US and EC collide in world food market

The United States and the European Community are drifting toward one of their worst farm conflicts ever. The problem is food -- too much of it on both sides of the Atlantic. And, with the US and the EC trying to unload on the world market, each has managed repeatedly to bump into the other.

On May 19, the US bumped a little harder, imposing quotas on white wine, chocolate, and other European imports. It is threatening tougher measures on July 1 if the EC doesn't show some give in current trade talks. [Allies at odds. Joseph C. Harsch, Page 9.]

``It's certainly a very large, very, very severe trade dispute,'' says US trade official Roger Bolton.

``It's probably one of the most serious situations between the United States and the EC in terms of agricultural trade,'' agrees Ralph Ichter, agricultural attach'e with the French Embassy here. ``I'm not very optimistic about how we can come to a solution.''

The nub of the controversy concerns Spain and Portugal and how their entrance into the EC will affect US farmers. Europeans and Americans agree that their move from national import policies to those of the EC will mean lost US agricultural sales. (From 1981 to 1983, Spain imported an annual average $624 million of US corn and sorghum.) But so far, the Portugal issue remains unresolved, and joint talks in Geneva have failed to work out a suitable solution on the larger controversy involving Spain. The US has threatened to put quotas on several key European food products if it is not properly compensated. The US and EC disagree on whether a possible gain in exports of US manufactured goods should be counted in the equation.

The problem underlying this controversy also remains unresolved: how to unload surpluses when there is too much food and too few buyers.

``For me the main problem is overproduction,'' explains Bruno Julien, EC agricultural attach'e in Washington, D.C. ``It seems to me we are at the worst point.''

In many ways, the position of the US and EC are strikingly similar: large agricultural subsidies (to the tune of some $21 billion for each this year, the EC estimates), overproduction, budget restrictions, and political pressure that makes farm-policy changes difficult. Indeed, both sides have bucked the political pressure and frozen or begun cutting back farm subsidies. The problem is that these moves are not coordinated.

US Trade Representative Clayton Yeutter is said to favor bold strokes and broad changes in farm policy -- a view apparently reflected by the Reagan administration, which pushed for and got deep cuts in some US farm subsidies. But according to various European officials, the EC is moving much more cautiously in tinkering with its common agricultural policy, known as the CAP.

``In the CAP, things are much slower,'' Mr. Ichter says. With this year's subsidy cuts, ``we'll start feeling the effect in five or 10 years, I think.''

``We shall not change the CAP around -- whether it's from your pressure or our pressure,'' adds Wilhelm Schopen, agricultural counselor at the West German Embassy here.

The controversy over farm trade probably won't spill into other US-EC trade disputes, says Mr. Bolton. ``The most significant danger is that somehow this dispute could lead to problems . . . for a new round of negotiations on GATT.'' Talks on the GATT (General Agreement on Tariffs and Trade), a body of international trading rules, is scheduled to begin Sept. 15.

``[Let's hope] people on both sides are rational enough to avoid a trade war,'' says Consultant J. B. Penn.

The other possibility is that the current conflict will actually force each side to improve its own agricultural trade policies, some officials say. ``Sometimes, you prevent war by showing your arms,'' says Jan Sonneveld, agricultural counselor at the Netherlands Embassy here.