Early Gatt setback deepens Tokyo gloom

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A WAVE of gloom broke over world trade talks yesterday and threatened to beach today's World Economic Summit before it had begun.

Trade ministers from the United States, Japan, the European Community and Canada failed to agree on a market access accord, essential for rescuing the deadlocked Uruguay Round of the General Agreement on Tariffs and Trade talks.

Negotiations at ministerial level resume today and leaders of the G7 leading industrial countries still hope to offer a qualified endorsement of a deal by the end of the three-days. But yesterday's deadlock lent weight to critics who have already branded the Tokyo Summit a failure. Expectations have been deflated by the dismal political standing of the G7 leaders.

Obstacles include high US tariffs on textiles, glassware and ceramics, to which Europe objects, and a broad array of low EC tariffs which the US wants to be cut to zero.

An outline market access deal would lower or eliminate tariffs and non-tariff barriers for goods and services between G7 markets. Even if there is an agreement, France has warned it could hold up the deal in the EC Council.

In addition, agreement would still need to be sought from the other 111 Gatt member states before a December deadline set by the US Congress. France also refuses to endorse a provisional US-EC accord on reducing farm export subsidies - another major element of an overall world trade deal.

John Major yesterday emphasised the importance of a Gatt deal to the revival of global growth and for tackling the unemployment crisis. 'I'm continuing to badger and bully; a settlement is no less vital than it was a couple of years ago.'

The trade outlook darkened further last night after the US and the EC admitted they had failed to persuade Japan to arrest the increasing number of disputes sparked by its mushrooming trade surplus.

Kiichi Miyazawa, Japan's outgoing Prime Minister, bluntly rejected US pressure to set numerical targets for US imports into specific Japanese markets. But President Bill Clinton politely refused to moderate his position.

Top Community officials meanwhile described the state of EC-Japan trade relations as grave, although they stopped short of supporting US pressure for managed trade deals with Tokyo. However, yesterday's stalemate may ultimately raise the risk of a bushfire of tit-for-tat protectionism. More immediately, it could help to sink G7 efforts to make any genuine headway on global economic co-operation at this year's summit.

The US President also took the potentially controversial step of urging the Japanese - who face an election this month - to vote for change. 'This is a period of change and ferment in Japan,' as it was in the United States. 'There is a global crisis of slow growth in the wealthiest countries, there is a global crisis of job growth in the wealthiest countries,' he said.

Pulling in all directions, page 10

Leading article, page 19