EC COMMISSION DEFENDS FARM PROGRAM

  The European Community's (EC)
  executive Commission defended attacks on major elements of its
  ambitious program to rid the EC of its controversial farm
  surpluses, after strong attacks from northern states.
      Britain and West Germany, backed by the Netherlands and
  Denmark, opposed a proposed tax on edible oils and fats which
  has already sparked strong protest from exporters to the EC led
  by the U.S. and from EC consumer groups, diplomats said.
      But EC Agriculture Commissioner Frans Andriessen told
  journalists he had warned ministers that failure to agree the
  tax, proposed last month as part of the Commission's annual
  farm price package, would leave a large hole in the group's
  budget.
      He added that he hoped states had not yet made their mind
  up for good. "I hope the debate is still open, if not there will
  be a formidable hole in the budget," he said.
      The shortfall could reach two billion dollars in 1988 and
  would be only slightly less this year, he said.
      Foreign ministers were taking a first look at the tax ahead
  of farm ministers in a move described by diplomats as
  unprecedented and welcomed by Andriessen as a sign ministers
  recognised the importance of reforming the EC's farm policy.
      The proposed tax is designed to provide the EC with extra
  cash to finance community oilseed crops at their current levels
  and to brake a dramatic decrease in olive oil consumption by
  making it more competitive with other oils.
      Andriessen noted the EC has over two mln olive oil
  producers, mostly small farmers, who could be helped by the
  tax.
      "What we are suggesting is reasonable, it should be better
  understood not just outside the community but at home," he said.
      Britain, normally a keen advocate of radical changes in the
  EC's costly farm subsidies system, warned the proposal to
  impose the tax on both domestic and imported oils and fats
  could seriously damage the EC's trade relations with other
  countries.
      Britain also warned that the tax could hit developing
  countries already receiving aid from the EC, they said.
      The Commission also defended proposals to dismantle
  Monetary Compensatory Amounts (MCA) -- a system of cross border
  subsidies and taxes to level out foreign exchange fluctuations
  for farm exports -- against harsh West German criticism.
      In a letter this weekend from Chancellor Helmut Kohl to EC
  executive Commission President, Jacques Delors, Kohl made clear
  such a dismantling would mainly hit West German farmers.
      Diplomats said West Germany again repeated its criticism at
  the talks here but Andriessen told journalists that Germany had
  been alone in its opposition. The question was a key aspect of
  the Commission's farm price proposals, he added.
     Ministers also agreed a 3.5 billion dlrs scheme to rid the
  EC of its butter mountain, despite Spanish and Portuguese
  opposition.
      The scheme will pay for the disposal of one mln tonnes of
  unwanted butter, by selling it at knock-down prices, turning it
  into animal feed or exporting it at subsidised prices.
      National capitals are due to be reimbursed later out of
  savings from another plan to curb milk production.
      Diplomats said Spain and Portugal have been angered by the
  scheme, which they feel forces them to pay for massive
  surpluses built up before they joined the community last year,
  but the two countries did not block today's vote.
  

