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Time - Man of the Year
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1993-04-08
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THE WEEK, Page 18WORLDTrade War? Or Trade Peace?
Any E.C. deal that satisfies the U.S. might mean isolating France
The nominal stakes -- soybeans and Pouilly- Fuisse wine --
hardly seemed worth war. But of course other matters are at
issue. The future of French politics, for one. Also the balance
of power within the European Community, and Washington's
determination to stop playing Uncle Sucker in trade. Oh yes, and
a grand trade deal that eventually might give a huge lift to the
world economy.
The scrap began when Washington threatened to add a 200%
tariff (thus tripling prices) on white wine imported from Europe
-- unless the E.C. agrees by Dec. 5 to extraordinary cuts in
subsidies that encourage production of oilseeds. In the U.S.
view, these subsidies unfairly limit export sales of American
soybeans. But France is trying to stall any such reductions
until after parliamentary elections in March. President Francois
Mitterrand's Socialists face defeat as it is, but the anger of
farmers with reduced incomes might cost them even more votes and
seats than expected. Reasoning: it's better for a successor
center-right government to reduce subsidies further and face
farmer fury.
Meanwhile, though, a U.S.-E.C. trade war could kill a deal
among the 108 members of the General Agreement on Tariffs and
Trade to lower many barriers to commerce. So while starting to
list U.S. products for counter-retaliation, the E.C. also moved
to reopen negotiations with Washington. France's partners
forced E.C. Commission President Jacques Delors to reinstate Ray
MacSharry, the Community's principal agricultural negotiator,
who had resigned after accusing Delors of undermining his
efforts. British Prime Minister John Major insisted on a deal,
and German Chancellor Helmut Kohl called the prospect of a trade
war "politics of idiocy." Mitterrand conceded that the isolation
of France would be "very dangerous." But France has support from
Italy, Spain and Belgium. A compromise is foreseeable, but not
readily.