Yeutter Says U.S. May Boost Farm Supports

Trade Representative Clayton K. Yeutter on Thursday raised the prospect of U.S. escalation of the already costly farm subsidy battle unless progress is made on eliminating all subsidies by the year 2000.

Yeutter said Congress could very likely increase export subsidies, just as it did in 1985, if it appears that current global trade negotiations on the matter are at a stalemate.

“Sometimes one must have a higher level of confrontation in order to achieve progress,” Yeutter said at a news conference held during trade talks with America’s largest trading partners.

Yeutter and his colleagues--European Community Minister for External Relations Willy De Clercq, Canadian Trade Minister John Crosbie and Japan’s Minister for International Trade and Industry Hajime Tamura--meet twice a year for comprehensive talks on both bilateral and global issues.

The two days of discussions come on the heels of the seven-nation economic summit in Toronto, where farm subsidies were a major item of dispute.

The allies rebuffed President Reagan’s call for totally scrapping subsidies. The final economic communique simply repeated language calling for further negotiations aimed at reducing subsidies rather than eliminating them.

The world leaders directed their trade ministers to keep negotiating, but officials said they did not expect any breakthrough in this round of talks, being held at a resort in the lake country of Minnesota.

The trade ministers reported after the first session Thursday morning that significant progress was being made in other areas, particularly a U.S. effort to speed up the process for settling trade disputes before the 96-member General Agreement on Tariffs and Trade, the Geneva-based organization that governs world trade.

GATT is conducting the current round of trade liberalization talks, known as the Uruguay round because they were launched at a conference in that country in 1986.

Yeutter and his counterparts were hoping to narrow their differences on a variety of issues from trade in services to foreign investment so that progress can be made at a key Montreal meeting in December, the halfway point for the current trade round.

However, there are fears that the dispute over agriculture has become so contentious that it could jeopardize progress in other areas.

Yeutter said that unless progress is made at the Montreal meeting, pressure will build in Congress to further subsidize American farmers so they can compete on world markets.

$26 Billion in Farm Support

He said congressional frustration would probably result in a new farm bill being taken up next year rather than in 1990, when the current subsidy program is due to expire.

“I am not making legislative threats. I am just giving you an assessment of what could happen,” Yeutter said.

The 1985 farm bill significantly boosted U.S. subsidy payments to help American farmers stay competitive on world markets. Last year, the U.S. government spent $26 billion on farm support programs.

Tamura, the Japanese trade minister, said his country was already upset over the congressional insistence on passing an omnibus trade bill this year. A version minus the plant-closing provision that prompted a Reagan veto has begun working its way through Congress.

Tamura said the new bill still contained many protectionist provisions to which Japan objects.

“We have a strong belief that good sense will prevail and the President will not sign the bill,” he said.

Reagan has not said what he would do if a second bill reaches his desk, although congressional sponsors are predicting he will sign it.