Farm policy is main block in West's trade talks

The conclusion of trade talks among representatives of the United States, the European Community, Japan, and Canada this weekend has set the stage for contentious discussions in the weeks and months ahead. The trade officials -- representing countries that acccount for nearly half of all world trade -- met in an effort to forge a common negotiating strategy in advance of next Monday's round of global trade-liberalization talks by the 92-nation GATT (General Agreement on Tariffs and Trade).

US Trade Representative Clayton Yeutter emerged from the talks, held in this sunny mountain resort town west of Lisbon, to announce confidently that the participants had agreed ``on almost everything.''

For his part, the chief delegate of the European Community (EC), External Relations Commissioner Willy de Clercq, proclaimed that the weekend meeting had revealed a ``very large consensus'' and had helped the ministers understand ``the reasons behind our respective positions.''

Beneath the rosy rhetoric, however, the Sintra discussions demonstrated that progress at next week's GATT talks, in Punta del Este, Uruguay, will be slow and difficult as governments struggle to resist growing protectionist pressures back home. Initially set up in 1947 to provide a temporary framework for tariff negotiations, GATT's purpose is to promote the expansion of international trade along agreed-upon lines of reciprocal rights and obligations.

The ministers did manage to reach broad agreement on the issues they think should be discussed during the new GATT round -- namely those of free trade in agriculture and services.

But substantial differences remain on precisely how the liberalization of trade in certain key sectors should proceed -- and to what extent.

The main stumbling block continues to be agriculture.

Highly sophisticated farming methods in many industralized countries have massive unsold food surpluses.

Yet for decades, the EC has subsidized farm exports to help boost sales. Although it is not illegal under GATT rules to do so, other farming nations -- including the US -- have argued that the practice is unfair and discourages free-market trade patterns.

Now the US has launched its own subsidies program, and other countries whose economies depend heavily on agriculture -- such as Canada, Australia, and Argentina -- complain bitterly that the ``subsidy war'' between the US and the EC will cripple their economies.

``We're caught in the crossfire,'' Patricia Carney, Canada's minister for international trade, said here this weekend.

After two days of talks, the ministers here were no closer to agreement on how to handle agriculture in the new GATT rounds than they were when they arrived.

The EC continues to insist that export subsidies ``will not be negotiated away'' in the new GATT round, according to one official, while the other countries have put ending subsidies at the top of their negotiating agenda.

This agreement during the GATT talks in Uruguay, and beyond, will not be limited to the industrialized world, officials here were quick to point out.

A wide gap has also opened up between GATT and many developing countries.

The attempt by industrialized nations to include new subjects that have never been regulated in international trade is likely to detract from issues that the third world sees as more important, the developing nations say. These include services such as banking and insurance.

The US has made liberalizing trade in services its main goal for the new round.

The EC also supports the inclusion of such new subjects in the GATT discussions, but insists that certain concessions must be made to the developing countries.

Although unable to settle internal disputes by the time the talks ended Saturday, the ministers here were successful in agreeing on a couple of foreign policy questions:

To oppose a request by the Soviet Union to participate in the new rounds as an observer.

To reject an attempt by some developing countries to ban South Africa (a GATT member for many years) from taking part, as part of a package of sanctions against Pretoria.