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Export Subsidies and Trade

December 23, 1988

The article "Trading Places" (Opinion, Dec.11) by Tad Szulc on the inconclusive outcome of the mid-term review of the Uruguay round of international trade negotiations quoted Michael Duffy, Australia's minister for trade negotiations as warning that "we're staring down the barrel of an all-out trade war." Agricultural exporting countries like Australia will be the ones to suffer most from any confrontation between major trading groups, particularly the North Americans and the Europeans.

I believe, therefore, that it is necessary to correct an inaccurate reference to Australia in Szulc's analysis.

Australia's primary producers are not subsidized. They are among the most efficient in the world, yet find themselves squeezed out of markets by practices of others that distort prices and levels of production. In effect, Australia is caught in the cross fire of a trans-Atlantic subsidies war and is placed in a most unfair position, being compelled to compete with countries that subsidize heavily.

Common agricultural policy of the European Community has distorted the international trading system through costly subsidies, while the competitive use of subsidies for agricultural production and exports by the United States compounds the problem and harms the trading interests of non-subsidizing countries like Australia. It is not correct to imply, as the article appears to do, that the United States is not subsidizing agricultural exports at present but "may begin applying its own exports subsidies from a $2.5-billion fund." That amount is already provided for the Export Enhancement Program by U.S. legislation, a program which for some years has been only too actively used to Australia's detriment. The United States also pays direct export subsidies, euphemistically called "marketing loans," on cotton and rice.

Over the years Australia has made plain its commitment to the multilateral system. The reasons are simple: The world as a whole is a bigger market opportunity than any part of it. Restrictive trading blocks do great harm to the countries on the outside.

The interests of all will be best served through the freeing up of market access and the elimination through negotiation of subsidies, tariffs and other costly trade barriers.

JOHN KELSO

Australian Consulate-General

Los Angeles

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