Progress reported in trade talks U.S., Europe closer to farm-subsidy deal


WASHINGTON -- U.S. and European officials advanced toward ending their long-running dispute over farm subsidies yesterday, improving the prospects for a new world trade agreement that could add an annual $195 billion to the global sales of goods and services within a decade.

U.S. Trade Representative Carla A. Hills described her meeting with the Europeans as "good" and "useful" -- a striking improvement over the diplomatic chill that has characterized previous negotiating sessions.

Mrs. Hills, who was accompanied by Secretary of State James A. Baker III, said the United States provided the sort of "political dimension" to the talks demanded by the Europeans to break the deadlock, but she refused to give details.

The European representatives, led by Frans Andriessen, the European Community's trade commissioner, explained their recent reform of the Common Agricultural Policy, which traditionally has provided European farmers with production supports, export subsidies and market protection.

The reform package, agreed to earlier this month in Brussels, Belgium, cuts wheat prices by 29 percent over three years, more than the 20 percent reduction in price supports demanded by the Bush administration. But it does not directly address export subsidies or market protection, both of which the United States wants reduced. Mrs. Hills said she gave the Europeans suggestions to widen the reforms and address remaining U.S. concerns.

The U.S.-European deadlock over farm subsidies has become the main roadblock to completion of the five-year-long Uruguay Round of negotiations to liberalize international trade under the General Agreement on Tariffs and Trade.

"We have heard a lot from the Europeans that the Common Agricultural Policy reform did clear the way for solution of the Uruguay Round. We spent a lot of time exploring how that was the case," Mrs. Hills said.

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