President Reagan yesterday imposed quotas on imports of white wine, chocolates and other products from the European Community in retaliation for Common Market restrictions on U.S. farm sales to Portugal.
But the White House, apparently to defuse what has threatened to become a major transatlantic trade war, said the new retaliatory quotas would have no immediate effect on EC sales in this country.
White House spokesman Larry Speakes said the import limits were set high enough to avoid harming European sales because EC restrictions on grains and oil seeds, largely soybeans, would not pinch American exports until the end of the year. Speakes warned, however, that Reagan either will lower the quotas or impose tariffs when the EC restrictions begin to hurt American farm sales.
"What we are attempting to do here is to mirror the actions of the EC. When they put a hit on us, we'll come back and do a like action against them that will have the same dollar effect," Speakes said.
He described the president's actions as a "fair and measured" response to the EC's "illegal" and "unfair" quotas, and urged negotiations to avoid a transatlantic trade war.
"This is a dispute the United States sought to avoid," he said. "We hope the EC will respond in a way that will help us settle this dispute without further damaging our trading relationship."
This is the second major administration trade action in two days, and it comes as Congress is about to consider a major trade bill that President Reagan has attacked as protectionist and harmful to the nation's economy. Although Speakes denied there was any connection between the president's announcement of retaliation and upcoming congressional action on trade, he attacked a bill due to come to the House floor Tuesday as "heavily protectionist" and "catastrophic."
The administration intensified its assault on that Democratic-sponsored bill, releasing a letter to all congressmen from nine Cabinet members that called the bill "defensive and defeatist."
"This legislation would severely damage our economy, reduce our international competitiveness, destroy American jobs and embroil us in trade conflicts with virtually all our significant trading partners," the letter said. It was signed by Secretary of State George P. Shultz, Defense Secretary Caspar Weinberger, Commerce Secretary Malcolm Baldrige, Education Secretary William Bennett, Treasury Secretary James A. Baker III, Agriculture Secretary Richard E. Lyng, Labor Secretary William E. Brock, Budget Director James Miller and U.S. Trade Representative Clayton Yeutter.
Although the statement of presidential action appeared to postpone an immediate trade war, European and American officials emphasized the seriousness of the dispute between the United States and the EC over agricultural trade that arose when Spain and Portugal joined the 10-nation Common Market.
In integrating those two countries into Western Europe's agricultural policies, the EC established quotas on grain and oil seeds bought by Portgual and tariffs on Spain's purchases of grains. U.S. officials estimated these restrictions could cost American farmers $1 billion.
Speakes said the Spanish tariffs "began to pinch right off the bat." Deputy U.S. Trade Representative Alan Woods said American farmers have sold no grain to Spain since March 1.
Nonetheless, the presidential action to retaliate against the EC for the Spanish tariffs will not take effect until July 1 to allow time for negotiations over compensation to the United States for lost grain sales.