EUROPE’S PLAN TO CUT FARM SUBSIDIES INADEQUATE: U.S.

BRUSSELS —  U.S. Trade Representative Carla Anderson Hills said Wednesday that the European Community’s new offer to cut farm subsidies at GATT world trade talks did not go deep enough.

She said the EC offer would amount to about 10% in new cuts up to 1996, compared to a new U.S. offer in the pipeline of more than 70% during the next decade.

The two sides are at loggerheads over reducing farm subsidies, the key issue needed to be solved at the so-called Uruguay round of GATT talks on liberalizing world commerce, which ends in December.

Hills said that unless the United States and Brussels could agree on how to cut farm subsidies and which ones to cut, the Uruguay round could collapse, wrecking attempts to free trade in other areas such as services.

She was speaking hours before EC Farm Commissioner Ray MacSharry was to present a package to cut subsidies by 30% between 1986 and 1996.

“That leaves only a 10% reduction in future,” Hills told reporters, referring to credit the EC is claiming for cuts already made. All negotiators have to put in offers to the General Agreement on Tariffs and Trade by Oct. 15.

“We would be prepared to go by as much as 70% reduction in the area of internal support and in the area of market access,” she said. “We would go even further in the area of export subsidies.”

Washington has singled out the last as the area in most urgent need of attention. Rich countries such as the United States and EC members are blamed for distorting world markets with farm subsidies in a way that squeezes Third World commodity exporters out of the market.

Export subsidies were distorting the market to the point where Argentine farmers might as well give their wheat away, Hills said.

The EC insists it will cut support across the three main types of subsidy -- domestic support, barriers to market access and export subsidy -- by what is known as an aggregate measure of support. But it will not single out export subsidies.

Hills said Washington had no problems with using an aggregate measure support for internal supports such as when the EC buys its farmers’ meat to put into cold storage when prices are low, but she wanted the EC to give more on export subsidies.