The Bush administration, attempting to ease a bitter four-year dispute with Western Europe over government support for agricultural trade, yesterday backed away from its insistance that all farm subsidies be ended. It proposed instead that they be sharply reduced over the next 10 years.
The transatlantic dispute has threatened progress toward a successful conclusion in December of the Uruguay Round of global free-trade talks, which President Bush has made his top trade priority.
The new U.S. proposal calls for a 90 percent cut by all nations in subsidies paid to farmers to help their overseas sales; for a reduction in all barriers to agricultural imports by 75 percent; and for a cut in major agricultural support payments that distort trade flows by 75 percent -- all over a 10-year period.
U.S. Trade Representative Carla Hills called the U.S. proposal "ambitious" and said it closely follows the outline endorsed during the Houston economic summit in June by the leaders of the seven largest industrialized nations.
The 12-nation European Community had no response to the new proposal, which was presented to negotiators in Geneva yesterday. The talks are aimed at strengthening and expanding the rules of free trade known as the General Agreement on Tariffs and Trade (GATT).
The EC is working on its own plan, which will offer some reductions in the subsidies paid to European farmers.
As presented by the EC, the plan calls for smaller reductions of some subsidies than the U.S. proposal, but it fails to attack export supports that U.S. officials say allow less efficient European farmers to take markets away from American agriculture.
"We are still oceans apart in concept, literally and figuratively, and that is the problem," said a senior U.S. trade official.
The official said the EC gained its present share of world farm markets through export subsidies, and it is now trying to get a GATT agreement that allows the community to keep those markets.
"It's a little like Saddam Hussein saying, 'Let's talk about peace in the Middle East now that we've got Kuwait,' " the official added.