Dispute Centers on American Farm Exports : Shultz Calls on Europe to Help Head Off Protectionism in U.S.

In the face of a major unresolved trade dispute with Europe involving more than $400 million in annual American farm exports, Secretary of State George P. Shultz appealed to the European Communities on Friday “to work together with us to do all we can” to stave off growing American protectionist trends.

“American protectionism is not only bad for other countries--it is bad for American consumers and, therefore, bad for the American economy,” Shultz said at a news conference after a three-hour meeting at Common Market headquarters with European Commission President Jacques Delors and other top officials of the communities.

“I would make that point again and again and again and contrast our present and recent history with the 1930s, when we did have protectionism. President Reagan has fought on that line before, and he will continue to fight and he intends to prevail.”

High-Level Meeting

At this regular annual meeting of the commissioners and U.S. Cabinet officers, Shultz was flanked by Treasury Secretary James A. Baker III, Agriculture Secretary Richard E. Lyng and Trade Representative Clayton K. Yeutter.

Baker told reporters that much of the discussion centered on “the major problem of the rise of protectionism and, if you will, isolationism in the United States.”

The big immediate problem between the Common Market and the United States is an American claim for trade compensation as the result of a drop in U.S. exports of feed grains to Europe after Spain and Portugal became full members of the community.

French corn and barley have replaced American corn and sorghum in Spain and Portugal, and Willy de Clercq, the market’s commissioner for trade, has called the current dispute “probably the most difficult and perilous we have had with the United States.”

Calls for Compensation

Yeutter said: “With our loss of agricultural exports to the community already causing financial problems in the Midwest, we certainly are not ready to accept another loss of $400 (million) to $500 million per year without appropriate compensation for it under the GATT trade rules. All we are insisting upon is that the damage we suffer is properly compensated.”

An earlier partial settlement on a temporary basis, giving further trade entry concessions to the United States in agriculture and other fields in Europe, runs out at the end of the year. The United States has already prepared some heavy retaliatory measures if agreement cannot be reached on a full, permanent package of compensation in the next two weeks. Yeutter and De Clercq will continue negotiating this weekend, and neither side was prepared to forecast the outcome.

Despite the farm issue, Shultz and the other Cabinet ministers all were in a generally upbeat mood about basic U.S.-Common Market relations.

Shultz said the latest summary of basic economic statistics shows that trade across the Atlantic now totals $120 billion annually, investment amounts to $200 billion and all of this generates a total of $700 billion in sales.