Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: \TITLE Date: Mon, 23 Nov 92 12:15:13 EST Message-ID: <10.1992Nov23.121514@AmeriCast.com> 11/23/92 TITLE #m#tlj#m#U.S., EC Avoid A Trade War Over Subsidies Farm Pact May Set Stage For Broader Global Trade Accord Chuck Freadhoff The U.S. and the European Community settled their long- running dispute over farm subsidies Friday, averting a trade war that could have scuttled global trade talks. The breakthrough followed two days of intense negotiations in Washington between high-level U.S. and European negotiators. The agreement resolves a five-year long fight centered on U.S. access to the European oilseed market. The negotiators were working under a Dec. 5 deadline. The U.S. had announced that on that day it would slap 200% tariffs on $300 million in European goods, mostly French white wines, as retaliation for what it considered unfair trade practices. The European negotiating team, led by EC Agriculture Commissioner Ray MacSharry and the EC's chief trade official, Frans Andriessen, left Washington Thursday night saying they did not have an agreement but had made progress. Friday, after the two negotiators presented the outlines of the pact to other EC members and won approval, an agreement was announced simultaneously in Washington and in Brussels. "I am hopeful that the breakthrough that we achieved today will spur movement across the board," President Bush said. "The real victory . . . is for international trade," MacSharry said in Brussels. The oilseeds dispute was not part of the Uruguay Round, as the global trade talks are known. However, the U.S. and Europe had been at logger- heads over agriculture issues in the round of talks held under the auspices of the Geneva-based General Agreement on Tariffs and Trade, the 108-nation organization that governs world trade. There are still several tough issues facing both sides in the on-going GATT trade talks. Despite the large number of countries in the GATT, the pattern of negotiations is set by the dominant nations, such as the 12-nation EC and the U.S. If these two trade giants had begun a trade war over oilseeds, it would have doomed the global talks and could have undermined the GATT's ability to police world trade. "If it holds, it'll be a big boost for the GATT negotiations. That (agreement) really clears the way going into the final stages of the Uruguay Round," said Jeffrey Schott, a senior fellow at the U.S., EC Avoid A Trade War Over Subsidies Institute for International Economics in Washington. A com- munique, issued after the oilseed deal was announced, noted that the two sides had found mutual ground on the problem of tariffs, or "market access." The question of tariffs is important to developing countries in the GATT that want to sell more in the U.S. and European markets. Friday's agreement clears the way for both sides to focus again on the global talks, which have been under way since 1986. The GATT talks were supposed to conclude in 1990, but were almost killed by the failure of Europe and the U.S. to agree on farm trade. In addition to tariffs, negotiators still have to reach agreements on trade in services and intellec- tual property rights. Even with the breakthrough Friday, howev- er, the fight over agriculture isn't over. Both sides may have trouble selling the deal to farmers at home. In Fargo, N.D., Larry Kleingartner, executive director of the National Sunflower Association, which represents 15,000 sunflower growers, said his organization was disappointed by the agreeement. The U.S. has been seeking a cutback in oilseed production in Eu- rope. Oilseeds - such as soy beans, rapeseeds, sunflowers seeds and peanuts - are used mainly to feed livestock. The U.S. claimed it was losing $1 billion a year in exports because of illegal EC subsidies. While all the details of the pact had not been made public by Friday afternoon, Kleingartner said he had learned that the U.S. had agreed to a European proposal to reduce the number of acres planted in oilseeds in Europe. American producers wanted a reduction in the number of tons pro- duced. They fear that the Europeans can use improved fertilizers to increase their output on the remaining land. "The Europeans have dragged their feet on this for so long, and now we feel they're getting the better deal," Kleingartner said. However, his organization won't decide whether to oppose the deal until it sees all the details, he said. In France, the deal will undoubt- edly anger farmers, who oppose any cut in subsidies. On Thursday, French farmers demonstrated in Paris, trashing a McDonald's res- taurant and burning the American flag. Also Friday, French Agri- culture Minister Jean-Pierre Soisson said the French government rejects the accord. "The agreement is not acceptable," said Soisson during an inter- view with French national radio. He added the French government would adopt an official position to the agreement after a debate in Parliament, scheduled for this week. Others in the U.S. who have a major stake in the GATT talks were much more pleased with Friday's announcement, however. "I'm absolutely overjoyed," said Robert McNeill, executive direc- tor of the Emergency Committee for American Trade, a group of 61 large multinational corporations. With the oilseeds dispute set- tled, negotiators now hope they can begin a final push in order to finish the GATT talks in the next three months, analysts said. "I would assume that we'll have substantial progress before the new president takes office" in the U.S., McNeill said. That would be a major boon to President-elect Clinton, who now has the prospect of taking office with a major world trade agreement all but wrapped up. It's unclear, however, that the negotiators can finish a deal before March 1. "I don't think one can do the job right before March 1," Schott said. If a deal can't be complet- ed, Clinton may have to seek a limited extension of the fast- track negotiating authority to conclude an agreement, he said. Even if the French can be persuaded to endorse the agreement, the fight over agriculture within the GATT isn't over, warned Dale Hathaway, director of the National Center for Food and Agricul- tural Policy in Washington. It may be difficult to convince Japan and Korea, who heavily subsidize their farmers, to endorse a GATT agreement if it means changing their own agricultural pol- icies. Japan and the U.S. have been fighting bitterly over Japan's closed rice market for years. Still, the U.S. has won an important victory in its fight with the Europeans, Hathaway and others said. While the U.S. may not have gotten all it wanted, the agreement sets a precedent for lower agricultural subsidies. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM