COUNTDOWN ON WORLD TRADE : Agreement on Dumping Breaks GATT Logjam : Negotiations: Disputed areas have been narrowed to textiles, civilian aircraft, entertainment and financial services.

Negotiators from 116 nations trying to rewrite the rules of global trade achieved a major breakthrough early this morning, agreeing to the key provisions in a U.S. proposal that would protect workers and industries from competition with foreign manufacturers dumping below-cost goods on the U.S. market.

But the progress on dumping, one of the most politically sensitive issues involved in the negotiations, was one of the few major bright spots as officials struggled to conclude a pact by Wednesday--with some of the most intractable issues still on the table.

“The pace has definitely escalated,” one European trade official reported. A GATT spokesman went so far as to say that success in concluding a deal on anti-dumping rules had “broken the logjam” in other areas.

But other trade experts cautioned that breakthroughs led three years ago to false optimism just before the earlier sessions of the same round of trade talks collapsed in failure.

The international referee of the talks, Peter Sutherland, who is the director general of the General Agreement on Tariffs and Trade, called on the United States and the other major trading nations to exert leadership and find room for compromise.

“We are at a moment of vital importance which will determine whether or not the world has the opportunity to grow in trade and economic prosperity,” Sutherland said. “It is a time for recognition by the developed world that they have an obligation to lead. . . . President Clinton--and others--have a primary responsibility to help in the process.”

A short time later, Clinton spoke by telephone, in three separate 15-minute conversations, with French Prime Minister Edouard Balladur, British Prime Minister John Major, and German Chancellor Helmut Kohl, to encourage them to press their negotiators onward to an agreement, a White House official said.

The negotiations continued beyond an informal deadline of Sunday night, with only occasional breaks for private consultations.

The negotiators’ target is nothing less than a vast revision of the rules under which not only consumer goods and the products of heavy industry are bought and sold among countries, but also an expansion of those trade regulations to cover such previously unregulated arenas as agriculture, financial services, pharmaceuticals and the products of creative activities, including books, movies, recordings and computer software.

The focus of the negotiators is minute details covering more than 5,000 pages of text in 40 separate legal documents and declarations, but the scope of their labor would be broader than any trade pact ever written. They would slash tariffs charged on imported goods by an average of one-third, with the ultimate goal of fueling a global economic expansion worth, by some estimates, at least $270 billion by the year 2002.

Blocking the way, according to participants in the talks, were divisions over the handling of the entertainment industry, subsidies for production of civilian aircraft and the international expansion of banks, insurance companies and other financial institutions.

In the dumping dispute, the U.S. trade negotiators had their backs against the wall. The U.S. position was originally opposed strenuously by both industrialized nations and less-developed countries that would try to sell their goods at prices below production cost to gain such a strong position in the U.S. market that they would drive out U.S. competitors.

The U.S. anti-dumping laws that other nations wanted to see overruled by the trade pact are strongly favored by industries and by workers, whose jobs the laws help protect, and by organized labor.

Under congressional mandate, Clinton has until Wednesday to negotiate an agreement that would not be subject to amendment by the House and Senate. But Sutherland had given the delegates an informal deadline of Sunday night to allow sufficient time to complete preparation of an official declaration that would satisfy the congressional timetable.

As the day progressed, there were conflicting statements about the state of the talks--and the few comments, both public and private, by officials to reporters were tactical posturing that did not necessarily reflect the prospects for a successful conclusion.

Leon Brittan, the external affairs commissioner of the 12-nation European Community, said after breakfast: “We have very severe problems at the moment. Things are not looking good. We have a crisis on our hands.”

But Mickey Kantor, the U.S. Trade Representative, took issue with the notion that it was crisis time, and Sutherland was downright sunny by comparison.

“Tantalizingly close” was the way he described the negotiators at midday.

On entertainment, the United States and the European Community, said a senior U.S. trade official, were driven further apart by the community’s insistence that any agreement allow it to adhere to a four-year-old directive that 60% of the productions on French television be produced in France.

“A lot of churning, but between morning and night, there’s been no change,” said Jack Valenti, president of the Motion Picture Assn. of America.