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US says it will give up subsidies, if other countries will do the same.

US Sys It Will Give Up Subsidies, If Other Countries Will Do the Same

"We've said for the last three years that if everyone else is willing to give up subsidies, we're willing to do the same thing," a U.S. trade official told the Western Frozen Food Convention in San Diego, Calif., this spring.

With the subsequent agreement of Congress to continue "fast track" trade negotiations towards both a North American common market and worldwide free trade, the issue of agricultural subsidies is likely to take center stage.

Len Condon, a deputy secretary to U.S. Trade Representative Carla Hills, was sent to San Diego to brief the frozen food industry on "The Truth about Trade with Canada and Mexico," and specifically negotiations towards a free trade agreement with the latter.

What the United States is actually after, Condon stressed, is a three-way trade agreement between the U.S., Canada and Mexico. That would create a common market with a combined population of 360 million, and an economy of more than $6 trillion. Three-way "working groups" had already been set up before Congress cleared the way for formal talks by extending "fast track" authority.

Under "fast track" authority, the government is able to conclude a treaty and submit it to Congress for an up-or-down vote - that means it has to be approved or disapproved as is, without amendments. Without "fast track" authority, Condon said, both the North American talks and the Uruguay round of the worldwide GATT (General Agreement on Tariffs and Trade) negotiations would be "as good as dead," because no other country would want to make a deal that Congress could break.

With respect to U.S. goals in upcoming talks, Condon declared:

"Our objective with respect to Canada is to preserve all the trade liberalization that was achieved in the U.S.-Canada free trade agreement, and to try to improve on that agreement and expand that agreement; but there's been a commitment between our government and the Canadian government that there'll be no backsliding with respect to the U.S.-Canada free trade agreement in the North American free trade agreement. With respect to Mexico, our joint objectives with the Mexicans are to remove all trade barriers on goods, to liberalize trade in services and investments, and to generally do whatever we can do to expedite trade between our two countries."

Mexico has liberalized its economy considerably in the last few years, through "very dramatic policy changes" that have opened up the country to imports, brought debt under control and created significant economic growth. Condon said the U.S. hopes to negotiate a three-way free trade pact in less than the two years it took to work out the one with Canada, but that the provisions of the Canadian treaty (eliminating tariffs in 10 years, and sooner in some categories) will be a "model."

But while the Canadian treaty eliminated tariffs as such, it failed to remove agricultural subsidies and quotas. Canada still maintains strict quotas on dairy products and most poultry products, and imposes severe licensing restrictions on most products containing wheat. "We can't promise we'll resolve all our problems with the Mexicans, either," Condon said - but it isn't really a question of the Canadians and Mexicans, for subsidies and other non-tariff barriers are built into the world trade system.

Although GATT talks in Brussels last December broke down over the issue of subsidies, Condon said he thought it was a "positive step" that the European Community - especially France - had been put on the spot for defending subsidies. "We isolated the European Community," he said, and that may cause the Europeans to "take another look at their position." If non-tariff barriers can be reduced or eliminated in future GATT talks, he added, the results could be "folded into" a North American free trade agreement.

Another concern is health and safety regulations. The Uruguay round has already "made a lot of progress" on this, Condon said, and "we have a document that is pretty close to final," using the Codex Alimentarius as a basis. But there are also environmental issues - environmental groups as well as organized labor, the textile industry and some agricultural and transportation interests are opposed to free trade with Mexico, which allows use of chemicals banned here. Condon said there will have to be "closer cooperation" between the U.S Environmental Protection Agency and its equivalents in Mexico and Canada to resolve these issues.

One way or another, the U.S. wants a treaty with Mexico - if it can't work out a three-way pact, it will settle for a two-way pact (It's even conceivable, although unlikely, that Canada and Mexico could sign a free trade agreement between themselves). The "fast track" procedure has already been used for a free trade agreement with Israel as well as with Canada, and for terms of the Tokyo round of GATT talks. But there's no guarantee Congress will approve a North American free trade agreement in an up-and-down vote - only that the U.S. Trade Office will do its best to negotiate one.
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Publication:Quick Frozen Foods International
Date:Jul 1, 1991
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