Officials Agree to Serious Bargaining on Farm Subsidies

World trade negotiators in Geneva, long at odds over agriculture and other disputes, agreed Monday to begin serious bargaining over the central stumbling block of farm subsidies.

After dragging their heels since the beginning of the trade talks 3 1/2 years ago in Uruguay, European representatives finally expressed a willingness to consider their own agricultural trade barriers as part of a discussion on how to reduce subsidies in all three major areas of protection--domestic subsidies, export subsidies and import quotas, U.S. officials said.

But both U.S. and European officials acknowledged that they remain far apart on the longstanding conflict over farm policy, which could torpedo efforts to remove obstacles to more than $1.5 trillion in general trade among the 105 nations engaged in the negotiations. The talks are being conducted under the aegis of the General Agreement on Tariffs and Trade, the Geneva-based organization that administers current world trading rules.

Only last Friday, chief U.S. trade negotiator Carla Anderson Hills said officials from the 12-nation European Community--the group most opposed to reducing farm subsidies--were still refusing to bargain, despite the strong statement of support for the trade talks by leaders of the seven largest industrial democracies in Houston earlier this month.

U.S. officials in Geneva were reluctant to describe Monday’s step as a “breakthrough,” acknowledging that “very real differences” remain. But one top negotiator said both sides “agreed to work toward overcoming those differences as expeditiously as possible.”

Although the United States is pushing hard for a global agreement to reduce farm subsidies, the federal government still spends billions of dollars subsidizing U.S. farmers, continuing farm-subsidy programs begun in the 1930s. However, U.S. officials say Washington would be willing to reduce America’s subsidies as part of a worldwide agreement. And they point out that, except for a recently prepared “war chest” designed to counter European subsidies, the United States does not underwrite its farm exports.

GATT’s top-level Trade Negotiations Committee is meeting this week in an effort to clear the way for a general trade accord before a self-imposed deadline in early December. But the negotiators postponed a showdown that could have sparked sharp conflicts by agreeing to start intensive bargaining on farm trade in late August.

The biggest obstacle to achieving success in the current Uruguay Round of negotiations is farm protectionism among advanced industrial nations, which is said to cost consumers and taxpayers $245 billion a year. The Bush Administration is leading an effort by exporters around the globe to open up wealthy markets to agricultural goods produced mostly by struggling developing nations.

Without a breakthrough on farm subsidies, U.S. officials insist, there is no chance of reaching an overall trade agreement. A breakdown in the talks would raise the risk that Europe, Asia and the Americas would form rival economic blocs that could foster escalating trade wars.

Other areas of dispute among the 15 under debate include textile trade, where Asian exporters and developing countries are insisting that rich nations allow more imports of clothing and textiles, and services, where the United States and other industrial powers want to establish rules allowing them to expand banking, aviation and similar activities across international borders.

Arthur Dunkel, director-general of GATT, told a news conference in Geneva that governments are playing “cat and mouse” in the negotiations by insisting that they cannot make concessions in key sectors without making progress in other areas important to them.

That suggests that any real breakthrough in the trade negotiations might not occur until much closer to the final sessions in December, when top officials are scheduled to meet in Brussels to forge the overall accord.