Europe Hints at Way Out of Farm Deadlock

INTERNATIONAL TRADE TALKS IN BRUSSELS

THE European Community, beleagured by attacks from all sides for its failure to accept deep cuts in agriculture subsidies, says a global trade liberalization package should not be quashed simply for lack of agreement in just one or two sectors. ``That's our official standpoint,'' says an EC Commission spokesman. ``We are not of those who say this round of trade talks must resolve everything, that it's all or nothing.''

The reality, however, is that the Europeans have a keen interest in a handful of the 15 areas under discussion: dispute settlement, antidumping regulations, government procurement liberalization, and extension of GATT to the service sector.

For the EC Commission, which negotiates for all 12 EC members, the success or failure of the talks should be measured by the direction it sets for world trade liberalization, rather than by the degree to which specific sectors are liberalized.

In line with that philosophy, the EC emphasizes that simply bringing in agriculture, textiles, services, intellectual property, and foreign investments would mean that for the first time all major aspects of world trade would be covered by the GATT roof. This position contrasts with that of the United States, which publicly has appeared to prefer no accord to one with little progress on agriculture.

The threat that the agriculture issue could sink four years of negotiations hangs over Brussels' Heysel international fair center, where 2,000 delegates from 105 GATT countries are meeting. But there are some signs the EC is willing to take a few additional steps on agriculture.

Still, EC External Affairs Commissioner Frans Andriessen said last week that the ``margins of maneuver are small.''

One possible compromise would be in the ``references,'' or dates used in figuring agriculture subsidy cuts, one EC official says. The EC proposes a 30 percent cut in subsidies over the decade ending in 1996. Taking into account cuts already made, the EC would require only a 15 percent reduction over the next six years. An EC official indicated that further cuts over the rest of the 1990s might be possible.

The EC will also go to battle with the US over Washington's proposal to exempt certain types of services - telecommunications and transportation - from uniform trade-barrier removal. US interests see little advantage to liberalization in these areas of traditional American strength.

In the area of government procurements, the EC - with its fast-approaching single market a prime plum - wants to see foreign competition extended beyond the federal level to states and localities. The US counters that it has no authority to force open state and local contracting.

Yet to be gauged is whether, as some predict, the Germans will tilt the EC towards a more compromising position on agriculture now that the weekend's elections are over. Another question is whether France, the world's second-largest services exporter, will be willing to accept a more sweeping farm package if it is counterbalanced by the promise of a strong services package.

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