The G7 Summit: Gatt dominates the fringe

MUNICH - Officials at the Group of Seven summit in Munich were yesterday striving to break the deadlock in the Uruguay Round of world trade talks and launched an intensive round of diplomacy on the summit's fringe, writes Peter Torday.

The two main protaganists at the heart of the dispute, the United States and the European Community, set a meeting today which could lead to detailed negotiations on the General Agreement on Tariffs and Trade (Gatt) by their experts in the final two days of the summit.

While no one was predicting anything like a final agreement and some officials were privately pessimistic, successful progress could set in train detailed talks which would end late this year. This would be after the French referendum on Maastricht, where farmers might express their opposition to a Gatt deal. It would also avoid upsetting the presidential election in the US, where protectionist measures are mounting.

President George Bush and James Baker, the US Secretary of State, scheduled a meeting with Jacques Delors, the President of the European Commission, and Frans Andriessen, the European Community's chief trade negotiator, to set the political tone of the detailed negotiating sessions.

John Major, the Prime Minister, meanwhile made a determined attempt to win around President Francois Mitterrand - who is seen as the main opponent of a Gatt accord because of his fear of losing the farmers' vote - to achieve a political breakthrough. But officials dismissed reports of a sharp exchange over Gatt between the two leaders.

The Prime Minister has placed a Gatt agreement at the top of his agenda for the British presidency of the EC. After presenting to other leaders at the summit what were thought to be new proposals on the main stumbling-block over Gatt - the level of cuts in farm export subsidies - Mr Major asked President Mitterrand to join him for private talks today.

Don Mazankowski, the Canadian Finance Minister, told reporters: 'My understanding is that Mr Major brought forth a proposal that contained some elements of the solution. My understanding is that it may be considered later on.'

Indications that Gatt stood a chance, however slight, of progress at the Munich summit came yesterday in a meeting between Mr Baker, Douglas Hurd, the Foreign Secretary, and Mr Andriessen. A European official said Mr Baker showed himself 'very committed to a Gatt breakthrough'.

During yesterday's talks it was agreed that the differences over farm trade were sufficiently small and the will for an agreement - with the world economy languishing - sufficiently great that it was worth entering into negotiations of substance during Munich. The EC expert on Gatt was already in Munich, and the US was thought to be ready to fly in its own technical negotiator from Geneva.

In addition to narrowing US and EC differences over the reductions in farm export subsidies, and the extent of income support for farmers, negotiators would look at other unresolved Gatt issues. These include reductions in tariffs on manufactured goods, and liberalising trade in financial and transport services.