Last September when the United States haggled with trading partners over ground rules for a new round of trade negotiations, the most heated moments came during talks on farm subsidies. The US wanted to expedite negotiations aimed at ending such subsidies, while the Europeans and Japanese wanted the talks to be part of the five-year trade wrangling.
Yesterday the White House began plowing ahead with its own plan by announcing it would seek the elimination of what President Reagan called all ``trade distorting'' subsidies by the year 2000. The Reagan position was presented yesterday in Geneva where 90 countries met to negotiate the agricultural portion of the new round of the General Agreement on Tariffs and Trade (GATT), the treaty that covers trade ground rules.
The US move, supported by such agricultural countries as Canada and Australia, is not likely to be warmly received by the European countries where subsidies help to keep German and French farmers afloat. This week, Willy de Clercq, commissioner for external relations and trade policy for the European Community (EC) and Frans Andriessen, vice-president for Agriculture and Forestry, are expected in Washington to voice their concern over the pending trade bill. While there, it is expected, they will also react to the administration's proposals.
A spokesperson for the EC in Washington says the European position is to stick by the communiqu'e issued in Punta del Este. That communiqu'e pointedly did not mention a time frame to conclude the negotiations.
US farmers were uncertain how to react to the Reagan proposal, which would end almost all of the $26 billion in farm subsidies over a 10-year period. Asks one farm lobbyist, ``What do you define as a subsidy? Would the farm extension service be considered a subsidy?''
The Reagan proposal might also conflict with the pending trade bill, which proposes spending more federal funds to promote US agricultural products. Such spending might be considered a subsidy.
US officials are aware of the difficulty in getting GATT to adopt its views. United States Trade Representative Clayton Yeutter, at a White House press conference, said, ``This is a negotiation.''
As US officials are aware, however, Europeans want agriculture to be part of the overall trade negotiations, which include services, investment, and intellectual property rights. The European position is that agriculture should not be ``decoupled'' from these issues.
Americans say the time is ripe politically for such moves. It received some support for this view in May when Treasury Secretary James Baker III met with other finance ministers in Paris. And, at the Venice economic summit, leaders agreed not to stimulate agricultural production at a time of surplus.