The Reagan administration's insistence that the booming trade in services worldwide be be tackled next year by the General Agreement on Tariffs and Trade (GATT) blocked discussion in the GATT annual meeting today for the third straight day.
The United States said it could not agree to the organization's 1985 budget until agreement is reached on the work program -- which centers on the services issue.
Deputy U.S. Trade Representative Michael B. Smith, head of the U.S. delegation, denied that Washington was holding out on the financial side as a bargaining tool to get the services question accepted.
Trade officials in Washington said the U.S. position is that no discussion on the budget can be held until GATT decides what it will do next year. The budget contains real increases in funds, which presumes increased spending because of new programs, and the United States wants to know what those programs will be, a Washington official said.
Negotiations on the work program bogged down almost immediately because the United States insisted that trade in services be included in future work. Many developing countries are upset that the Reagan administration is pressing for new programs when work on issues raised in the 1982 GATT ministerial meeting remains unfinished.
"Trade in services is around $500 billion a year, which is a sizable chunk of world trade, and we think that GATT ought to be concerning itself with this problem," Smith told a press conference here. He added, "We cannot say that all past issues must be dealt with before we move on to new ones."
One unresolved past issue is the question of subsidies to farmers granted by the European community. The current meeting has before it a proposal that would phase out subsidies over a period of years "subject to certain exceptions" -- a compromise between the European position that subsidies are necessary and the U.S. position that they should be eliminated.
The deadlock on the work program effectively blocked serious discussion of another major issue on the agenda, the calling of a new global round of trade talks starting in late 1985 or early 1986. Japan and the United States have been the major proponents of such a round, which gained support at the current meeting from Paul Luyten, deputy commissioner of external affairs of the European Community. Luyten called for a meeting of senior officials next year to begin planning the new round.
Smith said he "found merit" in this idea and that Washington hoped such a meeting could be convened next summer.
At one point, according to GATT sources, Director General Arthur Dunkel became so frustrated by the impasse that he suggested the whole meeting be recessed while delegates went home to get new instructions from their governments.
Smith, who said that "win or lose," he was leaving for Washington Friday morning, said he was hopeful some compromise could be reached Thursday. He made it clear, however, that Washington is linking approval of the 1985 GATT budget of $22.6 million to the successful conclusion of discussions on the work program.