U.S., Europe Achieve Truce in Spain Trade

The Reagan Administration Wednesday declared a truce in an impending trade war with the European Economic Community over U.S. food exports to Spain.

White House spokesman Larry Speakes, announcing the accord as a “provisional agreement,” said that threatened U.S. retaliation against European imports--primarily white wine, beer and other products--will be suspended until the end of the year. Spain, in turn, will allow American exports of corn and sorghum to continue at current levels during the suspension.

The action avoids a worsening of agricultural trade tensions with the Common Market by postponing a July 1 deadline for agreement that proved impossible to meet.

“The EC (European Community) and the United States have about $120-billion worth of trade,” Commerce Secretary Malcolm Baldrige told reporters. “Neither one of us wants to get into a trade war. . . . We expect to have this settled by the end of the year.”

A parallel compromise involving U.S. exports to Portugal was worked out in May. At that time, the Administration suspended until the end of the year its threatened quotas on white wine, beer, fruit juice and candy that would have been imposed to retaliate against threatened Portuguese limits on U.S. wheat and soybean sales.

“What’s new today is that the Spanish part of the problem is being addressed by the same methods that the Portuguese part of the problem was,” Baldrige said. “It’ll be wrapped up together by the end of the year.”

Spain, Portugal Joined

Both problems arose earlier this year when Spain and Portugal, major importers of U.S. agricultural produce, formally joined the European Common Market. That move made both nations subject to the Common Market’s restrictive and protectionist agricultural policy, leading to quotas and other limits that Baldrige says would have cost U.S. farmers at least $1 billion a year.

In a separate statement, U.S. Trade Representative Clayton K. Yeutter observed that “the enlargement of the community to include Spain and Portugal had the potential to cause enduring strains in the U.S.-EC economic and political relationships because American farm exports were being severely restricted. Now, however, those exports will be unharmed while we negotiate a fair settlement.”

“The President isn’t going to sit by and watch U.S. farmers lose a half a billion dollars worth of trade with Spain and another half a billion worth of trade with Portugal,” Baldrige said. “This agreement essentially says our farmers will not be hurt while we are negotiating what ought to happen in the long run. And we both agree that those negotiations should be finished by Dec. 31 of this year.”