Alarmed EC seeks to avoid trade war with U.S. over dispute on subsidies

November 07, 1992|By Richard O'Mara | Richard O'Mara,London Bureau

LONDON -- The European Community, alarmed at the prospect of a ruinous trade war with the United States, went into a flurry of meetings trying to get negotiations back on track.

Britain's Prime Minister John Major, who occupies the EC's rotating presidency, called in EC Commission President Jacques Delors to insist something be done. The talks derailed in Chicago on Tuesday on the question of subsidies to European farmers producing oilseeds.

Mr. Delors is at the center of a hot controversy stoked by allegations he sabotaged the talks and thereby precipitated the U.S. decision to levy $300 million in taxes on EC products: German, French and British oilseeds, and white wines, mainly French, German and Italian.

The two men emerged from 10 Downing St. with a statement urging the negotiators back to work "in order to resolve the oilseeds dispute and the GATT Uruguay round in a balanced way."

(The world trade body, General Agreement on Tariffs and Trade, has been trying to revise world trade policies in a series of talks that began in Uruguay.)

Mr. Delors said he was not promoting the French position in the negotiations and hadn't interfered in the talks.

The sanctions will go into effect Dec. 5, unless an agreement is made to conclude the trade and tariff talks, which have been going on since the mid-1980s.

There were reports circulating in Brussels, Belgium, that several commissioners were seeking Mr. Delors' resignation. When he arrived here yesterday and was asked about this, Mr. Delors said, "Resign? Why? I am in good health."

In Hertfordshire, EC trade ministers began a two-day meeting in an attempt to come up with a unified response to the U.S. action. Though the French were urging retaliation, many of the other countries' delegates seemed more interested in avoiding confrontation. On Monday, EC foreign ministers will meet.

One question before them was whether the EC could hold its various parts together before a challenge from the world's largest economy -- a challenge supported by other major agricultural commodity exporters, such as Australia, Brazil and Argentina, all aroused by the EC's continuing subsidy of inefficient farmers, particularly those in France and Germany.

Keeping the global implications in mind, the 105-nation GATT scheduled an emergency meeting for Tuesday in Geneva.

The first sign of disunion within the EC emerged almost immediately after the talks collapsed. On Thursday, Ray

MacSharry, the EC's Irish trade negotiator, resigned his post. He complained of interference by Mr. Delors, who reportedly told him the deal being contemplated with the Americans would be unacceptable.

That deal, according to the British agriculture minister who was in Chicago, was a whisker away.

"I believe there is a deal there to be taken," said John Gummer yesterday. "We have got to do it. It is essential for world trade, it is vital for Britain and vital for Europe as a whole, and even vital for French farmers."

Mr. MacSharry's remarks stimulated allegations that Mr. Delors was acting more on behalf of France -- the EC's largest agricultural producer -- than for the Community, which he is charged to do.

In fact, the whole impasse seemed to have the scent of French politics all over it, as suggested by the fact the responses in most EC countries that have spoken on the matter have been conciliatory. The exception is France. The French seemed almost to invite confrontation.

The French trade and industry minister, Dominique Strauss-Kahn, said yesterday the "EC has always made it clear that it will respond in the same way to any measures taken by the United States."

He condemned the American sanctions and urged a firm reaction by the EC. France's Agriculture Minister Jean-Pierre Soisson said retaliatory steps would be studied.

Jacques Chirac, the mayor of Paris and leader of the opposition Rally for the Republic party, raised the French defiance to French belligerence.

"We must return blow for blow," he said. "If this stupid and aggressive process is to start, then we too must take retaliatory measures against American food and agriculture imports, particularly beef."

What has probably shaken Europe so deeply is the realization the confrontation might not be happening were it not for a small group of French farmers who receive subsidies and exercise political clout out of proportion to their numbers.

France's million farmers account for 15 percent of the country's exports but represent only about 6 percent of the electorate. They are very conservative and rarely vote for President Francois Mitterrand's Socialist Party.

So why all the tough talk from a Socialist government on their behalf?

Though the farmers do not vote Socialist, they are widely admired throughout the country. That, combined with their tendency to use violence and vandalism -- such as blocking roads, spilling rotting food -- to express their sentiments toward government policy they disapprove of makes the government wary of offending them.

The Socialists face a general election in March and are not expected to do well. Should the farmers be driven to their usual depredations, the government will surely be blamed for much of it.

Thus, it is not surprising the French alone among their partners were more than willing to want to retaliate now and await the arrival of Bill Clinton in the White House before pressing on for an agreement -- preferably after March.

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