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Prime Minister Says Subsidies Will Corrode Relations

September 8, 1992

CANBERRA, Australia (AP) _ Prime Minister Paul Keating said Tuesday he has warned President Bush that a plan to increase U.S. wheat subsidies will have a ″corrosive impact″ on relations between the countries.

Bush’s announcement of an extra $1 billion in subsidies has led to a major political squabble in Australia.

Opposition parties have accused the government, which says it has gained Canada’s support for a complaint to the General Agreement on Tariffs and Trade, of not responding strongly enough.

Bruce Lloyd, a deputy leader of the rural-based opposition National Party, has said the United States now is Australia’s ″No. 1 trade enemy.″

Keating, quizzed on the issue in Parliament, released a letter he received from Bush and the response he sent to the president.

Bush’s letter said he knew Australia would be concerned about his plans to increase the subsidies, which are expected to have a major impact on Australia’s wheat exports.

″In announcing the package, I made a point of emphasizing that it was aimed at countries which subsidize wheat exports and not at those, such as Australia, which do not,″ Bush said.

″We are continuing to take into account Australia’s interests as a non- subsidizing exporter.″

Keating said he appreciated the president’s confirmation that the United States remained firmly committed to reaching agreement in the Urugay Round of negotiations under the auspices of GATT.

″Nonetheless, I have to say that the issue of export subsidies remains a major difference between Australia and the United States,″ Keating wrote to Bush.

″It will continue to have a corrosive impact on public support in Australia for the relationship between our two countries. This is a matter which should be of concern to us both.″

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