US-French Squabble Threatens to Derail World Trade Deal

OVER the past weeks, French politicians and press have issued warnings about the influence of the United States - from the way French cinema has been polluted by American films to an ``Anglo-Saxon conspiracy'' that has driven down the value of the French currency.

This week the French are protesting what they consider the ultimate in economic threats - Washington's apparently adamant stand on the reduction of European agricultural subsidies. The issue has outraged French farmers and cut to the core of French politics.

Paris has opposed the so-called Blair House Accord, an agreement on agriculture negotiated last November by the US and the European Community. Trimming European farm subsidies is a blow to French farmers who enjoy a high degree of government financial support. But the US says it is essential for a broader deal on the regulation of trade and finance between the 116-member General Agreement on Tariffs and Trade.

GATT nations have been pushing for completion of the Uruguay Round of trade talks - now in their eighth year - by Dec. 15. These longtime trade warriors seemed closer than ever to a global trade deal. But there is concern that a deal may be scuttled by an unresolved Franco-American dispute.

EC Trade Commissioner Leon Brittan cautioned the European Parliament earlier this week that ``Europe would be wrong to try to shake off recession through national economic recovery programs that ignore'' the increasingly interdependent world economy.

Prodded by the French to get the US to ease conditions of the Blair House Accord, Sir Leon met with US Trade Representative Mickey Kantor in Washington Monday. Kantor was unequivocal in his response: Blair House will not be renegotiated.

Continuing the fight, French Agriculture Minister Jean Puech said after the Brittan-Kantor meeting that it was ``too early to expect results from the talks.'' The stakes are high, he said: ``I am convinced that the US has understood that if they want a general GATT agreement, the agricultural issues must be resolved. What is important now is not public declarations from Mr. Kantor, but the content of successive meetings with the Americans.''

``It looks bad, actually much worse than it really is,'' says Jacqueline Grapin, president of the Washington-based European Institute, a regular forum for high-level US-European dialogue. But there are ``irrational factors,'' she says. ``Agriculture in France is part of the blood of the nation, and it is not easy to negotiate.''

WHILE the Clinton administration insists that the US agricultural position is steadfast, trade watchers speculate that Washington may ultimately give in on technical rather than substantial points. Some say the US will agree to extend the amount of time (beyond the six-year Blair House Accord) it has committed itself to not initiating challenges against the EC farm subsidy regime. Others suggest that the US could restrain exports of corn feed to the EC to end dominance of the EC animal-feed market.

The French threat to eliminate the cornerstone of the Uruguay Round worried leaders from the Group of Seven (G-7) leading industrialized nations - the US, Britain, Canada, France, Germany, Italy, and Japan - who met in Washington this week before the annual meetings of the International Monetary Fund and the World Bank.

In July the G-7 heartily endorsed the Dec. 15 deadline for completion of a global trade deal. This week, the G-7 saw hints of protectionism and trade wars that most economists say would eat away at, rather than enhance, recoveries in the recession-weary industrialized world.

French Foreign Minister Alain Juppe calls the Blair House agreement ``only one stage of the process.'' On Monday, Mr. Juppe will join other EC foreign ministers in Luxembourg where the accord will top the agenda.