U.S. Group Attacks EC Pasta Subsidies : Jobs Hinge on What Decision Will Be Reached by July 1 Deadline

U.S. pasta makers Thursday urged the European Community to end what they called its illegal subsidies on pasta exports, saying they undermine American prices by up to 60%.

U.S. National Pasta Assn. leaders pressed their case in Brussels as American and EEC negotiators worked against a July 1 deadline to settle a 6-year-old transatlantic pasta dispute.

“The U.S. pasta market is growing steadily,” Robert E. Ronzoni, head of the U.S. National Pasta Assn., told reporters. “However, faced with competition from heavily subsidized Italian imports, it is questionable whether U.S. producers will benefit from this market growth.”

He said that because of EEC subsidies, Italian pasta is sold in the United States at up to 60% below the price charged by U.S. producers.

“If (EEC export) subsidies continue, the only practical course open to U.S. pasta companies will be to import pasta from Italy at the expense of U.S. jobs,” Ronzoni said. The U.S. pasta industry employs 10,000 workers.

Ronzoni said that since the EEC began subsidizing pasta exports to the United States in 1975, exports have jumped to 110 million pounds a year from 10 million pounds.

According to U.S. industry figures for first quarter 1987, Italian pasta accounted for 62% of total imports, up from 55% in the same period of 1986.

The U.S. pasta industry asked the Reagan Administration in 1981 to counteract the EEC subsidies.

In November, 1985, the Administration imposed tariffs of 40% on EEC pasta imports to retaliate against EEC duties on citrus imports from the United States, causing a major trade confrontation.

To avoid a further escalation in duties, the United States and the EEC agreed last August to settle the “pasta war” by July 1.

But Ronzoni charged that as negotiations were proceeding, the EEC raised pasta subsidies by nearly 50%, to 18.5 cents per pound, on April 1.

He said this subsidy now amounts to more than two-thirds of the wholesale import price. The EEC export subsidy was initially aimed at compensating exporters for the difference between the EEC price of durum wheat, from which pasta is made, and the world market price, which is lower.

Paul C. Rosenthal, the U.S. Pasta Assn.’s legal counsel, said there no longer was a clear link between the price of wheat and the EEC subsidies.

“Figures never matched up. Nobody knows exactly, not even in the EEC, how the subsidy is calculated,” he said. “It is more than a compensation for a higher wheat price.”