TRADE NEWS BULLETIN
Friday, November 20, 1992
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GATT News Summary
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EC-US ANNOUNCE FARM TRADE DEAL

After two days of talks, the United States and European Community 
reached an agriculture agreement that settled a long-running quarrel 
over EC farm subsidies.  The accord covers the dispute over EC 
oilseed production and a broader farm subsidy package which has 
been blamed for holding up the completion of the Uruguay Round of 
the General Agreement on Tariffs and Trade (GATT).

President George Bush expressed relief that the deal had been 
completed.  "We avoided a possible trade war," Bush told reporters 
Friday.  "I am extremely pleased to announce that the United States 
and the European Community Commission have reached unanimous 
agreement on an agricultural package that should enable us to press 
forward on a successful trade agreement."

EC External Affairs Commissioner Frans Andriessen and EC Farm 
Minister Ray MacSharry returned to Brussels to announce the deal 
simultaneously with their U.S. counterparts in Washington.

European negotiators seemed pleased with the deal, which appears to 
satisfy most of the European demands just two weeks before 
prohibitively high U.S. tariffs on EC products were scheduled to go 
into effect.  U.S. Trade Representative Carla Hills announced the U.S. 
would impose 200 percent tariffs on $300 million worth of EC goods 
if the EC did not agree to reduce its subsidized production of soybean, 
rapeseed and sunflower seeds by December 5.

The new pact would limit the area of land devoted to oilseed 
production rather than the total amount of oilseeds produced as the 
U.S. had wanted.

Still in question is how the French government will react to the deal.  
Under a rarely used EC law,  France could veto an agriculture deal by 
contending that it violates its "national interest."   President Francois 
Mitterand does not want to enrage France's many farmers, 300 of 
whom burned an American flag outside the U.S. Embassy and 
vandalized a McDonalds restaurant in Paris Wednesday.  But because 
the deal is generally viewed as a good one for the EC and France, and 
because Mitterand is eager to complete GATT, France is not expected 
to block the deal.

Earlier, French farm minister Jean-Pierre Soisson said the agriculture 
dispute was not the only reason the Uruguay Round had not been 
completed.  "The Americans have made no progress on industrial 
patents, services, banking or industry.  It's only a question of 
farming and I think that is the sign of a profound imbalance and, let 
it be said, a certain form of American imperialism," Soisson said.

The U.S. claims that EC subsidies to oilseeds farmers cost U.S. farmers 
$1 billion a year. 

A summary of the EC/US farm deal:

OILSEEDS
Limits on the amount of land the EC can use for oilseed production.  
The EC would agree to a mandatory land set-aside of 15 percent the 
first year and at least 10 percent in subsequent years. No internal 
subsidies beyond 5.128 million multiplied by 2.36 tons/hectare.
In addition, up to 1 million tons of non-food oilseeds will be allowed 
to be produced. US Agriculture Secretary Edward Madigan said this 
will allow between 8.5 and 9.7 million tons to be produced.  Others 
predicted the actual number would be between 10.5 and 11 million 
tons.

EXPORT SUBSIDIES BY VOLUME
A reduction of 21 percent, with no aggregation or "swing."

REBALANCING
A vague agreement that if U.S. imports rise above a certain level the 
two sides will meet.

ANDRIESSEN CLAUSE
A reinstitution of the clause, which states that no EC beef exports to 
the Far East will be subsidized. 

Source: Bob Davis, "U.S., EC Show Gains in Talks on Farm Trade," 
WALL STREET JOURNAL, November 20, 1992, p. A2; Keith Bradsher, 
"U.S. Sees 'Good Progress' on European Trade," NEW YORK TIMES, 
November 20, 1992, p. A6; Robert Trautman, "U.S., EC Trade Talks 
Adjourn to Resume Later," REUTER, November 19, 1992; Martin 
Crutsinger, "Trade Talks," November 19, 1992; Juliette Rouillon, 
"France Defiant on Farm Trade Talks, But Braces for Deal," REUTER, 
November 19, 1992; "EC Would Cut Oilseeds Hectares to 5.13 million-
Sources," REUTER, November 20, 1992; Peter Blackburn, "EC, US 
Clinch Farm Trade Deal," REUTER, November 20, 1992; "U.S. Accepts 
New Conditions in Trade Talks," UPI, November 20, 1992.
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Produced by:
Kai Mander    
The Institute for Agriculture and Trade Policy (IATP)
1313 Fifth Street SE, Suite #303
Minneapolis, MN 55414-1546 USA

Telephone:(612)379-5980 Fax:(612)379-5982 
E-Mail:kmander@igc.org
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