Mar 13, 1992


BRUSSELS, MARCH 11 (IPS) – Top officials from the United States met here Wednesday with their European Community (EC) counterparts in a closed door meeting aimed at bringing a speedy conclusion to talks on the liberalisation of trade in the Uruguay Round of GATT.

But at the end of the day, few details were given with regard to the outcome of the talks which came a day after U.S. Secretary of State James Baker said he had presented the EC with an "extraordinarily generous offer" in the controversial area of farm subsidy cuts.

On Wednesday, the EC said it would not react to the new U.S. proposals, with a spokesperson for the president of the European Commission, Jacques Delors, stressing the need for "secret diplomacy". The spokesperson said the EC would respond to the U.S. proposals "in writing".

The U.S. is very keen to conclude talks on the General Agreement on Tariffs and Trade (GATT) before the presidential election campaign gets into full swing, while GATT’s Director-General Arthur Dunkel has already stressed the need to wrap up the Uruguay Round by mid-April this year.

Talks on opening up world trade between GATT’s 108-member states broke down in December 1990 in Brussels when the United States and the EC drew daggers over the degree of reductions to spending on the agricultural sector to open up world farm trade.

At the outset of the Uruguay Round in 1986, the United States sought total global liberalisation of agricultural trade by the year 2000, and the abolition of all subsidies.

The U.S. later proposed a compromise 75 percent cut in domestic agricultural spending, in addition to specific percentage cuts to export subsidies - the latter key to the EC being able to compete on the world market in spite of higher production costs.

The 14-nation "Cairns group" of agricultural exporters, which includes many Latin American nations, Australia and New Zealand also lobbied for the maximum farm spending cuts.

But up to turn of the year the EC has resisted both deeper domestic cuts and specific reductions in spending with regard to export subsidies.

Furthermore, the EC has attempted to convince trading partners that reform of the EC's annual 40 billion dollar Common Agricultural Policy will mean eventual cutbacks in EC trade.

Two suggested features of the proposed reform are reductions in farm prices, and incentive payments to small farmers to produce. This would be effective where farmers are paid for just being farmers rather than for the amount of production.

But the EC wants to ensure that its "hand-outs" or "deficiency payments" to farmers intended under CAP reform, enter GATT's "green box", which allows for certain products to be exempted from GATT farm cuts.

As one observer of EC farm policy pointed out: "if deficiency payments - the lynchpin of CAP reform - are left out of the 'green box', CAP reform is doomed".

To date, the U.S. has been insisting that these new EC payments are also subject to GATT cuts. A major concession on the part of the United States then, would be to allow for these payments to be put in GATT's "green box".