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Farm Subsidies Threaten World Economy, Lyng Warns

September 24, 1986

WASHINGTON (AP) _ Agriculture Secretary Richard Lyng today hailed an agreement to place a phaseout of farm subsidies on the table at upcoming trade talks, warning that they are ″threatening the economic stability of the world.″

Lyng said it is vital for negotiators to tackle the subsidy issue as they fashion a new version of the General Agreement on Tariffs and Trade, the 92- nation pact that governs much global commerce.

″If we fail to try, we have no chance,″ Lyng told a press briefing on last week’s GATT meeting in Punta del Este, Uruguay.

Lyng said it was clear that ″from the very outset, the Europeans wanted no linkage between the words export subsidies, phaseout or reductions.″

The U.S. delegation, however, continued to press the European Economic Community for agreement to place the subsidies on the agenda for the new round, said Lyng.

The conference finally settled on language that agrees to consider all subsidies, direct and indirect, which at least one European official has suggested was merely a diplomatic way of skirting the dispute.

Lyng acknowledged that the subsidies concept needed further definition and that the wording left room for substantial interpretation.

″It looks like a horse put together by committee that looks like a camel,″ he said. And he added that it ″could be part of the negotiating problem″ if Europeans try to hold the United States at bay in its demands for a subsidy phaseout by repeatedly finding one ″indirect″ U.S. subsidy after another to criticize.

He said one negotiator at Punta del Este suggested in conversation with him that U.S. tax depreciation provisions, the investment tax credit, water projects in western states and even the Agriculture Department’s extension service that provides information to farmers could all be viewed as subsidies.

Nevertheless, the wording represented progress, Lyng said.

″Without export subsidies as a matter of discussion, we didn’t have a sensible basis for negotiation,″ he said.

″We don’t want to fight with them, we want to make peace with them,″ he said. ″We want to set up a sensible set of rules...″

Because of progress at Punta del Este, he said, the GATT negotiations are already ″much further along in this round than we were in the Tokyo round. Things will fall into place much faster.″

On other subjects, Lyng predicted that marketing loan legislation proposed on Capitol Hill as an export stimulus is unlikely to pass before the Oct. 3 target date for adjournment.

He said criticism that the current law, with its lower loan rates, has failed to spur sufficient exports has blossomed mainly ″because the election is coming up before the farm program has time to work.″

″The constant talk about marketing loans has been an impediment to export sales,″ Lyng said. He said the amount of U.S. grain shipments ″is probably up now.″

″It will pick up even better when the Congress goes home,″ he added.

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