A high official of the General Agreement on Tariffs and Trade -- the organization that supervises the world's international trading system -- warned today that negotiations scheduled for later this month in Geneva may not succeed.
Jan Tumlir, director of research for GATT, said the trade negotiations' failure not only could lead to destructive protectionist policies, but also could reduce "GATT itself to a hollow shell."
Tumlir said that the very decision to hold the first ministerial-level session in nine years "is an expression of fear" over the deterioration of world trade in recent years.
The GATT session has been called in an effort to refine and liberalize international trading rules in this decade, and also to begin applying to the export and import of services the same regulations that govern merchandise trade.
But Tumlir reinforced warnings now circulating in Europe that American expectations for results at Geneva may have been set too high. In a discussion at the closing session of a two-day conference here on international debt and related problems, Tumlir said that the negotiations leading up to the GATT meeting have proved more difficult than expected.
"Most of the discussions are on highly technical issues," Tumlir said. "And most of those who conduct the negotiations do not seem to be sufficiently understanding of the implications of the highly technical material.
"They give the impression of children so immersed in their play that they forget to look over the rim of their sandboxes."
He was bitterly critical of the recent trend to bilateral agreements -- including the recent understanding on steel between the United States and Europe -- that skirt international rules and that have become commonplace in the last few years. Tumlir estimated that between 40 percent and 48 percent of world trade is now covered by quotas and other nontariff restrictions.
He said failure during the GATT meeting to liberalize trade will exacerbate the existing financial and debt crisis. The inability of the Third World countries to gain increased access to the industrialized nations' markets will further reduce their ability to pay off old debt, Tumlir warned.
He said bluntly that "a considerable portion" of the existing $500 billion Third World debt "is unsalvageable, and whether the loss can be absorbed depends on trade policy." If a failure of the GATT conference leads to greater trade restrictions, then all of the "reschedulings" of debt now planned will be useless, he indicated.
"If GATT doesn't succeed, I'm afraid of a really big world crisis in a short time," Tumlir added.
The link between trade and financial problems was a recurrent theme of the conference here, sponsored by the Global Interdependence Center and the Group of Thirty. A related theme, expressed by World Bank economist Chandra Hardy, is that the private banking system has "swung 180 degrees from unrestricted optimism to unrestricted pessimism."
International Monetary Fund Managing Director Jacques de Larosiere, emphasizing the same thought, said in a windup address to the conference that "an abrupt curtailment of bank lending would not only run counter to the interests of the debtor countries, but . . . contrary to the interests of the banks themselves."
He hinted that the IMF, to help avoid a burgeoning debt crisis, is exploring "new avenues for collaboration between the fund and the banks." Banking experts here urged in over the past two days that the IMF consider a form of "cofinancing" comparable with that being explored by the World Bank.