Euro-squabble holds back Gatt accord

THE GATT world trade accord, hailed last year as the most important deal of its kind in history, is being held up by an internal European row. EU officials fear the pact may not be ratified by the end of the year as planned.

The problem is that a classic power-struggle has broken out between EU member states and the European Commission. The argument is more than just legal nit- picking, officials in Brussels say. It strikes to the heart of how Europe represents itself internationally. The EU risks looking 'very stupid' if it cannot agree, said an official yesterday.

When the 12 member states agreed on the Gatt last December after protracted and bloody negotiations, they failed to agree on what the legal basis for the treaty would be. That will decide how the EU and its member states are represented in the new World Trade Organisation, the body that will succeed the General Agreement on Tariffs and Trade. The Commission says that it should carry on representing member states for all issues as it does at the moment on trade matters, with EU countries accepting or rejecting the outcome.

But some member states say that because some of the issues in the latest agreement are new, and outside the traditional EU's competences, they should be able to represent themselves. These issues include financial services and intellectual property, where member states like Britain and France want to deal directly with other countries. The Commission believes this would fragment the EU's trade policy, and would be the beginning of a break-up of the EU's integrated approach to external affairs. It wants the right to represent all states on all issues.

The tussle, apart from showing again the uncertainties that lie in the EU's legislation, is also part of the continuing struggle for power between the member states and the Commission. The EU's bureaucracy is concerned that member states like Britain want to use the Maastricht treaty to pick apart some of its powers in foreign affairs. Britain and some other states fear the Commission will use it to muscle in on new policy areas.

Representatives of member states failed to agree on a code of conduct, an informal plan that would settle the issue, when they met last week in Brussels in the EU's trade committee. Germany, which currently chairs the EU, said that it would try to produce a compromise this month. But Belgium, one of the most pro-integrationist states, said it was unhappy that a code of conduct would not clarify the important legal issues involved.

The Commission took the case to the European Court of Justice in February, seeking a solution, though the Court is unlikely to rule until December. But if a series of meetings next month - brokered by Germany - is unable to agree, the EU will have to await the Court's judgement, making ratification by January impossible. The European Parliament must also have its say, and most member states will have to ratify the treaty separately.

The Gatt agreement took eight years to negotiate, and it is proving troublesome to ratify in both Europe and the US. But other signatories are awaiting developments in the Gatt's two most important trade capitals, Washington and Brussels. If the deal does not go ahead quickly, it could provide ammunition for the Gatt critics who want to spike it.