AGRICULTURE has been a source of friction between Europe and the United States for years, but the current quarrel is getting dangerous. It threatens fundamental damage to the intricate set of rules that govern world trade -- rules that by forcing tariffs steadily downward for four decades have contributed mightily to the prosperity of the whole planet. For the past four years, more than 100 governments have been negotiating a dramatic expansion of these rules in a long series of conferences known as the Uruguay Round, having begun there. The idea is to expand trade, and improve standards of fairness, by pushing the rules into new areas including those -- like the trade in farm products -- that are extremely sensitive in political terms.

If these talks collapse it will mean, ominously, that the major trading countries are losing interest in an open trading regime. It will open a period of retreat into special country-to-country deals, discrimination and protectionism. It's not yet probable, but it's beginning to look very possible.

The deadline for these negotiations is the end of the year, and things have not been going well. A month ago the trade ministers from the big countries met in California and failed to reach decisions on a list of issues, with agriculture foremost among them. Last week in Paris, at a meeting of the two dozen rich countries, the same issues came up with the same result. Next in this series of encounters will be the annual economic summit next month in Houston, where, with President Bush as the host, the heads of the seven big industrial democracies will be confronted with the same agenda. Houston looks like the make-or-break climax to these talks.

On the substance of the agriculture quarrel, the European Community is plainly wrong. The Europeans are not only overproducing, but they are dumping their surpluses on foreign markets -- subsidizing their exports, driving down prices and undercutting other and less fortunate farmers, often in the Third World. European politicians know that it's wrong in principle, but they have other things on their minds and find it inconvenient to invite trouble with their rural constituents.

Until now, for 40 years, in each of the seven previous rounds of world trade talks, the politicians of the trading countries have in the end come down on the side of wider trade and higher standards of living for everybody. It would be a melancholy commentary on the quality of the present leadership if this long line of successes should now be broken over Europe's farm subsidies.