Farm Subsidy Dispute Puts Global Trade Talks on Hold

American and European trade negotiators broke off talks Thursday night without resolving a bitter and frustrating dispute over agricultural subsidies.

Officials had hoped to settle the issue this week to clear the way for a broader agreement on liberalizing global trade, but they could not come to terms on an acceptable level of government support for European oil seed producers.

U.S. Trade Representative Carla Anderson Hills said the two sides were “quite close together” on the longstanding oil seed dispute. She said there would be further talks, but did not specify when or where.

A European diplomat who has been following the talks said the negotiators appeared to have reached agreement late Thursday afternoon. But the deal suddenly evaporated and the two envoys from the European Community abruptly left for the airport to return to Brussels.

“We thought there was an agreement and then there wasn’t,” the European official said. “The Americans are now asking for more data. . . . We’re willing to talk again if necessary, but it may not be necessary. We were that close.”

Leaders of the European Community meet today in Brussels to review the talks’ progress and could approve a deal without ordering new negotiations, the official said.

The United States is demanding that European governments reduce the level of support paid to farmers who grow oil seeds such as rapeseed and sunflower seeds used in cooking oils and animal feeds.

Washington claims that the subsidies cost U.S. soy growers $1 billion a year in lost sales in Europe and elsewhere because subsidized European oil seeds are cheaper.

International trade panels have twice ruled that the European subsidies exceed legal limits, but European governments--particularly France--insist that they are within their rights in supporting their farmers.

The Bush Administration announced earlier this month that unless the EC agrees to cut its oil seed supports, on Dec. 5 it will impose 200% duties on $300 million worth of European products--chiefly French white wine.