The Treasury Department has decided to grant a special waiver from the nation's countervailing duty laws to imports of Danish butter cookies, sources said.
U.S. and European officials had worried that if the Treasury found it necessary to impose the levies on the $6 million of imported butter cookies, the move could have spillover effects on millions of dollars of processed food imports from the European Economic Community.
In finding last summer that Danish cookie makers were the recipients of a "bounty or grant" from the Eruopean Community, the Treasury struck at the heart of a complicated series of subsidies that makes Europe's "common agricultural policy" work.
Such agricultural subsidies are one fo the thorniest issues facing negotiators at the four-year-old multilateral trade talks in Geneva that finally seem to be bearing fruit.
The Treasury decided last July that Danish cookie makers were subsidized because they are able to get export rebates on some of the ingredients they use in their cookies and because they have access to low-priced butter from the Common Market's buffer stocks.
Once the Treasury determined subsidies existed, it had to decide - by Dec. 28 - whether to impose a countervailing duty in the amount of the subsidy or to grant a waiver from the law for a year.
By granting a waiver, the Treasury sidesteps the major impact the decision would otherwise have on the course of the Geneva negotiations.
Because a side variety of European food exports to the United States are made with subsidized ingredients - from German wines to which sugar has been added to hard candies made in Britain - European officials were concerned about the Treasury decision.
Officialy, Treasury spokesman yesterday said no decision had been reached in the case and did not have to be until Dec. 28, but sources unofficially confirmed that a waiver had been issued.