Conflict Over Trade Policy Looms for U.S., Allies

PARIS — The United States and its major economic allies are heading for another conflict over trade policy that ultimately could dampen the global trade-liberalization talks now under way in Geneva.

The spat is expected to come this week at the annual ministerial-level meeting of the Paris-based Organization for Economic Cooperation and Development, a forum for industrialized countries. The two-day meeting begins Wednesday.

Washington wants the 24-country OECD to call on the Geneva trade negotiators to prepare a detailed outline by early December on what they intend to accomplish between now and the scheduled end of the trade talks two years from now. It also wants the OECD countries to agree on a specific framework for a companion package designed to dismantle all agricultural subsidies and import quotas, another major U.S. goal.

But European countries and Japan say they are not yet ready to go that far in either category and are expected to oppose any U.S. effort to push the OECD in that direction.

The issue is important because the OECD ministerial meeting is regarded traditionally as a prelude to the annual seven-country economic summit conference to be attended by leaders of the United States, West Germany, Japan, Britain, France, Italy and Canada each spring. This year’s summit meeting will be in Toronto, from June 19 through June 21.

U.S. officials had hoped to use the Toronto meeting to give the Geneva trade talks added political momentum. Administration officials view the Toronto meeting as President Reagan’s last major opportunity to advance his international economic goals before he leaves office next January.

The Reagan Administration is expected to make a strong push for both proposals. Daniel Amstutz, the U.S. envoy to the Geneva trade talks, set the tone for the U.S. campaign in a speech last Wednesday by warning that a failure by the United States and Europe to agree on a plan to overhaul worldwide agricultural policies could do “serious damage to Western cohesion” and bring on the demise of the 92-country General Agreement on Tariffs and Trade, under whose aegis the trade talks are being held. Treasury Secretary James A. Baker III is expected to take a similar tack at this week’s OECD meeting.

As things stand, however, it seems unlikely that Washington will win anything more than a routine endorsement of the trade talks, which are known formally as the Uruguay Round, after the September, 1986, conference at Punta del Este, Uruguay, at which they were started.

European strategists say they fear that by negotiating too detailed a framework now, they effectively would wind up having to “pay twice” in making concessions on key trade issues--once at the OECD meeting here next week and again when the issues come up in the Uruguay Round bargaining over the next several years.

European and Japanese officials insist that because of their own domestic political constraints they cannot go as far as the United States wants on the question of dismantling agricultural subsidies and trade barriers. Europe now has 11.25 million farmers, several times the number in the United States.

“We’re going to be adamant about this,” a top European trade official said last week. “If the U.S. wants to insist, we’re ready to be tough. We’re aware that we are dealing with a lame-duck administration.”

The Uruguay Round negotiators are scheduled to present a “mid-term” accounting of their progress so far at a meeting in Montreal on Dec. 5. But U.S. officials have recently expressed fear that the trade talks have begun to bog down and that the review may prove virtually meaningless.

Still, the toughness of the new U.S. position has angered many Europeans, who have complained that Washington is insensitive to the political problems European and Japanese leaders face at home. The Europeans also contend that the OECD meeting should do more to press the United States to slash its budget deficit.

The European Economic Community agreed last February on some measures to limit its agricultural subsidies, but the United States considers these inadequate. Washington has proposed phasing out all agricultural subsidies and trade barriers worldwide over the next 10 years.

Besides a framework for a long-term agricultural trade package, the United States wants the OECD to endorse specific principles for writing new rules to govern trade in services, which are not covered by existing trade regulations, and to set an agenda for talks on protecting patents and trademarks.

The ministers are also expected to urge European countries to step up their efforts to rid their economies of so-called structural rigidities such as restrictive work rules and excessively generous unemployment benefits, which are said to make their economies too inflexible. European countries are already moving in this direction.

Except for that, however, the OECD session is expected to eschew any new initiatives. Finance ministers from the industrial countries have already served notice that they plan to issue an optimistic statement on the outlook for the world economy and avoid calling for any new prescriptions.

Treasury Secretary Baker is scheduled to lead the American delegation to this week’s OECD meeting. Also attending will be Trade Representative Clayton K. Yeutter.