Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.comment From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Leading EC's trade war battalions Date: Wed, 11 Nov 92 14:23:38 EST Message-ID: \SE G;COMMENTARY \SS (WS) \HD Leading EC's trade war battalions \BY B.J. Cutler If the United States and the European Community stumble into a trade war, which would hurt both sides, there'll be enough blame to go around. But the main villains will be two Frenchmen, President Francois Mitterrand and Jacques Delors, EC chief executive. Mr. Mitterrand's unpopular Socialist Party faces an uphill legislative election in March. If it loses, Mr. Mitterrand will have to share power with a conservative prime minister, a thought he loathes. So he is careful to cater to his potent farm lobby. As president of the EC commission, Mr. Delors is supposed to serve the entire 12-nation trade bloc. But he has dreams of succeeding fellow Socialist Mitterrand as France's president, and puts his country's narrow interests above everything else. Mitterrand-Delors political calculations have placed in jeopardy two steps toward world prosperity: a six-year effort by 108 nations to write liberal new rules for international trade, and a five-year drive by Washington to get the EC to open its oil seed market. The oil seed dispute goes back 30 years. In a 1962 deal at the General Agreement on Tariffs and Trade, the United States made concessions in return for the EC's removal of tariffs on oil from American soybeans and sunflower seeds. But the EC's Eurocrats, sometimes referred to as "Eurocheats," began subsidizing their oil seed growers in the 1970s. The subsidies are heavy enough to cost U.S. exporters about $1 billion a year in sales. So Washington did not get the benefits it had "paid for" at GATT in 1962. Two GATT dispute panels upheld U.S. complaints, but the EC has refused either to pay compensation or cut its oil seed subsidies. Washington offered to go to arbitration, which the EC rejected. In an attempt to head off threatened U.S. retaliation, EC farm negotiator Ray McSharry recently met for three days in Chicago with Agriculture Secretary Edward Madigan. They were close to a deal when Mr. McSharry was recalled by his boss, Mr. Delors. In an angry signal that Mr. Delors had sabotaged a settlement, Mr. McSharry resigned. After all that, Carla Hills, the U.S. trade representative, reluctantly fired the first shot. If no agreement is reached by Dec. 5, she said, the United States will impose punitive 200 percent duties on $300 million worth of EC farm exports, mostly French white wines. Mrs. Hills claims, and the record bears out, that Washington had been patient, had tried to work within GATT rules and had tempered the blow at Europe. Under international law, it could have slapped crippling tariffs on $1 billion of EC goods. The danger, of course, is that no compromise will be reached by Dec. 5 and that the EC will retaliate, as it has threatened. In that case, Mrs. Hills has another $700 million tariff blow to deliver, and a nasty trade war will be under way. Even so, the risk had to be taken. It is always hard to get a GATT treaty through Congress, where protectionists lurk. If the EC is allowed to renege on its 1962 commitments, as it hoped to do, nothing that emerges from the current world trade talks will have a chance in Congress. That would be a great pity. The new GATT treaty, which is within reach at Geneva and is stalled mostly by the EC's excessive farm subsidies, would boost world trade by $200 billion a year, or about 7 percent. It clearly would be a crime to lose such a prize, largely because of the machinations of an aged French president and an overly ambitious Eurocrat. B.J. Cutler is foreign affairs columnist for Scripps Howard News Service. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM