Europeans Urge France to Back Off Trade War With US
BONN — STRIVING to avert a wide-ranging trade war, the European Community is urging that the EC and the United States return to the negotiating table and settle their dispute over farm subsidies.
On Nov. 5, the US announced a 200 percent tariff on $300 million worth of EC white-wine exports and other products, to take effect Dec. 5 unless its dispute with Europe over oilseeds subsidies is settled.
When the issue is discussed at a meeting of EC foreign ministers today, the ministers are expected to emphasize that negotiators use the time until Dec. 5 in a last-ditch effort to reach an accord.
The French are expected to ask the EC today to draw up a list of retaliatory measures, according to Reuters. But the European Commission "will be divided on sanctions," a German government official said Friday, adding that "the majority will be for a counterretaliation."
Last week French Minister of Industry and Trade Dominique Serauss-Kahn said he still supports a return to negotiations, and he hopes for "a gesture from the Americans." But "if in a month nothing has advanced, France will very firmly demand that countermeasures be put in place," he told French television.
A counterretaliation could spark a trade war, doubly damaging because many of the countries involved have such weak economies already. A trade war would only prolong recovery, and worse, threaten the whole global trading system by dooming the floundering world trade talks, officially known as the Uruguay Round of the General Agreement on Tariffs and Trade (GATT).
Arthur Dunkel, director-general of GATT, has called an emergency meeting tomorrow of Uruguay Round negotiators to consider the "very grave situation" that has arisen.
Bearing the consequences in mind, the British, who hold the rotating presidency of the EC, tried mightily last week to steer the EC away from retaliation. In an emergency meeting in London Nov. 6, British Prime Minister John Major and EC Commission President Jacques Delors issued a statement that "Negotiations must continue to avoid a trade war."
The 12 EC trade ministers, meeting outside London also rejected retaliation. Mr. Delors has been criticized for using the Commission presidency to intervene on behalf of the French, considered the main culprit in the US-EC agriculture dispute. On Nov. 5, the EC's farm negotiator, Ray MacSharry, said he was giving up his post because Delors was undermining his efforts.
But the French are between a rock and a hard place. If they give in on the oilseeds dispute, they could face a farmers' revolt. With French elections just around the corner in March, Paris is reluctant to follow this course. On the other hand, the French would suffer the most from US sanctions, because they are aimed chiefly at French exports.
H. Tonnen, spokesman for the Dutch Ministry of Economic Affairs and Foreign Trade reflected sentiments in a few other European capitals when he said the US sanctions threat would not propel the French toward a settlement, but instead cause them to close ranks and put up more resistance. "It only gives the French more arguments," he said.
Still, there is growing pressure on the French within the Community. Germany, France's closest and strongest ally, is expressing increasing disapproval of Paris' position.
On Nov. 7, the conservative newspaper Frankfurter Allgemeine Zeitung published an editorial stating the the US has "right on its side." (A GATT panel has twice found that the EC's oilseeds subsidies are unfair to the US, and that Europe has been "blindly" following the French.).
German Economics Minister Jurgen Mollemann said before the EC trade ministers' meeting that if France does not come around in the oilseeds dispute, the EC Council might have to override it through a majority rule. The amount of tonnage being argued over in the dispute, he said, is "ridiculous."