Trade Accord Wins Approval of 117 Nations

Overcoming deal-threatening snags in the final hours, 117 nations approved a monumental world trade agreement Wednesday that will slash import taxes around the globe, open markets for food and consumer goods and extend protections to the growing business of international financial services.

The agreement, scheduled to take effect July 1, 1995, is one of the most far-reaching economic pacts ever. It cuts tariffs--taxes charged by a country on imported goods--by an average of 40%, bringing down the price of a wide range of products from aircraft to yarn.

“The results will mean more trade, more investment, more jobs and larger income growth for all,” said Peter Sutherland, director general of the General Agreement on Tariffs and Trade and the driving force behind the final months of tense negotiation. “Economic operators across the globe will benefit; producers and consumers, investors and traders everywhere will gain.”

Declaring this “a defining moment in modern economic and political history,” he said: “Trade binds people together. It compels recognition of mutual interest and cooperation. Today the world has chosen openness and cooperation instead of uncertainty and conflict.”

The final approval, which ended seven years and three months of acrimonious bargaining, came only 10 1/2 hours before a U.S.-imposed deadline. Delegates and aides who filled the meeting hall in the International Conference Center erupted in a one-minute standing ovation when Sutherland slammed down a small wooden gavel signaling completion of the agreement.

In Washington, President Clinton--who made the negotiations one of the top economic and foreign policy priorities of his first year in office--predicted that the accord will trigger an “export boom” in the United States.

“It cements our position of leadership in the new global economy,” he said. “It will create hundreds of thousands of good-paying American jobs.”

Touching virtually every sector of world commerce, the agreement will:

* Reduce government subsidies that make it possible for some companies to charge lower prices than competitors in countries where wages may be lower or subsidies nonexistent.

* Bring international sale of food and other agricultural products under new disciplines and rules to make competition more fair and, it is hoped, lower prices through cuts in subsidies.

* Establish rules for the service sector--activities such as shipping, banking, insurance, telecommunications and air transport. Overall, service enterprises account for 60% of the value of world production and a growing and currently 20% share of international trade.

* Replace the 47-year-old General Agreement on Tariffs and Trade, the organization that enforces rules of international commerce, with a more accurately named World Trade Organization.

“You . . . have not only given the world economy a much needed boost, you have also made a farsighted investment in a better future,” Sutherland told the assembled ambassadors and trade ministers.

The negotiators worked against a deadline of 6 a.m. today in Geneva, or midnight Wednesday in Washington. If Clinton could deliver a deal by then, the U.S. Congress would vote it up or down without the possibility of attaching amendments that could make the pact unacceptable to the rest of the world.

At first blush, it appeared the agreement will not run into the same sort of sustained, angry opposition that greeted the North American Free Trade Agreement with Mexico and Canada, which the Senate ultimately approved by a large margin but the House passed by a small one.

Although the outcome of the negotiations in Geneva appeared in little doubt after the United States and the European Community resolved their longstanding disputes Tuesday, the closing hours of the negotiations had stormy moments as participants sought to use the deadline pressure to squeeze new concessions out of their partners.

At one point late Tuesday night, the 12-nation EC tried to withdraw an offer to provide other countries with greater access to its markets. “All hell broke loose,” one U.S. trade official said. “There was concern everything might unravel. The Latins went nuts. There was a lot of shouting and hysteria. Sutherland . . . came down very hard on the EC and accused them of playing tactical games.”

The EC backed down, the source said, and “everyone kissed and made up.”

As late as 1 p.m. Wednesday, four hours before delegates were to convene for the closing session, they were still haggling over details of a shipping agreement; the last details of a textile agreement were not worked out until the final 12 hours.

“Textiles were true to form,” a U.S. trade official said. “They started negotiations at midnight. These people are allergic to the sun. I don’t think there has ever been a textile agreement negotiated in daylight. At 6 a.m., they agreed to a one-word change.”

Despite the accord, the prospect of further U.S.-EC battles remains.

U.S. officials insisted that the agreement reached here left intact their ability to close markets to countries whose markets are deemed to be closed to U.S. goods. But French Foreign Minister Alain Juppe told his fellow EC foreign ministers meeting in Brussels that their countries were no longer subject to such threats.

Leon Brittan, the chief EC trade negotiator, said the United States had blocked European efforts to introduce more international competition in maritime and financial services.

Those who criticize the EC for being protectionist, he said, “will take note of the fact that in these two areas it was the (EC) that wanted to go far and the U.S. that was hardly prepared to move beyond first base.”

Portugal posed a problem for EC members when it threatened to veto the trade agreement because it might harm the Portuguese textile industry, which accounts for one-third of that country’s exports. EC foreign ministers bought Portugal’s support with a nearly $500-million payment and a promise of a $600-million modernization of Portugal’s textile plants.

France, whose intransigence on agricultural trade and insistence on limiting U.S. movies had stymied the talks for months, exulted in the outcome.

French Prime Minister Edouard Balladur, greeted by a standing ovation in his Parliament, easily won a vote of confidence. “The cultural identity of Europe is protected,” he said. “The future of French agriculture is assured.”

For the Clinton Administration, the major disappointment of the talks was the failure to reach an agreement with the EC to bring satellite television, movies and other elements of the audiovisual business into the new trade pact; that shortcoming was viewed as a major failure by Hollywood.

On the other hand, negotiators argued that they were able to fend off efforts to sharply scale back American prohibitions against dumping of below-cost merchandise on the U.S. market, a practice of great concern to both unions and manufacturers.

“There is no more contentious issue than anti-dumping to most countries in the world,” said Jeffrey E. Garten, undersecretary of commerce for international affairs, who negotiated this section of the pact.

The agreement will include, among other things, limits on international reviews of anti-dumping decisions made in the United States and permission for workers or unions to file anti-dumping charges.

Terms of the complex agreement are spelled out in a 401-page document. Specific schedules of tariff reductions on roughly 10,000 products are yet to be written.

The negotiations, which began with much optimism in the Uruguayan resort of Punta del Este in September, 1986--when Ronald Reagan was President and the global economy was chugging along healthily--suffered through false starts, missed deadlines and, for months, no signs of movement.

In remarks Wednesday to his fellow negotiators, Rufus Yerxa, deputy U.S. trade representative, said his daughter was born during a low point in negotiations. She now has a favorite song--”It’s a Small World After All”--which, he said, “could perhaps be the theme song of the successful negotiations.”

Times staff writer Joel Havemann in Geneva and Isabelle Maelcamp of The Times’ Brussels bureau contributed to this report.

* IMPACT ON AMERICANS: Almost all Americans will be touched by the accord. A16

* RELATED STORIES: A19, A22, D1, D4

The World’s Biggest Trade Deal

From planes to poultry, the GATT accord will boost the global economy. The major elements:

MAIN GOAL: GATT aims to boost world wealth by improving countries’ opportunities to buy from each other.

GATT’S CORNERSTONE: The “most favored nation” principle, designed to prevent discrimination. It says any country’s trade barriers must apply equally to all other members.

BOTTOM LINE: World income will be increased $210 billion a year or more, according to economists.

IMPACT ON TARIFFS: Overall cut of 33% in import duties. Not formally part of accord, but most important part of trade talks for many nations.

Major Players

Largest purchasers of U.S. merchandise exports. (Figures are in billions of dollars of projected 1993 exports. CANADA: $98.6 JAPAN: $48.3 MEXICO: $41.5 UNITED KINGDOM: $25 BENELUX*: $21.9 Largest suppliers of U.S merchandise imports. (Figures are in billions of dollars of projected 1993 exports. CANADA: $108.9 JAPAN: $102.5 MEXICO: $38.5 CHINA: $28.2 GERMANY: $27.9 What’s Ahead

The GATT negotiations this week in Geneva are not the end of the road for the Uruguay Round of trade talks.

APRIL 15--Officials of the 117 countries sign the agreement, possibly in Marrakech, Morocco. This allows Clinton to send the completed agreement to Congress. Once that is done and he also sends the implementing legislation, Congress will have 90 legislative days to either approve or reject the agreement without amendments.

JULY 1, 1995--The expected date the agreement will go into effect.

* Belgium, Netherlands, Luxembourg