American trade negotiator Robert S. Strauss has run into stiff Japanese resistance to lowering tariff and trade barriers, apparently ending any hope of a trade agreement in time for this weekend's seven-nation summit meeting.
What impact the lack of agreement will have on the summit remains to be seen, but it could strain the credibility of a pledge expected from Japanese Prime Minister Fukuda to cut his export surplus.
Deputy Special Trade Representative Alan Wolff said in a telephone interview from Geneva that there were no plans to continue the trade dialog with the Japanese during the economic summit, although Strauss and his Japanese opposite number, Nobuhiko Ushiba, will be here.
In the good news category, however, Wolff revealed that a draft of a code limiting subsidy help to exports had been approved. This, he said, "is a great step forward."
Another critical issue, involving limitation on the use of so-called "selective safeguards", also appeared unresolved. These "safeguards" are now allowed under the rules of the GATT (General agreement on tariffs and trade) so a country can protect itself against sudden surges of imports.
But the British and French want to be able to invoke such "safeguards' unilaterally, to counter a quick influx of goods . The United States and West Germany are insisting on some form of international surveillance.
The combined Japanese, British, and French resistance to more open trade is what now casts a pall over the negotiations in Geneva. Strauss had said last week that there was little chance that a full agreement could be reached on key issues in time for the Bonn summit.
U.S. and German negotiators were nevertheless still hoping to pull off a miracle but the once found hopes that the key elements of a sweeping multilateral trade negotiations agreement could be initialled at Bonn now seem definitely out of the question. The Japanese attitude was said to be "very disappointing."
U.S. officials have been anxious to arrive at a successful MTN, both to gain more access to other markets, and as part of the bargaining process at the economic summit here. The Geneva talks are generally referred to as the Tokyo round.
More access to markets would help ease the U.S. trade deficit. The MTN is also a key German objective, one of the "contributions" it seeks from others as the price of boosting its own economic performance.
U.S. officials stressed, however, that the failure to get a completed MTN agreement now is not the end of the line. "We've come a substantial way," Wolff said, noting that negotiations would continue this fall with both the developed and developing counties.
There remains a good deal of work to be done on the subsidy code, a U.S. intiative to stop excessive aid by other foreign governments to their own producers. The code as now drafted will flatly prohibit cash grants, or export credits that go beyond a certain standard.
The code would also specify certain kinds of subsidy help that should be discouraged, and ways and means by which governments could "counter-vail" against subsidies that remain.
Progress has also been made on certain other non-tariff barriers, including government-mandated product standards and procurement requirements that serve as effective barriers to imports.
Sources said that a new customs valuations system is being worked out which will require the conversion of the favorite U.S. anti-free trade gimmick, the American selling price system for chemicals. But the protective nature of the asp system would remain, unless it is eventually bargained away for some concession that Strauss and his aides want.