LETTERS TO THE EDITOR HOW FARM SUBSIDIES AFFECT TRADE

In Dick Lawrence's excellent article (JofC, Jan. 12) highlighting the crucial role of the United States-European Community agricultural dilemma as a potential roadblock to progress in the upcoming GATT trade round, he rightly points out that world agricultural trade is "rife with distortions."

The estimate of $28 billion yearly U.S. farm subsidies, largely in domestic programs to restrain production and give farmers limited protection against disastrous world price swings, would be placed in better perspective by pointing out that comparable EC subsidies are estimated by the World Bank to be about $50 billion a year.Furthermore, direct agricultural export subsidies of the EC are estimated to be in excess of $5 billion annually, far above the U.S. level - and those are the types of subsidies that most clearly distort trade patterns. At present, direct export subsidies are the only subsidies covered under GATT rules, and the first priority of the Uruguay Round will be to strengthen the direct export subsidy rules.

Indirect subsidies affecting trade, such as those related to domestic support programs, taxes, financing arrangements, etc. are extremely difficult to measure, and efforts to bring them under a meaningful system of international trading rules will require nations to give up important areas of national sovereignty and may require decades of arduous negotiations to achieve the successful removal of trade barriers that we sell.

Robert H. Frederick Legislative Director National Grange Washington, D.C.

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