Seed Dispute Stalls Global Trade Talks : Negotiations: The U.S. threatens sanctions against EC nations. But both sides hope an agreement can still be reached.

Agriculture Secretary Edward Madigan said Tuesday night that he would recommend trade sanctions against European Community imports after the EC and the United States failed to resolve a dispute over agricultural trade.

Madigan, the top U.S. negotiator in talks here aimed at averting a global trade war, said he was still willing to continue to negotiate.

Earlier, EC Farm Commissioner Ray MacSharry said the two sides had hit an impasse over trade rules for oil seeds.

The two sides hoped to reach an agreement before a meeting today in Geneva of the General Agreement on Tariffs and Trade, or GATT, a 108-nation group that oversees world trade.

“The talks are alive. They are still going on,” Roger Runningen, a spokesman for Madigan, said during a break Tuesday morning.

The Chicago negotiations recessed for five hours to allow Madigan and USDA staff members to go home to vote in the general election.

The agenda for the GATT council meeting included a discussion of the quarrel between the United States and the 12-member European Community, which for two years has stalled GATT talks on a broad revamping of world trade rules.

The negotiations in Chicago between delegations led by Madigan and MacSharry have focused on U.S. demands for reduced European production of oil seeds, which include soybeans, sunflower seeds and cotton seeds.

The United States contends that subsidies paid to European oil-seed producers to help them compete on the world market unfairly encourage higher production and have led to reduced European demand for U.S. soybeans, which enter Europe duty free.

Madigan is from Illinois, the largest U.S. soybean-producing state.

The Bush Administration estimates that U.S. farmers are losing $1 billion annually in sales of soybeans to Europe as a result of the subsidies.

If the two sides cannot resolve their differences, the United States has threatened to order up to $1 billion in punitive tariffs on a variety of European exports, including French wine, to compensate for losses suffered by U.S. soybean farmers.

In Brussels, a senior EC trade negotiator said Tuesday that the community already has prepared a list of countermeasures it would impose if the United States slapped tariffs on Europe.

“They’ve painted themselves into a corner,” the negotiator, Hugo Paemen, said of the Bush Administration.

“They shouted off the rooftops that if there was no accord, they would impose these measures. If there is no agreement today, we will have measures (against us) today or tomorrow,” Paemen told BRTN, a Flemish-language radio station in Belgium.

He did not specify what measures would be taken, but other EC officials said duties would likely be imposed on American farm products.

Britain’s agriculture minister, John Gummer, arrived in Chicago on Monday and was conferring with the EC group but was not taking part in the direct negotiations, Runningen said.

Britain now holds the EC’s rotating presidency, and Gummer has been closely following the talks. But it is highly unusual for the farm minister of a member nation to be in on the bargaining.