TENSE TRADE TIES TO DOMINATE EC TALKS

  Tense trade relations with the U.S.
  And Japan and concern about the foreign impact of a proposed
  European Community (EC) tax on edible oils and fats are
  expected to dominate talks by EC foreign ministers here
  tomorrow.
      EC diplomats said Britain demanded the early debate on the
  EC Executive Commission's proposal to impose a hefty tax on
  domestic and imported oils and fats in an attempt to head off a
  proposal it sees as extremely damaging to EC foreign relations.
      The proposal was the most controversial part of a reform
  package, due to be discussed by EC farm ministers later this
  month, of the EC's Common Agricultural Policy -- widely seen as
  the root cause of the EC's persistent financial problems and of
  tensions with major trading partners.
      The proposal is described by its promoters as a
  stabilisation program which would penalise a new sector going
  into massive overproduction and complement proposals to cut
  cereals and dairy production, rather than a straight forward
  tax.
      They say it would not only curb the growth of oils and fats
  production and prevent imports from filling any vaccum left by
  a fall in EC output, but would also save the EC some two
  billion European Currency Units, over two billion dlrs, in farm
  costs.
      It has provoked strong protests from domestic producers as
  well as foreign exporters, led by the United States.
      The diplomats said the protests had been received from most
  corners of the developing and developed world, ranging from
  Senegal, Malaysia and Indonesia, to Brazil, Argentina, Canada,
  Iceland and Norway.
      The proposal had little chance of approval by EC
  governments, with West Germany as strongly opposed to it as
  Britain, and Denmark, the Netherlands and Portugal also
  unconvinced of its political or economic wisdom.
      Even Mediterranean countries such as Italy, France and
  Greece, which backed similar proposals in the past, did not
  seem as enthusiastic now because olive oil had been added to
  the list of products affected.
      But the diplomats said a protectionist lobby in the U.S.
  And elsewhere was using the proposal as an excuse to promote
  anti-EC action, and the foreign ministers' debate should
  demonstrate the strength of feeling against the proposal within
  the EC and deprive its oponents of this argument.
      The ministers were also due to discuss proposals in the
  U.S. Congress for a range of protecionist legislation such as a
  bill that would curb EC textile exports.
      The diplomats said the ministers were expected to strongly
  back a Commission warning to Washington that such a bill, if
  enacted, would provoke swift EC retaliation.
  

