Negotiators for the United States and the European Economic Community agreed yesterday to extend negotiations aimed at averting an all-out agricultural trade war.
"A common desire emerged to try and find accommodations to our problems," the negotiators said in a joint statement issued after meetings between U.S Trade Representative William E. Brock and Deputy Agriculture Secretary Richard E. Lyng and two Common Market leaders--Vice President Wilhelm Haferkamp and Poul Dalfager. No dates have been set for further discussions.
U.S. trade officials said they felt "some limited progress was made" in the dispute over complaints that Europe was cutting into the United States' traditional Third World markets with subsidized farm products.
The dispute between the leaders of the Western alliance appeared on the verge of escalating from a skirmish to a full-scale trade war when Europeans threatened serious reprisals if the United States makes another move such as the recent $150 million sale of government-subsidized wheat flour to Egypt. That sale, which took a market away from the French, reportedly angered the Europeans, who felt it "poisoned" ongoing talks over the subsidy issue.
"The dialogue is now re-established," the Europeans said after the current talks. "They made some progress. . . . but there still is a lot more to be done."
The talks now swing back to the lower, technical level, and sources said they are likely to be held sometime next month, probably in Brussels. The United States gave no assurances, however, that it will stop selling subsidized farm goods at below-market prices to prod the EEC into reducing its subsidies.
Commerce Secretary Malcolm Baldrige, meanwhile, told an Export-Import Bank conference here that American exporters can expect increased problems trying to sell goods overseas this year as the rest of the industrialized world climbs out of the recession more slowly than the United States.
The strong U.S. dollar also will hamper the sale of American products, Baldridge said. At the same time, the nations of the developing world--faced with $600 billion in debts and a 30 percent drop in commodity prices since 1980--will emphasize the sale of their own exports while not having the cash to buy American-made goods.
He predicted that unfair-trade-practice cases before the Commerce Department--which have increased 600 percent in recent year--will go up even more as other countries use "fair means or foul" to sell in the U.S. market. And American purchases of imports are expected to go up this year along with the growth in buying power that is expected to accompany the end of the recession.
Ex-Im Bank President William H. Draper III announced yesterday that the bank has decided that defaults on guaranteed loans to Mexican companies were due to political, not commercial, risks. This means the bank will cover all of $500 million to $700 million in claims expected to come in during the next three years.
The defaults involve 1,000 or more Mexican firms that bought American goods they were unable to pay for because of government restrictions on currency transactions.
Defaults on loans usually are examined on a case-by-case basis instead of taking a country as a whole, but bank officials said the large number of Mexican cases would have swamped the system. Ex-Im Bank General Counsel Warren W. Glick said the bank is considering doing the same with other Latin American countries with large debt problems such as Argentina.
Draper said he will go to Mexico next month to talk with government officials there on recovering some of the claims once Mexico solves its balance-of-payment problems.