Europe, US Vie On Farm Trade

Standoff threatens world trade agreement

UNITED States and European trade negotiators are exchanging visits this week in an attempt to salvage the endangered eighth round of discussions on regulating world commerce. The so-called Uruguay Round of discussions under the Geneva-based General Agreement on Tariffs and Trade (GATT) has reached an impasse over agricultural supports that could doom the entire agreement, which is designed to cover 15 sectors of international trade, from farm produce to financial services.

Trade specialists say a failure to reach agreement by a December deadline could cause a breakdown of the GATT structure and split the world into protectionist trading blocs.

European Community Commission President Jacques Delors and other high-ranking EC officials are meeting with President George Bush and several members of his Cabinet this week to try to resolve their sharp differences on the farm issue.

An exasperated senior EC official visiting Washington says Europe's right to maintain its farmers and the important rural-urban balance must be respected by US officials who currently are attempting to interfere with domestic policies in Europe.

US demands for a 90 percent cut in EC export subsidies and a 75 percent reduction in other farm assistance are shortchanged by the EC, whose current offer of a 30 percent overall reduction is unacceptable, say US officials.

US negotiators are joined by the 14 other farm-produce exporting nations, known as the Cairns Group, that oppose the EC stance on farm supports.

Even odds for success

Senate Finance Committee Chairman Lloyd Bentsen (D) of Texas, who returned from a European trip earlier this week, estimates that there is a 50 percent chance of a trade agreement by December. ``What I was doing in Europe ... was making the point that unless we get real access to those [agricultural markets] ... it can't pass the Senate,'' Senator Bentsen said.

US farmers have more affinity for local German and French farmers than they do for Washington's efforts to curb agricultural supports, either abroad or at home in the US, says Mark Ritchie, an agricultural economist on leave from the Minnesota Department of Agriculture.

Some 60 percent of the $40 billion EC budget goes to support farmers, in addition to what the individual governments do for their farmers. Even with all the support, says Ritchie, the US pays more per farmer in subsidies than the EC does.

He joins the broad US farm opposition to a US plan for lowering commodity costs and increasing market access. ``That only benefits agribusiness and multinational trading companies, not the farmers.'' This is a tough time for US farm subsidy cuts, he says, when fuel and transport prices are soaring, and taxes increasing. EC official discouraged

``I am very discouraged when I hear the ... declarations of Carla Hills and Clayton Yeutter,'' the visiting EC official said. US Trade Representative Hills and Agriculture Secretary Yeutter have blasted Europeans in recent weeks for insufficient farm concessions. The two have been on a difficult mission this week, visiting European capitals in search of greater flexibility from European farmers.

German and French leaders are particularly wary of political backlash from farmers unwilling to be sacrificial lambs for a general trade agreement whose benefits will affect them only marginally.

The EC official called for a ``change in attitude'' among American officials who ``unilaterally criticize the Community for its farm policies.'' Until this changes, he said, no fruitful discussions can take place, on agricultural or on any other GATT issue. ``And there are 14 others to discuss,'' he hastens to add.

Trade specialist Alan Oxley echoes the negotiators' line: If GATT collapses, observance of regulations on international trade will disintegrate into groups of protectionist blocs. ``There is no going back to the status quo of at least observing what's in place. It will degenerate.''

The EC could emerge as the world's largest trading bloc - and is potentially the most destructive, Mr. Oxley says. ``GATT is the first acid test of the European Community.'' If the EC rejects the pressing international demands for opening its markets, it sets an example of protectionism and anti-competitiveness throughout the world of trade, he says.