In the wake of the recent Boon economic summit, negotiations for a new international trade agreement center around half a dozen key issues glossed over by the political leaders of the key industrial nations.
"The feeling is that the technical boys will dredge back up a lot of differences that were papered over by the political people," a top negotiator said here last week.
Negotiators for the seven nation's attending the summit hammered out a "framework of understanding" on the eve of the Bonn meeting which they hoped would serve as the basis for continued bargaining.
Key items still on the negotiating table involve the so-called "Strauss products," the nickname given the agricultural items U.S. trade negotiator Robert Strauss insists must be given greater access to foreign markets.
Although some progress has been made in this area, negotiators say an impasse exists in many areas since the Europeans also produce large quantities of the items on "Strauss" list and do not want to risk upsetting the Common Agricultural Policy (CAP) of the Common Market.
"You'd have to reform the structure of the CAP to let in turkey parts (one of the "Strauss products")," muses a European negotiator. He noted that the Common Market Maintains prices for poultry farmers by buying at an intervention price and adjusting duties on imports so that foreign chickens and turkeys are not sold for less than the European price.
The Europeans are also resistant to opening up their markets to American citrus fruits, another "Strauss product", since the EECC already includes two Mediterranean producers and Spain and Portugal are waiting to join the Common Market.
Meanwhile the Japanese, who finally bent under U.S. pressure at the Bonn summit to increase their industrial tariff reductions on certain items of interest to American business, such as computers and color film, are still holding out over reducing protection for their farmers, especially beef and citrus fruit producers.
An added problem in the politically sensitive agricultural area, is the U.S. demand that Europeans crack down on subsidies which gave them a trade advantage. The U.S. maintains that it is not attacking the CAP as such, but U.S. negotiators say that the EEC pracitce of buying domestic farm products at the CAP price and exporting the produce at lower world market prices results in a distortion of trade flows.
Although the fight over tariffs and quotas on farm products has moved into the spotlight lately, even more world trade may be affected by what negotiators decide about the complicated maze of subsidies, such as tax rebates, governments grants and low interest loans to industries which sometime provide the recipients an unfair competitive advantage.
In the "framework of understanding" the U.S. agreed to apply an injury test before imposing extra duties to compensate for foreign subsidies and the Europeans acknowledged the need for greater discipline of the use of subsidies.
There is agreement in principle to a "two-track" approach. The U.S. would finally come into line with existing international trade rules by not imposing countervailing duties (extra taxes to compensate for a subsidy) unless there is proof the subsidy injures domestic producers. On the second track there would not be an injury test, but countervailing duties or other measures could be applied if the subsidy deprived a nation of benefits of the general agreement on tariffs and trade (GAIT). An international panel would settle cases.
But trade negotiators have never been able to come up with an agreed definition of subsidies and the Europeans are resisting American demands to draw up a list of subsidies.
"It's politically sensitive," explains a European negotiator. "It's a direct attack on the way in which mixed economies in Europe work." The Europeans fear that by listing a type of subsidy the assumption would be made that the practice is likely to give rise to an injury of American industry or distort trade flows.