U.S. Plans Concessions on Farm Trade Barriers : May Ease Deadline Stand to Spur Talks

The Reagan Administration, in an effort to jump-start the stalled global trade liberalization talks, has decided to offer major concessions involving two U.S. proposals on agricultural trade that are snagging the negotiations, U.S. officials say.

The concessions will be offered personally by President Reagan in a major speech here today, only 2 1/2 weeks before trade ministers from 96 nations meet in Montreal to take stock of the 2-year-old trade talks and to set an agenda and timetable for the next--and final, they hope--two years of bargaining.

Bowing to European contentions that it is unrealistic, Reagan will offer to drop a U.S. demand for a worldwide agreement to phase out agricultural trade barriers by the year 2000--a key provision of his previous agricultural trade proposal--and offer instead to negotiate over the actual phase-out date if the Europeans and others will agree in principle to eventually end subsidies. He will also offer to be “flexible” about how rapidly specific agricultural barriers are reduced.

Moreover, in an effort to ease fears of Japan and some developing countries, he will agree to discuss ways to guarantee access to food stocks from abroad for countries whose food production would plummet if their import barriers were removed.

Administration officials said that this could involve anything from creating special food stockpiles for such countries to allowing governments to purchase land abroad to grow specific crops. The proposal would be aimed partly at persuading Japan to eliminate its current restrictions on rice imports, which the Japanese regard as an issue of food security.

Bush Said to Endorse Plan

White House officials said that the proposals--the first major concessions by the United States on its controversial agricultural trade liberalization plan--have been coordinated with President-elect George Bush, who endorses them wholeheartedly and has pledged to stand behind them in the next Administration.

Bush is expected to confer in detail with U.S. Trade Representative Clayton K. Yeutter before Yeutter departs for the Montreal meeting on Dec. 3.

The presidential address, which is being billed here as a major speech, will be delivered only four days before nationwide elections in Canada in which the pending U.S.-Canadian Free Trade Agreement is a major issue.

U.S. officials say that, in deference to Canadian sensitivity, Reagan is not planning to make a direct appeal for the trade pact, which is in serious trouble in Canada. But he will praise it more generally as a “catalyst” for broader trade liberalization efforts, pointing to it as a potential example for other countries to follow.

“We can go forward into that future or slip back into the protectionist past,” he is expected to tell the National Chamber of Commerce here, and he will praise the U.S.-Canadian agreement as “an example of cooperation at its best.”

White House officials said that the speech, in which Reagan will also review other economic developments during his Administration, is intended as a major jolt to help revive the Montreal discussions, which have bogged down in part because of inertia in the face of the U.S. elections.

To underscore that point, the President has invited ambassadors of all the 95 other countries that are participating in the talks to be in the audience when he speaks.

Although the talks have become mired in other areas, it is the agricultural issue that has been the most controversial and the biggest stumbling block to progress. Europeans and some developing countries have contended that the U.S. plan to phase out all agricultural subsidies and trade barriers by the year 2000 is politically unrealistic, particularly because European farmers are so highly subsidized.

They have also insisted that other countries cannot go along with any long-term plans unless the United States agrees to a short-term freeze on agricultural trade barriers designed to deal with the current glut in farm products.

Until recently, Washington has rejected such pleas, contending that the only way to bring the Europeans around is to maintain pressure on them. But this year’s drought removed some of the Administration’s leverage on that count.

Last week, Yeutter agreed to consider a short-term freeze in 1989 and 1990 in return for a commitment from other countries to “eliminate all measures that directly or indirectly affect trade” and to write new rules that are based on free-trade principles.

Reagan’s proposals today are expected to deal with the medium- and longer-term questions.

U.S. officials fear that failure to obtain some significant progress at the Montreal meeting could seriously crimp the trade liberalization talks, which were begun at Punta del Este, Uruguay, in 1986.

Washington has a short but controversial agenda calling for development of specific timetables for more liberal trade in agriculture, intellectual property protection and restrictions on foreign investment, but it seems unlikely to win any major victories now.