Standby Quotas Set on European Food, White Wine

In the latest maneuver in a potential trade war with Europe, President Reagan on Thursday imposed quotas on a variety of European wine and food sold in the United States but delayed their effect until European restrictions on American grain exports to Portugal begin to harm U.S. sales, perhaps early next year.

The action had been expected since Reagan declared in March that European Economic Community quotas on U.S. corn and soybean sales to Portugal and Spain, which joined the Common Market earlier this year, would be matched in kind. The President’s decision to suspend the impact of the quotas on European wine and food until the Portuguese quotas begin to hurt the United States amounted to a partial relaxation of tensions.

U.S. Trade Representative Clayton K. Yeutter and Agriculture Secretary Richard E. Lyng agreed in a meeting with European officials in Paris last month to delay the impact of the U.S. quotas. Negotiations with the Europeans are to continue.

“This is a dispute the U.S. sought to avoid,” White House spokesman Larry Speakes said in a statement announcing the measures. “We hope the European Community will respond in a way that will help us settle this disagreement without further damaging our trading relationship.”

No Immediate Impact

“We have been assured by the EC that their quotas will have no immediate impact on our trade,” Speakes added. “As long as that remains the case, our quotas will be similarly non-restrictive. However, should the EC’s quantitative restrictions begin to restrict U.S. exports, the U.S. quotas will be adjusted to have a comparable effect, or the President may substitute tariff increases for the quotas.”

Speakes said the United States will also retaliate against Common Market tariffs on corn and sorghum sales to Spain, for which the Administration is seeking compensation in the form of lower Common Market tariffs on manufactured goods. The Administration has set a July 1 deadline for tariff retaliation in the Spanish case, which Speakes said has already all but extinguished American exports.

In all, the Administration has claimed that U.S. farm exporters stand to lose $1 billion in sales because of the Portuguese and Spanish restrictions. When Spain and Portugal joined the Common Market earlier this year, they automatically adopted the Common Market’s barriers to foreign agricultural products.

When effective, the U.S. measures announced Thursday would limit imports of European white wine valued at more than $4 a gallon, chocolate, candy, apple juice, pear juice and beer.

Hailing the move, Sen. Pete Wilson (R-Calif.) said the limitation on white wine imports would cut into the largest segment of European wine sales to this country, worth $285 million last year and equivalent in importance to U.S. soybean exports to Europe.

Take News in Stride

Common Market officials said a formal response would be issued in Brussels today and hinted that any further retaliation would likely be in kind--that is, with delayed effect. Speaking unofficially, they generally took the announcement of the U.S. action in stride, linking it to the April talks in Paris that eased tensions.

Speakes, however, put Reagan’s trade policy in a somewhat more aggressive light. The Portuguese quotas, Speakes said, “are illegal quotas” under the General Agreement on Tariffs and Trade. The retaliations, when effective, would be equally illegal, he acknowledged.

“What we are attempting to do here is to mirror the actions of the EC,” Speakes said.

Asked if the threatened quotas would move the United States and Europe closer to a trade war, Speakes drew back slightly.

“It should not in this case,” he said. “In the case of Portugal, there is no effect on either side.”

‘Catastrophic Step’

Speakes denied that Thursday’s announcement was timed to blunt momentum in Congress for protectionist legislation. But he denounced the pending House trade bill as “really bad legislation . . . heavily protectionist . . . really a catastrophic step.”

Other Administration officials, speaking on condition they not be identified, said the White House hopes Congress will recognize that existing statutes against unfair foreign trade practices are adequate.

In a separate action, White House officials said a trade task force has set a June 25 deadline to draw up retaliatory options to use against Brazil if negotiations to ease restrictions against U.S. computers and related products do not succeed. Brazil’s closed high-technology market was the subject of an unfair trade complaint last September, and Speakes told reporters Thursday that Reagan’s final decision on whether to retaliate is due next September.