Talks imperiled by EC split on farm subsidies

October 23, 1990|By Steven Greenhouse | Steven Greenhouse,New York Times News Service

PARIS -- A four-year round of negotiations to liberalize world trade is threatened with collapse as a result of the European Community's failure to accept even a modest plan to reduce farm subsidies, officials from the United States and many other nations say.

The officials say the inability of the 12 community nations to agree even among themselves to put forward a modest proposal to cut farm subsidies is making it increasingly difficult to complete global trade talks. The deadline for an agreement is less than seven weeks away.

"Until they can come forward with an offer, there is no basis for negotiations, and time is running out," said Julius Katz, the deputy U.S. trade representative. "I don't know at what point the situation becomes desperate, but we're getting there."

Officials of the United States, Canada, Argentina and many Third World countries contend that the community's large subsidies for farmers have encouraged huge overproduction of agricultural products.

Those nations' officials say European farmers, helped by community export subsidies, dump their excess production on the world market at rock-bottom prices.

U.S. officials say the European practices cost U.S. farmers billions of dollars each year by driving down world farm prices and closing markets for U.S. products.

President Bush has said that the talks, which involve agriculture and 14 other areas, are his highest trade priority. But he and officials from several other nations have threatened not to sign a comprehensive trade pact unless they win substantial cuts in farm subsidies.

The European Community has resisted large-scale cutbacks in agriculture-protection policies. The community's executive commission has proposed reducing subsidies by 30 percent over 10 years, but last Friday the community's divided farm ministers refused to back the commission's plan. The community thus missed the Oct. 15 deadline for making proposals on farm trade.

The current trade talks, known as the Uruguay Round because they began in Punta del Este in 1986, involve 105 nations. The goal is to liberalize $1 trillion in trade not covered by international trade rules.

If the talks succeed, trade in apparel, financial services, telecommunications and pharmaceuticals would for the first time be brought under liberal international trade rules.

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