GENEVA, Switzerland -- Dealing a significant setback to the new World Trade Organization, an effort to liberalize trade in financial services apparently collapsed last night after the Clinton administration said certain other countries were not offering U.S. financial institutions enough access to their markets.
U.S. officials said they would give a binding commitment to the organization that would allow foreign financial service companies already established in the United States to continue operating there under the same regulatory conditions as their U.S. counterparts.
But they said the United States would not accept a new international agreement under which it would undertake to give all foreign financial service companies full access to its market and treat them as if they were U.S. companies.
The negotiations covered such businesses as banks, insurance companies and investment houses.
In making their announcement, the U.S. officials said foreign financial companies seeking to enter the United States, as well as foreign companies already there but seeking to expand, would be given clearance only if their home countries agreed to offer adequate access to U.S. companies.
"This is not the end of the negotiation because we are ready to work with other countries or groups of countries to improve access," Jeffrey Shafer, the assistant Treasury secretary for international affairs, said at a news conference after the talks.
"We will have the option to treat countries that treat us well better than others."
Many trade officials said the U.S. decision -- which came only one day after the United States and Japan averted at the 11th hour a trade war over Japan's automotive market -- had dealt a significant setback to the new trading system that was set up earlier this year to replace the General Agreement on Tariffs and Trade.
In particular, they said, it called into question the trade organization's hopes of brokering new trade agreements this year and next in such other service fields as telecommunications and maritime shipping.
Negotiators had agreed to try to liberalize financial services with a global agreement, not through the bilateral deals that the United States is now offering.
Renato Ruggiero, the trade organization's director general, said in a statement that he was "bitterly disappointed" by the U.S. decision.
The Clinton administration had set a deadline of midnight tonight for reaching an agreement, and U.S. officials held out no hope that an accord could be reached during the final day.
"After nine years of negotiation, I do not believe the next 24 hours will bring significant concessions," said Jeffrey Lange, the assistant special trade representative.