US Willing to Risk Harmony At Economic Meeting for GATT Progress in Geneva


WHEN the leaders of the industrialized world meet next month in Houston for their annual economic summit, they won't just eat chili dogs and watch rodeos. Instead, President Bush will be trying hard to corral the six other leaders into making some progress on stalled multi-national trade talks.

According to United States officials involved in planning for the July 9-11 Houston meeting, Mr. Bush is willing to risk a public disagreement in order to make progress in Geneva on trade talks being held under the auspices of the General Agreement on Tariffs and Trade (GATT).

Bush will press the European leaders to give their negotiators in Geneva enough leeway to get the talks moving. The negotiations are at an impasse over agricultural issues. The US wants the 96 members of GATT to agree to phase out agricultural subsidies by the year 2000. The Europeans oppose the US.

``There is a certain nervousness about a potential row at the summit,'' says Richard McCormack, undersecretary of state for economic affairs. However, Mr. McCormack, the US planner for the summit, says, ``The fact of the matter is we have some very complex issues which cannot be resolved without the intervention of political leaders at the highest level.''

Robert Hormats, who worked on eight of the past economic summits, says the leaders will have to come up with some ideas for breaking the logjam. ``If they can't do that, they won't have achieved much,'' says Mr. Hormats, the vice chairman of Goldman Sachs International, an investment banking firm.

Although there have been disagreements at past economic summits, the world leaders have always agreed to disagree and parted on amiable terms. This time, however, the Bush administration is feeling pressured to get some results.

The GATT talks are scheduled to end in December. If the talks are not concluded by then, the Bush administration runs out of ``fast track'' authority, which limits congressional debate on the pact. ``That means one or two senators can delay things interminably,'' McCormack says. Sen. Ernest Hollings (D) of South Carolina has already said he would filibuster the GATT bill if the administration vetoes a recently introduced textile bill.

Although the GATT negotiations are likely to be the most contentious issue, the leaders from the US, West Germany, France, Britain, Italy, Canada, and Japan also may disagree over environmental matters.

The West Germans, for example, want to speed up the shift away from hydrocarbons, which may contribute to global warming. They are likely to press the US to adopt higher fuel-mileage standards. The Bush administration maintains it is still too early to act precipitously. It is spending $1 billion on a Department of Energy study on global warming. This study will be released next November.

``If we mandate higher fuel efficiency, we will shut down the current auto industry in Detroit and force it to retool quickly. That is a decision that requires very sober calculation,'' McCormack says.

The leaders also plan to discuss the Soviet Union's deteriorating economy. Most of the world leaders have had meetings with Soviet President Mikhail Gorbachev recently. Some European countries would like to provide direct aid to the Soviets. The issue is now under discussion within the administration.

``This will be a complete nonstarter with the US,'' predicts Kim Holmes, director of foreign policy and defense studies at the Heritage Foundation, a conservative Washington think tank. When House Majority Leader Richard Gephardt (D) of Missouri made a similar proposal a few weeks ago, it received little White House support.

As in other summits, third-world debt will be on the agenda. There is likely to be a discussion about ways to reduce debt owed directly to the industrialized countries. At past summits, French President Fran,cois Mitterrand has introduced his own debt reduction plans, which go further than the plan authored by US Treasury Secretary Nicholas Brady. Mr. Mitterrand has yet to indicate if he will introduce any new ideas on debt at this summit.

At other summits the leaders have also tackled ways to stem the flow of narcotics. The issue is on the agenda again this year.

During the summit, many of the leaders will hold bilateral meetings. One White House official says it is possible the Japanese will produce a final version of the Structural Impediments Initiative (SII), a joint effort to improve the US and Japanese economies. An interim version was agreed to in the beginning of April. On June 25, the US will send a team to Japan to begin final negotiations.

Before the Houston summit begins, the seven leaders will get a chance to experience Texas hospitality. There will be a dinner - most likely a barbecue - and a rodeo on July 8. However, McCormack says it is unlikely Bush will have time to pitch horseshoes or go riding. ``Everyone wants to work at the summit. There are some major issues and little time to discuss them,'' McCormack says.

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