US shies from rescue of financial services pact

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The Independent Online

Economics Editor

As the European Union steps up its attempt to rescue a global trade agreement on financial services, the American government made clear that the European initiative will not bring the US back into the ring.

"We feel the negotiations are over," said Jeffrey Garten, US Under Secretary of Commerce, in London. "The offers were simply not in the ballpark," he continued, saying that "we do not want other countries to use the World Trade Organisation (WTO) as a cover for protectionist policies."

The US made no secret in Geneva last month that offers from some of the bigger developing countries in Asia to open up their markets in financial services fell far short from what it had been expecting.

Sir Leon Brittan, EU trade commissioner, wrote yesterday to the Japanese and Korean governments, urging them to keep their offers on the table, following the pledge on Monday by the six ASEAN countries to maintain their offers.

Sir Leon will meet Renato Ruggiero, the director-general of the WTO, in London on Friday to discuss the attempt to salvage the financial services agreement.

On a trip to Europe to try to mend fences after "a very rough set of negotiations" with Japan in cars and car parts, Mr Garten sought to depict the American eleventh hour climbdown over this dispute in a positive light. Despite the absence of binding government commitments on the part of Japan, the Americans would be watching like hawks to se if the agreement was implemented. There would be "the most far-reaching monitoring effort" ever mounted in a bilateral agreement.

The American trade negotiator made clear that the US had no intention of abandoning the "industry by industry approach" of opening up markets. A new flank was opened last week with Japan when the US took up the cudgels over access to the film market, following a complaint by Eastman Kodak about unfair practices that give Fuji Photo Film over 70 per cent of the market.

While at pains to emphasise the depth of US links with Europe, Mr Garten pointed out that "if you look into the twenty first century, a huge amount of the action will be in big emerging markets." The US would "continue to be very aggressive" in helping US firms to break into these countries. However, it was important to ensure this competition was not destructive with governments competing against each other "at the cost of their Treasuries".

Mr Garten said there was no question of the US relapsing into protectionism and would continue to act unilaterally to open up markets.