damage the already rocky credibility” of the trading system, one participant in the session said.


However, Hills said that even if the GATT members accept a basic framework by Dunkel’s November deadline, she believes that it could take an additional six months to work out the remaining details.