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EC To Probe New U.S. Subsidies; Worries About Belligerent Bush Tone

September 3, 1992

BRUSSELS, Belgium (AP) _ The European Community said today it would investigate whether the huge new wheat export subsidies announced by President Bush violate an international trade agreement.

Agricultural subsidies have been a major bone of contention between the United States and the EC. The dispute has delayed an ambitious attempt to reform the world trading system.

Bush announced Wednesday that new wheat export subsidies of $1 billion would be provided under the Export Enhancement Program. Last year’s cereal grain subsidies under the program were $768 million.

The move does not bode well for future trade relations, said an EC official, speaking on condition of anonymity.

The EC’s Executive Commission has called on Washington to gradually introduce any additional subsidies so as ″not to disturb world markets too much,″ the official said.

During the so-called ″Uruguay Round″ of global trade talks that began in 1986, the United States has demanded that EC nations reduce subsidies to farmers. The EC says the subsidies are necessary to protect Europe’s small family farm tradition.

The EC official said the EC intends to investigate whether Bush’s latest move meets the ″standstill″ procedure of the Uruguay Round, which requires trading partners not to introduce new measures that would be incompatible with the international General Agreement on Tariffs and Trade.

The new subsidies also were criticized today by Australian Prime Minister Paul Keating.

Wheat is one of Australia’s major exports, and farmers and the government have complained that U.S. export subsidies unfairly undermine the market for Australian wheat.

″We deeply regret that domestic policy pressures have overrridden a U.S. commitment to the pursuit of a less-corrupted international trading environment for farm products,″ Keating said.

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