Agricultural Export Friction Poses Biggest Trade Threat, Says Baker

Article excerpt

WASHINGTON - Treasury Secretary James A. Baker III said Wednesday that growing trade friction with the European Community over agri cultural exports poses ""the biggest threat to the world's free trading system.''

Baker said in a speech to the U.S. Chamber of Commerce that the dispute was likely to be a major item on the agenda of the May 4-7 economic summit in Tokyo, ""and we have to find a solution to it.''

Earlier Wednesday, Sir Roy Denman, the community's ambassador to the United States, told a group of reporters that Europe stands ready to strike back if the United States follows though with threatened new trade restrictions.

""We don't want a confrontation. But if there is a confrontation, then so be it. We will answer with corresponding measures,'' Denman said.

Remarks of both Baker and Denman were in response to U.S. plans to place new restrictions on European shipments to the United States next month in retaliation for lost U.S. food sales to Portugal and Spain.

The U.S. sales were threatened when Portugal and Spain joined the European Community, also known as the Common Market, on Jan. 1 and came under the communty's system of trade preferences for West European farmers.

The United States is demanding compensation for the lost farm outlets and has threatened to impose new restrictions on a list of Western European products - including wine, Scotch whiskey, cheese, beer and confectionary - if the dispute isn't resolved quickly.

Denman claimed U.S. exporters actually would do better in the long run in trade with Spain and Portugal and he disputed U.S. claims of economic losses.

""If there is damage to American trade, I fail to see it,'' he said. ""Silos all over Spain are bulging with American corn.''

A senior administration official, who spoke to reporters in the White House briefing room on the condition that he not be identified by name, said ""we are dangerously close to kicking off a trade war'' with the European Community over the dispute.

""It's important that we try to lesson the rancor,'' he said.

The official said the current situation could easily escalate into one where ""they act, we retaliate and then they retaliate again. …

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