World trade row fails to explode

BRUSSELS - The prospect of an immediate all-out trade war between the European Community and the United States faded slightly yesterday as a US deadline passed without any audible shot having been fired. But the hope of a speedy conclusion to long-stalled trade talks looks ever more forlorn as the Community sinks deeper into introspection and financial crisis, writes Sarah Lambert.

The US had served notice that unless the EC agreed to independent arbitration of a row over oilseed subsidies, it would slap tariffs on EC exports to the US. The EC maintains the problem can be solved by further negotiation. The US has taken no retaliatory action as yet, though the EC has prepared counter-measures just in case. However, a high-level US team is visit to Brussels next week, raising hopes that there may be a compromise.

But no one is nave enough to pretend that a break-through on oilseeds would unblock the current round of talks in the General Agreement on Tariffs and Trade (Gatt). Attempts to liberalise world trade rules seem to many observers to be truly stalled.

The EC and the US, as the principal trading blocks, are the drama's protaganists. For indebted third World Asian textile producers, the stakes are highest, but they can do little but watch the big boys slug it out.

Agricultural subsidies are still a sticking point. Optimists say resolution of Gatt and the trading opportunities that would create might suit President George Bush, who is trailing in the opinion polls.

Unfortunately, the same political reasons fuel the pessimists' argument. They say that because the US and EC are fighting to regain the confidence of voters at home, they have less political cause and time to devote to opening up trade with their partners abroad.