Agriculture Commissioner Ray MacSharry, who led the European Community's fight to protect its 10 million farmers against trade liberalization under the General Agreement on Tariffs & Trade, is now drawing up a plan to reform the EC's massive agricultural subsidies. He is expected to present it to the EC Commission around Jan. 9, ahead of a GATT meeting in Geneva on Jan. 15. The Geneva gathering will explore chances for reviving GATT's Uruguay Round of negotiations, which collapsed last month over the EC's refusal to make deep cuts in farm supports. MacSharry's proposals go beyond previous EC reforms but still are unlikely to fully satisfy the U. S. and other agricultural exporters.
MacSharry's aim is to continue protecting small European farmers while reducing excess farm output. Measures would include limits on the number of dairy animals per farm and improvements in pension and social security to encourage early retirement by farmers, thus taking small farms out of production. Other proposals range from reforestation to lowering beef price supports. Such measures, however, don't appear to meet U. S. demands for a 90% slash over 10 years in EC agricultural export subsidies.
If efforts to revive the GATT talks fail, a round of U. S. retaliation is likely against unfair trade practices by the EC and other countries. President Bush held back such actions, based on Section 301 of the Trade Act of 1974, to avoid trade friction during the final year of GATT's Uruguay Round.
Now, a series of tit-for-tat trade reprisals by the U. S. and the EC is starting. After banning imports of U. S. beef dosed with hormones, the EC is now halting all imports of U. S. beef and pork, charging that U. S. slaughterhouses are unsanitary. In retaliation, the U. S. is barring white wines from Europe and other regions made from grapes dosed with a fungicide the U. S. has not approved for safety.