Agriculture Impasse Deflates Trade Hopes
A long-awaited effort to jump-start the sputtering global trade-liberalization talks in Geneva fizzled here on Wednesday after the United States and the European Community hit a serious impasse over agricultural trade.
The two sides had intended to use this week’s annual meeting in Paris of the 24-country Organization for Economic Cooperation and Development to provide new political impetus for the trade talks, which are being held in Geneva.
The two-day ministerial-level OECD session, which began Wednesday, traditionally serves as a prelude to the annual seven-nation economic summit, which this year will be held in Houston July 9-11.
The two sides found themselves so far apart here Wednesday that they abandoned any effort to work out a compromise and decided instead simply to concede their differences publicly, outlining both positions.
Basically, the United States wants to substantially reduce farm subsidies worldwide. The Europeans have resisted for fear of harming the interests of their farmers.
The OECD communique due today will urge stepped-up efforts to complete the Geneva talks, but it will also highlight the U.S.-EC impasse--blunting the hoped-for impact of this week’s meeting.
Unless top U.S. and EC policy-makers can work out a compromise before the Houston economic summit, it could place the entire global trade-liberalization negotiation in jeopardy. The talks in Geneva are scheduled to end in December.
How rapidly to reduce farm subsidies in the United States and around the world is a key issue for Washington and also for many developing countries that want access to EC markets.
U.S. Trade Representative Carla Anderson Hills reiterated President Bush’s warning of last week that “there simply cannot be a successful conclusion” to the broader trade talks without “fundamental” reform in agriculture.
The trade-liberalization talks have been the centerpiece of U.S. trade policy since 1982. Besides agriculture, Washington wants the negotiations to set rules governing services, investment and intellectual property.
The crux of the differences between the United States and the European Community at this week’s Paris session involves how far the negotiators in Geneva should go toward cutting farm subsidies and opening up their agricultural markets to imports.
The negotiators have agreed in principle to aim for a “substantial, progressive reduction” in agricultural programs--both domestic farm supports and subsidies for exports--and to lower barriers to agricultural imports.
But Washington wants the OECD to call for parallel reductions in all three areas, while the EC wants merely to set an overall target that it could meet simply by cutting its huge domestic subsidies, leaving other areas intact.
U.S. officials argue that the battle here is crucial because unless the point is settled now the Europeans will be able to use the issue more effectively as a lever to ward off pressure for broader farm cuts.
U.S. Agriculture Secretary Clayton K. Yeutter warned the OECD on Wednesday that, with the trade liberalization talks scheduled to end in early December, “time is of the essence” in reaching a compromise on agriculture early.
“The consequences of not taking action are almost certain to be destructive,” Yeutter said in a speech. He said trade in farm products today “is stifled by an incredible labyrinth of . . . obstructionist policies.”
Each side blamed the other following the breakdown of discussions at the OECD meeting Wednesday. Yeutter said it now seems obvious that the EC simply “isn’t ready to negotiate on the issue of reducing export subsidies.”
Frans Andriessen, the EC’s trade minister, accused Washington of trying to renew its earlier, harder-line demands on farm subsidies. He told a news conference here that the OECD “is not the proper forum” for such talks.
The effort to breathe more life into the global trade-liberalization talks going on in Geneva is only one part of the U.S. agenda at this week’s session.
Washington also wants to beef up restrictions on the use of so-called tied aid--the practice under which a country conditions the foreign aid it gives to poorer countries on a pledge that they will buy some of its exports.
Despite the continuing U.S. trade deficit--and intensifying global inflation--the session has been devoid of the kind of battles about broad economic policies that characterized such meetings in the mid-1980s.
“This is really a meeting about trade,” said a Canadian official who is a veteran of several such sessions. “There’s not much going on in the macroeconomic area this year.”
The pressure here is being heightened because top U.S. officials have to leave at mid-day today to return to Washington for the summit conference between President Bush and Soviet President Mikhail S. Gorbachev.
