Summit Ends With Call to Cut Farm Subsidies

Leaders of the seven largest industrial democracies, ending their three-day annual economic summit Tuesday in the harmony that prevailed from the beginning, reached a broad agreement on economic issues that included a stronger-than-expected call to reduce global agricultural subsidies.

The agriculture accord represented a solid achievement for the Reagan Administration, which complained that massive government payments to farmers lead to vast overproduction. The Europeans had sought to stick with a milder agreement hammered out last month during a preliminary meeting in Paris.

Leaders Resolve Dispute

The leaders resolved the dispute by calling on negotiators in the current round of trade talks to prepare a detailed framework by December for settling the farm subsidy issue over the next two years. Their pronouncement will be important because it will provide political impetus for the lower-level negotiations to succeed.

With the world economy in better shape than most officials had expected following last October’s stock market crash, this year’s summit was confronted by no evident crisis. As a result, the meetings generated only relatively minor disputes dividing the United States from its major trading partners.

In a news conference after his final summit meeting, President Reagan celebrated the steady economic growth of the past six years under the leadership of generally conservative parties in the seven nations--the United States, Japan, West Germany, Britain, France, Italy and Canada.

“The economies of the summit countries have come roaring back,” Reagan said. “The goals we’re setting now will become the landmarks for the future.”

The summit’s 10-page communique was held up by a last-minute tiff between Reagan and French President Francois Mitterrand over whether to single out the Philippines for special attention in a section on new democracies among the developing countries.

In the end, the leaders agreed to mention the Philippines while noting the importance of countries in other regions as well.

Hurries to Lunch

“I’m just surprised we got it done,” Reagan said as he left the final session to hurry to a belated lunch.

Mitterrand acknowledged the dispute but said that the “argument didn’t go beyond the limits of reason.”

Although the United States achieved a tougher agricultural accord than finance ministers had approved last month in Paris, it bowed to European and Japanese insistence that any reduction in agricultural subsidies should not be so deep as to cause social disruption in farming communities.

Treasury Secretary James A. Baker III said the farm compromise “worked out very satisfactorily for the United States.” Speaking to reporters, he said: “Did we go as far as we would have liked? No. But it’s fair to say we’ve moved the process forward.”

British Prime Minister Margaret Thatcher also expressed satisfaction with the final result. “Toronto has given a fresh impetus” to the push toward establishing a free market in agricultural goods, she said, arguing against “a higgledy-piggledy, haphazard reduction” in farm subsidies.

Debt Aid for Africa

On other issues, the seven leaders:

-- Pledged to provide substantial debt relief to the most impoverished nations, primarily in Africa, but to let each creditor nation choose its own method for aiding the so-called “poorest of the poor” debtors.

-- Adopted the use of a global inflation indicator based on commodity prices, including gold, which will be used as part of the cooperative effort to prevent disruptive exchange-rate fluctuations.

-- Endorsed an agreement reached by their finance ministers last December supporting exchange rate stability. They said either a decline or a significant rise in the dollar “could be counterproductive.”

-- Vowed to continue so-called “structural” reforms such as tax revision and deregulation aimed at making their economies more flexible. Instead of the usual admonition for the United States to reduce its budget deficit, they urged new incentives for Americans to save more and called for U.S. industry to improve its ability to compete in world markets.

-- Endorsed both the U.S.-Canadian free trade agreement, which is pending before Congress and the Canadian Parliament, and Europe’s new bid to create a single market, free of trade barriers between nations, by 1992. Seeking to defuse fears that such developments could create regional trading blocs, they promised that other countries would not be shut out.

The summit was the 14th that the leaders have held since the first at Rambouillet, France, in 1975. The next summit will be held in Paris in July, 1989, when France will be celebrating the 200th anniversary of its revolution.