End Global Food Props, U.S. Urges : Proposed Pact Would Phase Out Farm Subsidies

In a move that would drastically change farm policies in the United States, Western Europe and Japan, the Reagan Administration on Monday formally proposed its plan to eliminate all food subsidies that distort global agricultural trade by the end of the century.

“It has become clear that ultimately no one benefits from the current agricultural policies employed around the world--not farmers, not consumers and not taxpayers. It is equally clear no nation can unilaterally abandon current policies without being devastated by the policies of other countries,” President Reagan said in a statement. “The only hope is for a major international agreement that commits everyone to the same actions and timetable.”

10-Year Plan

The Administration proposed that, within 10 years of a new agricultural agreement among trading nations, the following be phased out: subsidies for food exports; tariffs, quotas and other agricultural import barriers, and idiosyncratic health and sanitary regulations governing food imports.

Under the proposal, which the Administration has been considering for nearly 18 months, all commodities would be covered by the new rules and all existing subsidies would be vulnerable to elimination except for aid programs such as Food for Peace and direct cash payments to small farmers that provide encouragement for them to stay on their farms.

Ranking Administration officials representing the U.S. trade representative and the Agriculture Department presented the proposals Monday in Geneva, where the 73 nations covered by the General Agreement on Tariffs and Trade, the dominant trading system in the non-Communist world, are beginning a new round of talks to overhaul the world’s trading rules.

Laying Groundwork

The Administration has been laying the groundwork for Monday’s move in meetings with its allies and trading partners since mid-1986. Last September, it won GATT agreement to place agricultural policy reform on the agenda at Geneva. That approval was endorsed last month at the Venice economic summit.

But a Reagan speech at the summit calling for sweeping agricultural policy reform by the year 2000 won lukewarm reaction at best. The main summit participants, especially West Germany, France and Japan, were cool to any specific deadline for reform, and no timetable for the reform was set.

In calling for “a total phase-out of all policies that distort trade in agriculture by the year 2000,” Reagan stressed Monday that reforming the world agricultural trading system would primarily benefit taxpayers and the most efficient farmers.

At the same time, he insisted that the United States would take no such action unilaterally--a step that would bring the Administration the bipartisan wrath of every senator or congressman with any farmers in his district.

But farm organizations and some members of Congress were skeptical about the Reagan proposal, unwilling to enthusiastically endorse the sweeping plans to eliminate subsidies.

“I don’t believe that utopia is going to happen by the year 2000,” American Farm Bureau Federation international trade specialist Paul Drazek told Reuters news service, reflecting the view of many farm groups.

Senate Agriculture Committee Chairman Patrick J. Leahy (D-Vt.) said: “We (Democrats) have had a historical commitment to the family farm and I intend to keep that commitment.”

He said that in the past the Administration--which has tried repeatedly to get Congress to cut U.S. farm subsidies--has “turned its back on farmers.”

“I will not allow the Administration to use these negotiations to push through proposals which have failed in Congress,” Leahy told Reuters.

U.S. Trade Representative Clayton K. Yeutter, backed by Agriculture Secretary Richard E. Lyng, declared that “we have no intention of disarming unilaterally in the agricultural area. . . . We are not going to walk down the road 10 steps ahead of Europe or Japan or anyone else.”

Higher Costs Seen

Yeutter and Lyng, answering reporters’ questions at the White House and later at the Agriculture Department, conceded that a global phase-out of farm export subsidies would probably raise the cost of food to consumers worldwide.

However, Yeutter said, that increase would be more than offset by savings to government budgets and taxpayers who now have to pay for the subsidies. In fact, he added, the growing cost of food subsidy policies may be the main reason why the reluctant Europeans may eventually go along with the U.S. proposal to return global farm trade to the open market.

“The European community is in major financial difficulties with its programs,” Yeutter said, noting that Common Market agriculture ministers had recently met expressly “to determine how to keep the common agricultural policy from going bankrupt.”

In a parallel statement presented at Geneva, Michael B. Smith, the deputy trade representative, and Agriculture Undersecretary Daniel G. Amstutz warned of “a crisis of major proportions in agriculture” and totted up the costs this year of escalating subsidies to farmers: $31 billion in subsidies and transfer payments in the United States; $92 billion by European taxpayers, state governments and consumer transfers to farmers; $10.5 billion in direct government subsidies in Japan, and $30 billion to $40 billion in higher consumer prices.