Bush, Kohl Discuss Trade Issues, Predict Farm-Subsidy Stalemate Will Be Broken : Diplomacy: President, German chancellor optimistic that U.S.-European GATT talks will soon bear fruit.

President Bush and German Chancellor Helmut Kohl, meeting privately to discuss trade and other issues Saturday, indicated they expected an early resolution of a longstanding stalemate over European agricultural subsidies.

As Kohl arrived for a weekend of diplomacy and relaxation with Bush at the President’s Camp David retreat in Maryland, he predicted that U.S.-European trade talks would soon produce a new pact under the General Agreement on Tariffs and Trade (GATT).

“I’m quite optimistic that we have a good chance for agreement,” Kohl said, “and that agreement will be reached.”

Kohl said he was eager for an accord by the April 15 target date so that trade issues would not have to be on the agenda of the economic summit of industrialized nations scheduled to be held in June in Munich.

Likewise, Bush nodded affirmatively when asked whether he thought his talks with Kohl would help resolve the dispute.

Top Bush Administration officials said they expected the Bush-Kohl talks to narrow the differences between the United States and Europe on the knotty issue, but they cautioned that no agreement was likely without further negotiations with other European leaders.

“The chancellor’s been working with the President to see if we can come up with something that is acceptable to the United States and to the (European) Community and, of course, to the trading community,” said a senior Administration official, who declined to be identified.

“We obviously hope that we’ll be able to narrow the differences with the European Community and that the (two days of) conversations . . . can serve that purpose. But this is not . . . a negotiating session between the chancellor and the President. It’s an effort to try to move this process along.”

Bush added that the discussions would include a wide range of other subjects, including economic assistance for the former Soviet states, the problems of proliferation of nuclear weapons and the Munich summit.

In short, Bush said, he and Kohl had “a lot to talk about.”

Bush said he also would brief Kohl on telephone conversations he had earlier Saturday with the presidents of Ukraine and Armenia. His talks with these leaders touched on the problems in Nagorno-Karabakh, an embattled Armenian enclave within Azerbaijan.

The current round of GATT negotiations, which are intended to lower trade barriers among 107 participating nations, have been stalled because of the dispute between the European Community and the United States over agricultural issues. U.S. officials claim that European farmers receive heavy subsidies that give them an unfair trade advantage on world markets.

Kohl denied that he was coming to the United States with a formal proposal on the issue.

On Friday, Administration officials had said they anticipated that Kohl might bring a compromise plan that would reduce European farm subsidies in exchange for a freeze on the export of U.S. livestock fodder to Europe.

Yet even if Kohl had been prepared to make such an offer, one Administration official involved in the talks said before Kohl’s arrival on Saturday that such a proposal would be “generally unacceptable” to several food-exporting countries involved in GATT.

The European Community has offered to cut farm subsidies 30% by 1996; U.S. officials have demanded cuts of up to 90% over 10 years. Although U.S. officials recently offered to permit European governments to preserve certain agricultural subsidies, French President Francois Mitterrand remains opposed to the U.S. offer.

If no agreement is reached before April 15, the talks will continue, but the momentum for a settlement sometime this year will have been lost. The deadline set by Congress for approving a new trade agreement is Feb. 28, 1993.