All Gummed Up by Oilseed : Trade talks revive as Europeans, rightly and wisely, back down

The United States and the European Community went eyeball to eyeball--and finally, fortunately, Europe blinked.

Europe backed down on oilseeds. Yes, this was the issue poisoning the all-important world talks to liberalize trade. It was all about European agricultural subsidies--oilseed subsidies. Yes, it is arcane issues such as this that tend to gum things up at the General Agreement on Tariffs and Trade (GATT), whose Uruguay Round can now focus on the crucial task of reaching agreement on other matters.

The U.S.-EC oilseed dispute had brought to a dead stop negotiations held among 108 nations to lower trade barriers. EC subsidies to oilseed farmers--a payment program that Washington contends costs U.S. farmers $1 billion a year in exports--were twice found to violate GATT rules.

When the EC didn’t move fast enough to change the subsidies, the U.S. Trade Representative Office threatened to slap 200% tariffs on European exports, mostly French white wines, by Dec. 5. Alarmed at the prospect of an all-out trade war, the EC now has defused the oilseed bomb by agreeing to limit land devoted to oilseed production.

But will France, which has been most uncooperative at times, buy the deal? Angry, heavily subsidized French farmers have been flexing their political muscle by staging demonstrations and burning the U.S. flag, thus putting pressure on an already unpopular Socialist government facing elections in March.

Some quarters in France have expressed displeasure with the oilseed pact, but the nation has become increasingly isolated in its opposition to agricultural reforms.

Other key EC members--notably Britain and Germany--have tried recently to get beyond agricultural issues for the sake of a much-needed new world trade agreement that would cover services and intellectual property for the first time.

With concern about recession spreading around the world, expanding the global exchange of goods and services is one way to try to get national economies moving again. The French should go along with the EC and help propel world trade into a new era of greater opportunity.