World stumbles towards trade war

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The Independent Online
THE EUROPEAN Community was struggling to hold off US trade sanctions yesterday, as the world hovered on the brink of trade war.

Washington will impose punitive tariffs on a range of goods - mainly French - in days, Carla Hills, the US Trade Representative, said in Pittsburgh yesterday.

Her comments followed last week's breakdown in tariff and trade talks between the US and the EC. The US is blaming the breakdown on French insistence on retaining subsidies for farmers.

Australia's National Farmers Federation (NFF) said yesterday that it wants Australian consumers to boycott French goods, unions to consider banning ships carrying French products and the government to review its contracts with French companies.

The US is hoping that pressure from other EC countries will persuade France to back down. The EC must find a common position before the US will continue negotiations, said Ms Hills.

The EC Commission said yesterday it was drawing up a blueprint for agreement with the US which would reduce differences over agricultural subsidies, and revive a deal to liberalise international trade that has already been six years in the making.

John Major and Helmut Kohl agreed in a half-hour telephone conversation on Friday that the Commission must solve the row.

But Pierre Beregovoy, the French Prime Minister, said bluntly yesterday that no early deal was possible. 'The Common Agricultural Policy has allowed the Europeans to stay united in the Gatt talks . . . If European unity were to break down . . . the anger of farmers against the (French) government would be great,' he added.

France's Socialist government is facing an election in five months with its popularity in the doldrums, and opposition parties yesterday lodged a motion of censure against it.

The motion, which could bring down the government, claims that it is failing to help farmers.