No deal in sight as Gatt talks end

TALKS between the United States and the European Community aimed at saving the General Agreement on Tariffs and Trade (Gatt) round of trade negotiations ended without agreement last night, raising the possibility of a complete collapse in the discussions.

Spokesmen said that the talks between Carla Hills, the US Trade Representative, and Frans Andriessen, the member of the European Commission responsible for foreign affairs, had made 'good progress'. But they were overshadowed by the hostility of the French government, which is unwilling to offer further concessions on subsidies to the farm sector. Without a compromise between the EC and the US on agriculture, a wider agreement on a host of trade issues between 108 countries will fail.

Roland Dumas, the French Foreign Minister, and Jean-Pierre Soisson, the new Agriculture Minister, both indicated over the weekend that France was unwilling to see cuts in either the volume of Europe's subsidised exports or the direct payments made to French farmers.

Dominique Strauss-Kahn, the French Trade Minister, said yesterday before the talks broke up that France's partners would not abandon it over the issue - a clear sign that France was confident it would be allowed to veto any compromise with which it did not agree.

The US was demanding a 24 per cent cut in the quantity of the EC's subsidised agricultural exports and an undertaking from Brussels that direct payments from farmers should be gradually scaled back, starting six years from now.

Most of the Community's members had been willing to compromise with the export subsidies, perhaps on an 18 per cent cut, but the French government insisted that set-aside payments to European farmers, which were agreed only earlier this year as part of a wider reform of the EC's Common Agricultural Policy, must remain in perpetuity.

Mrs Hills and Mr Andriessen are expected to meet this weekend in Toronto at a quadrilateral meeting at which the EC, US and Japan will be represented. There are no plans for further meetings between Ray MacSharry, the EC's Agriculture Commissioner, and Ed Madigan, the US Agriculture Secretary, who were in Brussels last night discussing the finer points of farm trade.

The aim of the negotiations is to cut tariffs, trade barriers and subsidies everywhere, and thus to inject what economists believe could be dollars 200bn (pounds 114bn) a year into the recession-hit world economy.