World trade agreement eludes U.S., European leaders

April 23, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- President Bush and European leaders failed yesterday to break the deadlock blocking a new worldwide agreement on trade.

Both sides put undisclosed new ideas on the table, but they remained at odds over the high subsidies that enable European farmers to undercut U.S. prices on the international market.

Portuguese Prime Minister Anibal Cavaco Silva said the Europeans sought a "political impulse" from President Bush to ,, overcome an "impasse." Mr. Bush simply promised to keep negotiating.

The disagreement is stalling progress on other trade issues under the 5-year-old Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which had an informal deadline of mid-April and is aimed at liberalizing trade worldwide.

Jacques Delors, president of the European Commission, the administrative arm of the 12-nation European Community, said after yesterday's White House talks, "We went to Washington with the idea to propose a political opening to the United States. I await patiently the answer of the Americans."

Earlier, Mr. Delors said the Europeans were ready to make a "modest" compromise offer. After the talks with Mr. Bush and U.S. trade officials, he said, "We are together at the modest level."

Mr. Delors said a deadline should be set for the end of June so that the disagreement will not sour the July summit in Munich, Germany, of the leaders of the seven most powerful industrial democracies. Known as the Group of Seven, they are the United States, Canada, Japan, Germany, France, Italy and the United Kingdom.

Mr. Delors pointed out that although only seven national leaders will attend the summit, the trade negotiations involve 108 nations.

"If we want to keep, or regain, the momentum, we must fix a deadline," he said.

Thomas Niles, assistant secretary of state for European and Canadian affairs, said at a briefing after the talks, "There is no deadline. There is a desire on the part of all contracting parties to wrap up these negotiations as quickly as possible."

If the deadlock is not broken, he said, it will be on the Group of Seven's agenda in Munich.

Mr. Niles said the U.S. negotiators had not embraced any of the new European proposals, but "neither did they embrace any of our ideas."

"The differences are there, . . . but we are going to continue to work on it," he said.

Bush administration officials had warned against expecting a breakthrough, saying a central problem was that the Europeans are trying to reform their common agricultural policy while trying to reach international agreement under GATT.

Mr. Cavaco Silva said the Europeans were united on the agricultural issue. "We keep close together," he said. "I think on -- the main issue, the community is not divided."

European expectations of a breakthrough at yesterday's meeting were reined in by concern that the U.S. presidential election, with its emphasis on job creation and its pressure for protectionism, would dampen administration enthusiasm for any trade concessions.

Mr. Bush denied that the election year was a factor in the administration's posture and said he remained committed to achieving a global trade agreement that would spur economic growth in the United States and abroad.

Neither side gave details of the new ideas, but the three main areas of disagreement are:

* Reduction of internal farm subsidies. The GATT secretariat has called for reductions of 20 percent. The EC wants its set-aside program, which is used to pay farmers for idling land to reduce surplus production of food, to be excluded. The United States wants to limit any exclusions.

* Reduction of export subsidies. The GATT secretariat has proposed reducing them by 36 percent in budgetary terms and 24 percent in volume. The Europeans accept the cash reduction but reject the volume cut. The Bush administration favors both.

* The cereal market. The GATT proposes tariff-free import of cereal substitutes, such as corn gluten feed and citrus pellets, which are produced widely in the United States. The Europeans fear that those could be used to compensate for any cuts they make in natural cereal production. They want new protection.

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