Europe as Odd Man Out

October 21, 1990

World trade negotiations are nearing the panic stage as the much-vaunted European Community fails again and again to get its act together on agriculture policy. Not only are its 12 member states at odds but its farm ministers, as a group, cannot agree with its trade ministers, as a group. Talks under the General Agreement on Tariffs and Trade (GATT) thus are stymied just seven weeks before what was to be the conclusion of the four-year Uruguay Round of bargaining, the most comprehensive in commercial history.

At the same time the Europeans are in protectionist disarray, the United States is at last making strides in moving toward freer, more logical farm policies. Legislation due final passage this week might be described as an American version of perestroika. By reducing government subsidies and prodding farmers to operate in response to market forces, the measure brings U.S. farm policy closer to the rhetoric of U.S. trade policy.

Under the Reagan and Bush administrations, the United States has pushed for the complete elimination of government farm subsidies by the end of the century, a utopian approach that has been whittled down in recent weeks to a 75 percent reduction. Australia, Argentina and other grain exporting goliaths are Washington's allies in this endeavor, as are many Third World countries seeking markets for tropical products.

But the European Community remains odd-man-out and potential wrecker of the GATT negotiations. Only after super-strenuous efforts were its trade ministers able to accept a mere 30 percent reduction, and its farm ministers balked even at that. With France and Germany in the lead, the high-tariff, high-subsidy members of EC are loath to antagonize powerful farm lobbies.

At such a juncture, it is gratifying that Capitol Hill has crafted a measure that chops federal farm outlays by 25 percent and marks a backing away from half a century of government subsidies and price supports. It shrinks by 15 percent the amount of cropland available for government payments and frees farmers to plant there whatever crops they wish. That is far more than this newspaper expected and makes enactment advisable despite the murky outlook on GATT.

While U.S. attention remains focused on the Persian Gulf and Washington's budget follies, the outcome of GATT negotiations will profoundly affect the post-Cold War world. If global commercial arrangements can be expanded to include agriculture, intellectual property rights and service industries as well as normal merchandise trade, free marketeers estimate it will represent a $300 billion gain for the U.S. economy by the year 2000.

This is not a zero-sum game. America's gain will not mean Europe's loss. Rather, the EC will prosper under a renewed, revitalized GATT. Europeans should get their act together -- quickly.

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