European officials are deeply skeptical about possibilities of early success as they and top-ranking U.S. trade officials prepare for a new round of talks to thrash out a serious conflict over how to dispose of their burgeoning farm surpluses.
Two senior European Community officials, External Affairs Commissioner Wilhelm Haferkamp and his colleague in charge of agriculture, Poul Dalsager, are in Washington to open talks Thursday.
"It's a disaster scenario for both sides if we begin trying to grab each other's markets, let alone take steps to cut back trade with each other," a community official said. "On that basis alone we think cooler heads will prevail, but it does not look good right now."
"We cannot expect to have our farmers compete in world markets with one hand tied behind their back," explains a U.S. diplomat here. "The Europeans have been getting away with what I can only call institutionalized robbery."
In the last two decades, the Americans and Europeans have often clashed as fierce commercial rivals, accusing each other of unfair practices that affected billions of dollars in trade for products as diverse as steel, cheese and corn glutten.
But the current dispute threatens to spin out of control and degenerate into a self-defeating trade war, for, unlike previous conflicts over specific products, it goes right to the heart of the distinct agriculture policies pursued on both continents.
To keep prices stable and protect their farm communities from the vagaries of markets and weather, the U.S. and European governments have bought up surpluses.
As the United States and European Community accumulated vast stocks of butter, grain and meat, pressures have grown to find ways to get rid of the surpluses. To encourage buyers to take such enormous quantities off their hands, the Europeans offered heavy subsidies and sold farm goods abroad at prices far below what their own consumers would pay.
As American farmers have suffered through the worst recession since the 1930s, the Reagan administration has been pressed to fight back with its own subsidies rather than let butter and grain surpluses pile higher in storage warehouses at a cost to the taxpayer of some $6 billion a year.
The first serious shot in the subsidy war was fired in January, when the United States sold one million tons of wheat flour to Egypt at a price $25 a ton below the world market price.
The Europeans, especially the French, cried foul and accused the United States of stealing their traditional market. They demanded compensation of $30 million, which they claim was the loss incurred by the European Community in the Egyptian wheat deal.
"We felt this was only the thin end of the wedge," a community spokesman said. "We feared that the U.S. would soon try to conclude a massive butter deal while going after our other markets in the Mediterranean area."
The butter contract has been held in abeyance, chiefly because the Egyptians are flirting with the Europeans for an even cheaper arrangement.
But U.S. Trade Representative Bill Brock and Agriculture Secretary John Block have vowed that, unless the Europeans back down on the subsidies, the United States is prepared to fund cut-rate farm trade deals that would appeal to many of Europe's key customers abroad.
In the process, the prices of butter and wheat would become severely depressed and conceivably could drive Europe's common agriculture policy into bankruptcy if the cost of subsidies skyrocketed.
French Foreign Minister Claude Cheysson called the impact of the U.S. wheat deal with Egypt "mind boggling," and other officials have hinted that the French are prepared to start challenging the United States in its traditional markets of the Far East, including China.
Cheysson predicted that the trade squabble with the United States would worsen until the United States eliminates its vast surplus stocks over the coming months.
The United States claims it is only trying to persuade the Europeans to inject more free market medicine into their farm policies, or, if they refuse to do so, simply play by the same rules regarding surplus sales abroad.
Any full-blown trade war, however, would have serious consequences for American farmers, since the European Community remains one of the prime markets for soybean and other U.S. grain exports.