Agreement Reached in Farm Trade Dispute : Commerce: U.S. and EC negotiators see it as a step toward meeting deadline in Uruguay Round of GATT talks.

The chief American and European Community trade negotiators said Thursday that they had agreed on a formula to resolve a crucial dispute over farm products long viewed as the biggest obstacle to a global trade pact.

The agreement appears to be the most encouraging step yet taken toward meeting the Dec. 15 deadline for developing new rules that could lead to a surge in worldwide commerce.

At a news conference featuring lavish praise and thinly controlled elation, U.S. Trade Representative Mickey Kantor and his EC counterpart, Leon Brittan, said they hoped to meet again Monday to complete negotiation of all other outstanding issues that have separated them for so long.

“We have an agreed-upon approach to all major issues that would pave the way to completion of a substantive and comprehensive Uruguay Round,” Kantor told reporters, using the name given the present round of talks. “We have also formulated an approach which would successfully resolve all the issues in the area of agriculture.”

Brittan echoed Kantor’s assessment, declaring: “We have made good progress today and yesterday, and we are now beginning to see the outlines of a final package between Europe and the (United States). I hope we can resolve the remaining outstanding bilateral issues by Monday or on Monday.”

Not only would the Uruguay Round reduce tariffs and liberalize trade in products, from jet aircraft to computer chips, it would extend international rules to areas such as services (banking and insurance) and intellectual property (books and movies). The results will affect prices of a vast array of products bought and sold in the United States, and will determine markets for U.S. products in an ever-more competitive world.

Despite their obvious satisfaction, both Kantor and Brittan refused to call their work Thursday a “breakthrough.” They punctuated their remarks with words of caution, noting that more progress in other key areas will be needed this weekend if a final accord were to be reached by Monday.

“There are still a lot of details to be discussed and there are some areas of great controversy that have not been resolved,” Brittan said.

Kantor, at another briefing, spoke of “another critical three days,” noting, “Nothing is agreed until everything is agreed.”

The two Atlantic trading giants once had agreed on terms of an agricultural package during talks in Washington, D.C., late last year, only to have the accord collapse when France rejected the deal. But late Thursday evening, there were encouraging signs that this might not happen again, as the EC’s 12 foreign ministers met and unanimously endorsed the progress made so far.

“There is cohesion, there is a common approach,” Belgian Foreign Minister Willy Claes said after the meeting. French Foreign Minister Alain Juppe added: “We have gotten out of the Ice Age.”

Aides reported the EC ministers’ session was not confrontational; one who attended observed that “France did not seem in a fighting mood.”

Negotiators would not discuss details of the two days of talks, but there were indications that the impasse over agriculture is likely to be broken under a formula in which the United States may be prepared to accept a plan to allow the EC to “back-load” a 21%, six-year reduction of farm subsidies agreed in the Washington talks, by enacting fewer cuts in the initial years. In return, Europe would offer greater access to American farm products.

U.S. Agriculture Secretary Mike Espy said at the Thursday news conference that he was “very, very optimistic” about the talks’ direction: “We believe we have found ways to ensure that our farmers . . . will benefit from significant new market access opportunities in Europe.” Espy specifically mentioned that “grain, meat, diary products and other specialty crops would benefit from this new access.”

Kantor said work would continue this weekend to resolve remaining issues that separate Europe and America and said little progress had been made on contentious issues of film and broadcast rights.

The EC--responding to French fears of being culturally swamped by American movies and television programming--has sought to treat such material as a special case or to remove it from the GATT round.

While Kantor insisted the audio visual component needed to be part of an overall agreement, Brittan underscored the EC position, saying, “We need to give real teeth to the protection of European cultural identity.”

Kantor and Brittan are expected to resume talking here Monday with the aim of completing an agreement during the course of that day. It became apparent that Thursday’s Kantor-Brittan news conference, with its tantalizing whiff of success, was purposely staged in advance of Brittan’s meeting with EC foreign ministers, as an attempt to heighten pressure on the French.

The two days of EC-U.S. talks were conducted under enormous political pressure. The Uruguay Round has dragged on for seven years, largely deadlocked over the U.S.-EC disputes for the last three years.

Dec. 15 is the deadline for the 112 nations participating in the negotiations to agree on a complex series of interlocking measures to reduce tariffs and lift other barriers that now restrict world trade. The talks are being conducted under the umbrella of the Geneva-based General Agreement on Tariffs and Trade.

In recent days, President Clinton and other world leaders have given an almost overpowering aura to the GATT talks, declaring the elusive world trade agreement essential to bringing much of the industrialized world out of recession, to giving new trading opportunities to emerging Third World countries and preventing a wholesale collapse into protectionism. “The stakes are very high,” said Kantor.

Economists have estimated that an agreement could inject $275 billion more into the global economy annually by the beginning of the next century.

To present details of their own proposals to other nations in time for them to formally agree by the mid-December date, the United States and EC must agree by early next week.

Times staff writer Norm Kempster and Isabelle Maelcamp of The Times’ Brussels bureau contributed to this report.