TRADE : Kohl Leading Effort to Break Deadlock on Farm Subsidies

With an Easter deadline looming for a liberalized international trade agreement, German Chancellor Helmut Kohl plans to press President Bush for concessions this weekend in an effort to end the long stalemate over farm subsidies.

Kohl is due to arrive in Washington today and spend Saturday with Bush at Camp David, then return to the White House for a joint press conference and head back to Bonn late Sunday.

Although his government firmly denies that Kohl is acting as a mediator between Washington and the European Community, a chancellery statement issued Wednesday hinted at a new German proposal and said Kohl has “made it clear that he expects . . . a willingness to compromise from the United States.”

However, Kohl also told the leader of the German Farmers’ Union in a separate meeting Wednesday that Europe must put a stop to agricultural overproduction and ease price pressures.

BACKGROUND--In 1986, the General Agreement on Tariffs and Trade, the Geneva-based organization that oversees the global trading system, opened talks in Montevideo, Uruguay.

The GATT talks were supposed to end in December, 1990, but broke down when the European Community and the United States locked horns over farm subsidies.

The United States has demanded deeper and more timely cuts in the European Community’s intricate network of subsidies for farmers than the 12-nation body was willing to implement. The loudest protests came from the French.

France and Germany generally support each other’s agricultural policies, and with the government of Socialist President Francois Mitterrand currently on shaky ground, observers consider Kohl especially unlikely to pressure the French.

COMMENT--”Any ideas the Americans or others might have about Kohl being the mediator or middleman here are absolutely false,” a Bonn government spokesman declared. As is customary here, the official requested anonymity.

“The chancellor has no such mandate,” the spokesman added. “That is the role of the European Commission. He may spell out the EC position to President Bush, but he is not there to negotiate, and there are issues besides GATT on their agenda.”

Nonetheless, the spokesman said he “could not rule out” reports that Kohl is carrying a compromise proposal that would swap a European promise to limit grain exports for American readiness to freeze exports of cereal substitutes to the European Community.

The European Community produces 20% more grain than it needs; 37% more sugar; 16% more wine; 10% more beef and veal; 5% more pork; 22% more butter, and 64% more milk powder.

Earlier this month, GATT criticized America’s farm subsidies. Canadian representative Gerald E. Shannon complained that the U.S. government intervention “has tended to insulate U.S. farmers from international market forces while causing hardship to Canada and other efficient producers by driving down world prices.”

OUTLOOK--GATT chief Arthur Dunkel has set an April deadline for a deal. If the purported German compromise is accepted, it would remove a critical roadblock.

Since unification, Germany has faced a delicate task in carving out a world image that reflects the nation’s considerable size and economic clout without raising embarrassing reminders of the aggressiveness that kindled two world wars. But as acting president of the G-7 group of industrialized nations and leader of the world’s No. 2 exporting nation behind the United States, Kohl is anxious to somehow find a bridge between Washington and Paris on the crucial agricultural issues.

However, Bush’s willingness to compromise must be weighed against campaign pressures, and those appear to be mounting from the farm sector. The powerful U.S. Farm Bureau announced this week that it would reject any agreement requiring a freeze on U.S. agricultural exports to Europe.