United States anger over Western Europe's farm subsidies is ``going to put us in a position of frontal conflict'' by the end of this year or ``certainly next year,'' says US Labor Secretary William E. Brock. Mr. Brock, who until April 26 served as US trade representative, told reporters at breakfast Monday that ``we are going to have a terrible, terrible'' problem in world agriculture unless the European Community quickly agrees to negotiate with the US over European farm-product export subsidies.
Brock says that a harbinger of an imminent trade war surfaced in the Senate's budget plan, passed late last week. It included more aggressive subsidies for US farm exports.
``We have been had'' in agriculture and even free-trade advocates are ``fed up,'' he said.
The Senate plan would give government-owned surplus commodities to foreign buyers of US agricultural products as a bonus. The program could cost up to $2 billion a year.
European nations are going to find they ``can't compete with us in terms of deep pockets'' needed in a battle of subsidies, he said. In the process ``a lot of small countries will get chewed up.''
At the recently completed Bonn economic summit of Western industrial nations, France blocked unanimous agreement on a new round of trade talks under the General Agreement on Tariffs and Trade (GATT) at least in part to avoid having agriculture subsidies on the agenda. Brock said there was a ``pretty good'' chance of getting a new GATT round started by 1986.
Last week the Common Market's top trade official, Willy De Clercq, told the Monitor, ``The Common Agricultural Policy (CAP) is not an item, the principles are not an item for discussion in a GATT meeting. That is the responsibility of the European Community and is one of the bases for the European Community.''
Under the CAP the Common Market sets farm prices above world levels to ensure adequate incomes for farmers. The excess production that results from these higher prices is disposed of through subsidized exports to the rest of the world.
While Brock sees a farm trade war with Europe as a serious possibility, he remains an opponent of protectionist policies in general.
Protectionism is ``wrong, dangerous, and very expensive,'' and fails to answer the question of what steps need to be taken to make an industry competitive, he said. All protectionism does ``is redistribute unemployment'' among various groups, he added.
The majority of the overall US trade problem is due to the high value of the dollar on foreign exchange markets, Brock said.
Brock indicated that he was concerned about the course of US economic policy. For the US economy to avoid serious problems Congress has ``got to act quickly on the deficit and tax reform.''
Now that the Senate has passed a budget, ``the House's honeymoon is now over,'' he said. Brock admitted to being ``worried to death Congress will keep playing politics with this issue and then we are in the soup.''
If Congress adopts a budget cutting plan of the size the Senate passed last week, then interest rates could fall up to 3 percentage points and there could be a ``significant improvement'' in the economy in years 1986-88. If Congress fails to act and the economy takes a dive, it ``probably will hurt Republicans'' who as the party in power in the White House and Senate will be held accountable, he said.
Despite the current economic slowdown, the summer jobs outlook for teens may be at least as good as last year and maybe better, Brock said. The reason, he added, is that the economy's service sector is doing well and that is where most summer jobs are created. The manufacturing sector, which recently has showed signs of weakness, is not as important as a source of summer positions.
Brock admitted ``spirits were pretty low '' at the Labor Department when he succeeded the embattled Raymond Donovan as secretary. Brock said his review of department operations would be completed in a ``few weeks'' but that ``evidence of changes probably will take a little longer'' because of delays in getting clearance for hiring new employees.