Farm Issues Holding Up Trade Agreement

America’s hopes of negotiating a new and more liberal set of international trade rules by the end of the year are growing dimmer because European nations cannot agree among themselves on the single thorniest issue of the complex negotiations--trade in agricultural products.

A meeting in Luxembourg today of the agriculture and trade ministers from the 12 European Community nations may prove crucial. The agriculture ministers have failed in three successive gatherings to come to an agreement, and some EC officials hope that the trade ministers may provide the necessary prod.

Carla A. Hills, the chief U.S. trade negotiator, says Europe’s failure to formulate a farm policy jeopardizes the outcome of the entire talks, which began four years ago and involve about 100 nations.

“All of global growth and prosperity hinge upon the success of these negotiations,” she said in a press briefing Wednesday.

Success, Hills has said, will mean billions of dollars in new U.S. exports as a result of reducing worldwide barriers to trade in goods, establishing rules governing trade in services and tightening enforcement of rules prohibiting unfair trade practices. Failure, she says, could split the world into three protectionist trading blocs--North America, Europe and East Asia.

Europe has already missed the Oct. 15 deadline for placing a proposal on the negotiating table in Geneva. Time is growing perilously short between now and the first week of December, when Hills and the world’s other chief trade negotiators are scheduled to meet in Brussels to conclude the talks.

That deadline is important. National legislatures must approve whatever pact the negotiators reach, and the one legislature that has traditionally balked is the U.S. Congress.

The trade legislation is slated for the congressional fast track--Congress will have to quickly vote the pact up or down, without possibility of amendment. But the fast-track authority will expire next March, and the Congress that nearly overrode Bush’s veto of legislation designed to protect the textile industry from foreign competition is not likely to extend that authority.

Textiles represent one of the 15 complex areas for negotiators in the “Uruguay Round” of the trade talks, so called because agreement to hold the talks was reached in that South American country. Others include drawing rules to cover services and “intellectual property”--patents, trademarks and copyrights.

But agriculture is the knottiest category of all.

The United States has proposed that the EC slash its domestic farm price supports by 75% and its export subsidies by 90%. Last year the EC spent a staggering $24 billion on domestic supports and $11 billion to subsidize exports--far more than even the $10.5-billion total that the United States spent in aid to farmers. The EC subsidies, U.S. negotiators charge, give European farmers an unfair edge in worldwide competition, hurting farmers in the United States and the Third World.

On this side of the Atlantic, the EC Commission--the bureaucrats who manage the EC’s affairs--has proposed a reduction that U.S. negotiators regard as about 10%.

And the representatives of the 12 individual governments have refused to accept even that. The most stubborn have been the Germans, who are loath to antagonize farmers before the Dec. 2 German election, and the French.

Even if the French and Germans climb aboard during today’s meeting in Luxembourg, that will leave Europe and the United States miles apart. None of the Europeans who are involved in the talks have much more than scorn for the U.S. position.

“We are not going to tell our farmers that in a couple of years they’ll all disappear,” said Nico Wegter, press spokesman for Frans Andriessen, the EC’s chief trade negotiator.

The proposal approved by the EC Commission would shave subsidies over a five-year period by 30% from 1986 levels. But 1986 was a record year for EC farm subsidies, and farming was so attractive then that mountains of unsellable crops accumulated throughout Europe.

U.S. negotiators figure the EC has already trimmed subsidies by 20%, leaving only 10% left to accomplish. EC documents show a reduction so far of only 10%. Regardless, agricultural stockpiles have diminished substantially--from 11 million tons of wheat to about 5 million, for example, and from nearly 1.4 million tons of butter to 187,000 tons.

As divided as the United States and Europe appear to be, many participants in the trade talks cling to the hope that negotiators will pull a rabbit out of the hat during the climactic week in early December.

“I remain convinced,” Wegter said, “that there is so much at stake that we will find a way to succeed.”