U.S. Announces Truce in European Trade Dispute

The Administration, seeking to quell trade tensions, announced a six-month truce today with the European Community in a dispute over agricultural exports and put off retaliatory action ordered by President Reagan.

White House spokesman Larry Speakes called the settlement “a provisional agreement” that will “keep European agricultural markets open to U.S. exports” while additional negotiations are conducted under the General Agreement on Tariffs and Trade.

At issue are Spanish and Portuguese curbs on U.S. imports of feed grains, imposed earlier this year as a result of those two countries joining the European Community.

Reagan announced May 15 that the United States would retaliate with tariffs and a withdrawal of trade concessions on imports of European wine, beer, liquor, cheese, vegetables, chocolate, candy and fruit juices if the dispute over the levies was not resolved by July 1.

Open for Negotiations

Commerce Secretary Malcolm Baldrige said the provisional agreement will permit negotiations on a permanent settlement to continue until Dec. 31. If there is no solution by that point, he said, the United States may be forced to retaliate, as first threatened by Reagan on March 31.

While hopeful that action can be forestalled, Baldrige said, “I think we would be fortunate to have an agreement wrapped up by December.”

Baldrige told reporters that without today’s action, American farmers would be hurt to the tune of $1 billion this year and added, “We want to be sure the American farmers are held harmless.”

For Farmers’ Benefit

Asked if the move was timed to avoid the November elections, Baldrige said: “This is to help the American farmer. Never mind the politics of it. The President isn’t going to let us get run over like that.”

“The European Community has agreed to keep their markets open to the United States and we’ve agreed not to take retaliatory steps” until the end of the year, Baldrige said.

U.S. trade representative Clayton Yeutter, who negotiated the postponement of retaliatory measures Tuesday, commended European officials in a written statement “for the intense effort to avoid a confrontation on this important trade issue.”

However, U.S. officials acknowledged that the agreement was only a truce, rather than a settlement, of the simmering trade feud between the United States and the European Community. Regardless, Baldrige said, American farmers came out victors in seeing at least a postponement of restrictive community measures, “which had the potential of restricting over $600 million in U.S. farm exports to Spain.”

All told, the United States and the European Community have about $120 billion worth of two-way trade, Baldrige said.