WTO Backs EU Plan That Excludes U.S. : Trade: Washington says it will begin refusing new providers access to financial markets.

Member states of the World Trade Organization agreed Friday to a European Union plan to try to shape a global pact freeing trade in financial services that will leave out the United States.

About 80 WTO countries--including major players in the multibillion-dollar financial services sector, seen as vital for world economic growth--backed the EU proposal to extend talks for a month, a spokesman said. The talks were due to end at 3 p.m. Friday.

Ambassadors and other trade diplomats burst into applause when the decision was taken by consensus just one hour before the deadline was to run out.

WTO Director-General Renato Ruggiero, who had warned that collapse of the pact could undermine global recovery, welcomed the decision.

The United States, which on Thursday pulled out of the talks, saying market-opening offers from developing countries were inadequate, did not block approval in the WTO financial services committee and its services council.

Washington, which on Friday submitted its own final offer to the WTO, says that as of today, it will, in effect, bar access to its market in the sector to new providers unless they have negotiated a special deal with the United States.

The EU, angered by the action, argues that offers from developing countries such as India, Malaysia, Pakistan and Brazil provide solid foundations for an accord that could be improved upon in coming years.

The EU plan had been agreed to earlier at an emergency meeting in Geneva by ministers from the 15 EU member countries. An EU official said, “We are not isolating the Americans, they are isolating themselves.”

Ruggiero said he hopes the United States “will soon be back in the system, because we need the U.S. as a strong partner in the multilateral trading system and certainly in a sector such as financial services.”

But there was little sign of that happening in the near future, as the Clinton Administration won bipartisan support in Congress for its tough line.

Prospects for a pact in any form appeared wrecked Thursday after the U.S. withdrawal. U.S. Trade Representative Mickey Kantor said Friday in Denver that the decision was final.

U.S. Treasury negotiator Jeffrey Shafer told reporters after the WTO session that the United States will not change its stance over the coming month, while Kantor aide Jeffrey Lang said Washington still wanted one day to see a pact that it could join.

The EU--whose members have vast interests in banking, insurance and investment services--fought to save a deal based on market-opening offers from developing countries and from other big trading powers such as Canada, Japan and Australia.

“This keeps the show on the road,” EU Trade Commissioner Sir Leon Brittan told reporters.

The EU plan extended the deadline to July 28.