Yeutter Warns Europeans on Farm Subsidies

U.S. Trade Representative Clayton K. Yeutter warned Tuesday that the United States is resigned to “full-scale controversy” and “confrontation” with the European Common Market if it refuses to commit to long-term reform of the subsidy-ridden world agricultural trading system.

Yeutter repeated at a news briefing that America is willing to accept a short-term compromise plan to freeze or reduce some agricultural subsidies, but only if the Europeans make a commitment to longer-term elimination of subsidies that distort world farm production and agricultural trade.

He did, however, suggest that the Administration would be “flexible” and modify its proposed deadline for phasing out such subsidies if the Europeans alter their view that farm export subsidies can never be eliminated. In July, 1987, the Administration challenged U.S. trading partners to eliminate all market-distorting farm export and production subsidies by the end of the century.

Key Objective

Yeutter made his comments while staking out a tough U.S. negotiating position before a crucial world trade meeting later this year.

Much of the non-Communist world trading community is nearing the midpoint of four-year trading negotiations in which agricultural trade reform is a key U.S. objective. A mid-session review of the negotiation, the so-called Uruguay Round of the General Agreement on Tariffs and Trade, is set for Montreal in early December.

Looking ahead to that meeting, Yeutter warned that if the Europeans refuse to budge, “then there clearly will not be any agreement in Montreal” on short-term farm trade reform “because we want something to indicate that they really mean it.”

“If they are just stalling in Montreal, it’s not worth it, and we ought to stop wasting our time and just have at it in terms of a full-scale controversy,” he said. “If we fail in Montreal, it will tarnish the atmosphere, and there will be a danger of confrontation and a larger danger of a congressional response.”

Congress, its appetite for trade protectionism whetted by a two-year battle to pass an omnibus trade bill and by election-year trade rhetoric, is scheduled to start work on farm policy legislation in 1989. Asked whether the U.S. Treasury had the resources to pay for competitive farm export subsidies if a full-scale agricultural trade war with the Europeans were to break out, Yeutter said pointedly: “It’s Congress that appropriates the funds.”

Yeutter said that the United States would withdraw its objections to a short-term agricultural trade reform compromise offered last summer by 13 food-exporting countries--but only provided the Montreal meeting also produces a more general commitment to long-term reform.

The proposal, he said, is a “short-term down payment, and we believe a short-term down payment in Montreal would be highly desirable for everyone. . . . But we’re not going to embark on that unless there is a satisfactory commitment to long-term reform.”

Trade ministers from non-European participants in the Uruguay talks are closer to the U.S. position on agriculture than to the European position, Yeutter said.

“Developing countries are interested in agricultural trade reform,” he said. “But if it becomes apparent that the prospect for agricultural trade reform at Montreal is unsatisfactory, that will make developing countries less interested in other areas of negotiation. That is inevitable.”