Why did the EC finally change course after the long fight, led by the French, to keep farm production and exports high? Because Washington got tough, analysts say. EC members were facing a Dec. 5 deadline to cut a deal or suffer U.S. import taxes on $300 million in EC goods. The import taxes would have tripled the cost of white wine in the United States, a slap at the balky French, whose stubbornness on farm issues threatened to scuttle the global trade agreement. Deputy U.S. Trade Representative Julius Katz told NEWSWEEK that the American tariff threat “had the effect of a public hanging” on EC members–“it concentrated their minds wonderfully.”
But the aura of good cheer was tempered by uncertainty. The French government has the power to veto the agreement–and might. It is under heavy pressure from it’s mighty farmers’ groups, who oppose any givebacks to the United States. France had stood by the farmers, even though a GATT panel has ruled twice since 1991 that the Europeans were in the wrong. The French government is obviously reluctant to use its veto card without an overwhelming mandate, so it has spent much of the past week bad-mouthing the agreement. The French government recently leaked a long study purporting to prove that all European farmers would be seriously damaged by the agreement, which was clearly on the way-and raised the specter of hundreds of thousands of cows, pigs and chickens that would have to be slaughtered after farmers lost their subsidies.
The government’s campaign whipped up the farmers into a rowdy state. Last week they rioted in Paris: at the American Embassy, 2,000 angry farmers threw vegetables and rocks and burned the American flag. Now that the agreement has been announced, more demonstrations-including nationwide protests this week by the National Farmers Union-can be expected. The sound bites flew: “A feeling of anger reigns among farmers tonight,” said Christian Jacob, president of the National Center of Young Farmers. Yet many EC hands expect that France will end up signing the agreement. France is still seeking European approval for the controversial Maastricht Treaty on political and financial union. Trashing GATT would split the Franco-German partnership that French President Francois Mitterrand holds dear. It would also cast France as the villain that singlehandedly blocked a world trade deal that could build the economies of the 108 GATT member states by $200 billion a year. But Mitterrand’s government could simply be laying the groundwork to accept the deal in return for concessions in other areas from their Euro-partners. “We can’t see in these circumstances how France can possibly back out or sabotage matters further,” says a U.S. negotiator.
An American victory could add millions of tons to U.S. grain exports, but American farmers will have to fight for that market with farmers from Canada and Brazil to Australia. Meanwhile, the overall GATT agreement is still a long way from completion; though many subagreements have been signed, they are provisional-and many areas are still in dispute, including some shipping and banking rules. Even if all of the parties can finish off the GATT agreement by early next year, American lawmakers will still have to approve it. If the agreement reaches Congess by March 1, lawmakers will have until June 1 to vote the deal–no amendments possible–up or down. Clinton has voiced support for GAIT, and is expected to enjoy a friendly relationship with Congress for a while. But passage still isn’t ensured. American soybean farmers, among other powerful interest groups, have already protested that the agreement still favors the Europeans.
Though exhausted by the six-year battle to wrestle the current talks (known as the Uruguay Round, after the country where negotiations began, in 1986) to completion, GAIT administrators are already talking about the next round. The next GATT could focus on resolving some of the international conflicts between strong environmental policies and economic growth. In other words: a “green!” round. It’s an appealing idea. However, the current trade talks have been so much trouble there’s some feeling that big global deals might not be worth the effort. The next round could be a long time in coming.
