Europe Seen Ready to Give on Grain Sales : High Officials Expect Concessions to U.S. to End Trade War

The European Communities appear ready to cave in to U.S. pressure for substantial concessions to end an escalating trade war with Washington over access to the Spanish grain market, senior EC officials said today.

The officials, who declined to be identified, said negotiators from the EC’s Executive Commission at high-level talks in Washington later this month will be instructed to avoid a trade war at virtually any cost. The talks are due to take place from Jan. 22 to 24.

British Foreign Secretary Sir Geoffrey Howe is meeting U.S. Secretary of State George P. Shultz in the Bahamas today to try to ease the tensions that EC diplomats fear could turn into a damaging political row if allowed to get out of hand.

200% Duties Threatened

Under growing protectionist pressure from a hostile Congress, the Reagan Administration said Dec. 30 that it will impose 200% import duties from the end of this month on a range of EC food exports unless compensation is agreed upon for feed-grain markets lost since Spain joined the Common Market a year ago.

The EC officials said there is no doubt that the EC will impose tit-for-tat retaliation if the U.S. goes ahead with its measures. But neither the commission nor member states appear to want a fight and they will go to great lengths to avoid one, the officials said.

In Washington on Tuesday, U.S. trade representative Clayton Yeutter, who in the past has taken a hard line in the dispute, softened the U.S. position slightly. He indicated that Washington might be willing to accept some compensation in reduced tariffs on industrial products as part of a deal also compensating U.S. farmers for lost grain sales to Spain.

However, U.S. officials said talks are still delicate because of strong political pressures--the Reagan Administration, for example, will face intense protectionist sentiment from Congress later this year if it is perceived to have given in to the EC.

Guarantee Offered

Talks between the two sides broke down last month although the EC did modify their original opposition to compensation. After saying it was unthinkable unless the United States took into account its overall gains from a more liberal Spanish import policy, the EC offered to guarantee non-EC exporters, mainly from the United States, annual sales of 1.6 million metric tons of grains to Spain or other additional EC markets. The United States demanded at least 4 million tons access.

The officials in Brussels would not speculate on what tonnage will be agreed in a settlement before Washington’s Jan. 31 deadline. But diplomats said the EC’s greater reluctance to enter a trade war points to a figure much closer to Washington’s target.

In Washington, U.S. officials said guaranteed access for a substantial quantity of corn would calm American farmers who have seen their grain exports to Spain virtually wiped out since March 1 last year, when the EC agricultural policy was applied to Spanish farm imports.