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'Take-It-or-Leave-It' Draft Treaty Offers Scant Hope for Talks


EVERYONE says it would be a disaster for an international economy already gripped by slowdown and creeping protectionism, but even in the 11th hour the key players aren't taking the final steps to prevent the collapse of ground-breaking international trade liberalization talks, now in their fifth year.Now that a December deadline for the Uruguay Round trade negotiations has passed without an accord, negotiators from 108 countries have until Jan. 13 to review a "take-it-or-leave-it" treaty draft put forward late last week. But the 500-page "final act," submitted by Arthur Dunkel, director general of the General Agreements on Tariffs and Trade (GATT), under whose auspices the talks are organized, has already met with a firm "no" from the European Community over the central issue of agriculture. The talks, designed to bring such sectors as textiles, services, intellectual property, and agriculture under barrier-reducing trade rules for the first time, hinge on agreement between the EC and the United States on farm-subsidy cuts. If anything, however, the two principal players are further apart than a few weeks ago when a compromise appeared imminent. Jacques Delors, president of the EC's executive Commission, sees only a "25 percent chance" of agreement, replacing a much more optimistic assessment he gave early this month. Now both European and American officials repeat regularly, "No agreement is better than a bad agreement." Ostensibly, the holdup is caused by disagreements over proposed percentage cuts in trade-distorting farm subsidies. In addition, EC Agriculture Commissioner Ray MacSharry rejects the final draft's position disallowing the kind of direct payments the EC wants to make to farmers to cut production. Beyond that, however, several deeper trends are creating a context around the trade negotiations that make the necessary spirit of compromise increasingly remote. First, worries about worsening economic conditions and outright recession in some places are causing an "every-country-for-itself" attitude. And despite repeated vows at recent summits of the world's wealthy nations to see the Uruguay Round succeed, evidence of this attitude is especially strong among them: * President Bush is shifting his foreign policy concentration to an America-first emphasis. The president plans to take the chiefs of several major US companies on his forthcoming Asian trip, where the issue, he says, will be "jobs, jobs, jobs." * The Japanese, after earlier hints that they might be willing to consider opening their rice market to imports, now appear to be closing the door again. Japanese officials also rejected Mr. Dunkel's final text on the grounds that it favored food-exporting nations. * Worried about a rise in its own inflation rate, Germany's Bundesbank moved a week ago to hike interest rates to their highest postwar level. The move wreaked havoc in Europe's monetary system barely a week after the conclusion of accords designed to foster EC monetary cooperation. Germany's European partners, obliged to follow suit and raise their own rates, find hopes dashed for any quick pickup in their own economies. Another problem is what European officials believe is a US unwillingness to negotiate with the EC as the major world economic power that it is. Mr. MacSharry repeated at the end of an EC trade and agriculture ministers' meeting Monday his view that in order for the Uruguay Round to succeed, "[our] views are going to have to be taken into acount." The EC still feels the bite of the international condemnation it experienced in December 1990 when the negotiations ground to a halt over the Community's resistance to deep farm subsidy cuts. Community officials are working hard to convince observers this time around that failure, if it comes, will not rest solely on EC shoulders.

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