EC farm agreement clears way for world trade talks Accord slashes subsidies, lowers production limits

May 22, 1992|By Alan Riding | Alan Riding,New York Times News Service

PARIS -- After 18 months of intense, often bitter negotiations, the European Community cleared the way yesterday for early resumption of stalled global trade talks by reaching broad agreement on a new European farm policy.

The crucial trade-liberalization talks have been stalled for two years by disagreements between the United States and the European Community on the broad question of farming subsidies, with Washington repeatedly rebuffed in its demand that the 12 community nations reduce their agricultural protectionism.

The agreement thrashed out in Brussels, Belgium, yesterday involves sharp cuts in agricultural subsidies and lower production ceilings, moves that seem certain to be strongly opposed by most of the region's 10 million farmers. French farmers said they would protest the deal.

It was significant that after much hesitation, the new policy was accepted by Germany and France, the countries that spawned the common agricultural policy 30 years ago and have the strongest farming lobbies in Western Europe.

If European governments do not retreat in the face of expected criticism, this far-reaching change could break the deadlock in what is known as the Uruguay Round of trade talks taking place under the auspices of the 108-nation General Agreement on Tariffs and Trade.

Named after the country where it began in 1986, the Uruguay Round aims to liberalize $1 trillion in international sales by slashing trade restraints in 15 areas, including textiles, tropical products, services and intellectual property.

Agriculture has been the main sticking point, with the Europeans under attack from the United States and other leading food producers, such as Australia, Canada, Argentina and Brazil. The EC had been unable to be flexible because of internal differences.

"Now it is necessary for a major move by the Americans," said Britain's agriculture minister, John Gummer, after a final stage of negotiations yesterday afternoon. "The heat is on the Americans. We have done more than GATT requires."

In London, Prime Minister John Major called accord "excellent news." The EC's agriculture commissioner, Ray MacSharry, said the world should "match what we have done."

U.S. officials said they could not comment on details of the farm agreement because they had not seen it. They added, however, that they hoped the accord might give some impetus to the Uruguay Round.

The United States has sought deeper cuts in farm subsidies than the EC would accept. The depth of yesterday's cuts was unclear, but trade experts doubted they would satisfy Washington's past demands.

France's farm minister, Louis Mermaz, said "the reform will breathe new vigor into our agricultures on a community level and on a global level." He can still expect to be the target of demonstrations by French farmers.

A statement by the main French farmers union, which organized violent protests last year against agricultural reform at the EC level and through GATT, promptly condemned the accord and said European interests had been "sold out" to the United States.

Farmers elsewhere also were unhappy. The German Farmers Association said "structural collapses in entire regions can be expected" as a result of subsidy cuts. A spokesman for British farmers said the cuts would cut farmers' incomes. Italian farmers described the deal as "completely unsatisfactory."

But European consumers, who have been sustaining millions of small farmers by financing subsidies, may pay $25 billion less for food each year, some experts estimate.

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