Fears mount over trade deal

TOP officials preparing this week's Tokyo summit fear that their leaders will miss the last chance to wrap up a world trade deal.

Mounting concern over the trade talks is matched by worries that discord could erupt over the US-Japanese disagreement on curbing the Japanese trade surplus, forecast to climb to dollars 150bn ( pounds 100m) by 1994 from dollars 117.6bn last year.

On Tuesday, trade ministers from the US, Japan, the European Community and Canada hold an eve-of-summit meeting in their third and final attempt to agree on one of the key issues in the Uruguay Round trade talks - an outline 'market access' accord. This would cut or eliminate tariffs on industrial goods and lower non-tariff barriers to trade in goods and services between Group of Seven markets.

The other current issues between the antagonists in the General Agreement on Tariffs and Trade concern:

The so-called 'Blair House' agreement on cutting farm export subsidies, a deal that France is determined to reopen.

The steel war whereby both the US and the EC are set to impose anti-dumping duties on each other's steel exports.

New rules that would open up public-sector procurement contracts to foreign bidders.

Even if the debate on the market access agreement can be resolved this week, France will prevent the G7leaders from issuing a conclusive endorsement of any accord.

Edouard Balladur, the French Prime Minister, made clear last week that a market access agreement negotiated by the European Commission on behalf of the member states would be subject to the approval of the EC Council of Ministers.

Mr Balladur will not attend the summit, which means that France will be represented by a politically weakened President Francois Mitterrand.

'It means that we cannot simply say we have agreed this package,' a senior British official admitted. The leaders will be able to debate the terms in which they could endorse a market access agreement, 'but the French will want to insist on procedures being followed.'

Britain has accordingly lined up behind France in an attempt to ensure further progress in the trade talks after Tokyo. Gatt officials believe that the UK position may improve the chances for a favourable EC Council decision.

But many senior G7 officials argue that a strong endorsement of the Uruguay Round at the 7-9 July summit is more important - and probably the last chance for G7 countries to influence the outcome.

Despite hopes that the French position is based on extracting maximum concessions, the strategy for piloting the talks to a successful conclusion appears to be unravelling rapidly. It was developed by Sir Leon Brittan, the EC's chief trade negotiator, and Mickey Kantor, the US Trade Representative, and aimed to put an agreed market access deal to the rest of the world in post-summit Gatt talks in Geneva.

These would then be linked to the shaky Blair House agreement between Washington and Brussels on cutting farm export subsidies - all in time to meet a 15 December deadline set by the US Congress for approving the deal. But France has refused to acknowledge the Blair House agreement as the final word on farm trade.

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