Argentina and Brazil, in a move that threatened a collapse of the General Agreement on Tariffs and Trade, warned Thursday they would block key trade talks if the United States and the European Community fail to resolve their rift on agricultural subsidies.
The stand by the two leading Latin American powers was reported to have substantial support among GATT members from the developing nations.John Ellis, a spokesman for the Australian delegation, told United Press International in an interview that the two countries made their warning shortly after midnight in meetings between the so-called Cairns Group of farm exporting nations, the United States and the European Community.
Ellis said blockage by any one country of agreements reached in other areas of the Montreal meeting, such as trade in services and ways to strengthen the GATT, "would lead to a collapse of the Uruguay Round and the GATT."
Australia's top trade negotiator, Michael Duffy, who heads the Cairns Group, spent more than four hours early Thursday unsuccessfully mediating between the U.S. and EEC positions.
The United States has demanded the EEC agree to eliminate all trade-distorting agricultural subsidies within a specific time. The Europeans favor an immediate freeze and gradual reduction of support programs, but oppose their elimination.
The impasse has created a crisis situation in the mid-term review of the so-called Uruguay Round of GATT negotiations.
The United States and the European Community were scheduled to meet again Thursday.
Ellis said the Cairns Group, which has supported the U.S. position on eliminating subsidies, would decide what further action to take after that meeting.
"Brazil and Argentina have asked that, if there is no movement on agriculture, we block any movement in other areas," Ellis said.
He said Australia would not likely support that measure, but there is support for it among many of the developing nations that are members of GATT.
Under the rules of GATT, there must be a consensus among all 96 signing members for agreements to be implemented.
Negotiations on 15 trade-related areas by a 23-country committee of finance ministers were to end Thursday, but GATT spokesman David Woods said meetings could be extended to Friday because of the deadlock on agriculture.
The negotiating committee, which includes senior officials from the United States and European Community, worked through most of the night to settle the farm-trade issue and resumed negotiations at 7 a.m. after breaking off briefly.