Common Market Attacks Certain U.S. Trade Quotas

The European Common Market, in moves that could further cloud prospects for an accord on longer-range farm topics at this month’s seven-nation economic summit in Toronto, has intensified several small trade skirmishes with the United States over narrow agricultural issues.

Common Market officials disclosed Friday that they have taken preliminary steps to challenge a 33-year-old waiver by the Geneva-based General Agreement on Tariffs and Trade that has allowed Washington to maintain import quotas on foreign produced sugar, cotton, dairy products and peanuts.

Europeans have also complained informally about the Reagan Administration’s recent decision to allow U.S. farmers to plant more wheat next year in the face of the serious drought that is sweeping the Midwest.

The Administration has said it will require wheat farmers who want to qualify for government set-aside programs to keep only 10% of their acreage out of production in 1989, compared to 27.5% this year. It has also expanded federal subsidies for agricultural exports.

The decision to challenge U.S. agricultural quotas appeared to be a tit-for-tat counterattack against a new push by Washington to pressure the Common Market to reduce its own subsidies for European soybean growers.

American soybean producers filed a formal complaint earlier this year charging that their products were being crowded out of world markets as a result of the European subsidies, and the Reagan Administration has initiated unfair trade practice proceedings that could lead to retaliatory measures by the United States.

U.S. officials said that they were undisturbed by the Common Market action. A Reagan Administration trade official said the U.S. quotas had been reviewed several times in international organizations and have been upheld repeatedly as legal.

Nevertheless, the escalation from Brussels is expected to heighten tensions between the two sides at this month’s Toronto economic summit, where President Reagan and the leaders of West Germany, Japan, Britain, France, Italy and Canada are scheduled to consider ways to increase political momentum for long-range agricultural trade liberalization talks now going on in GATT.

The United States and the Common Market clashed over the agricultural trade issue at a meeting last month of the Paris-based Organization for Economic Cooperation and Development.

The European challenge to U.S. agricultural quotas so far has been limited to a request for formal “consultations” in the 96-country GATT. If the European Community is not satisfied with the talks, it can seek adjudication by a special GATT panel on whether the United States is acting legally.

Willy De Clercq, the Common Market’s trade minister, told reporters Friday that Brussels is not trying to contend that the American farm quotas are illegal. The United States obtained a special waiver from the GATT in 1955 to impose restrictions on some agricultural products, with the goal of keeping production down and it has maintained quotas and tariffs ever since.

Instead, De Clercq said the Europeans are questioning whether the United States is using its waiver as promised to help keep a lid on domestic production or is just trying to close its market. He said the Common Market particularly fears that sugar-exporting countries that no longer can sell their products in the United States will divert them to European markets.