Deal At Dawn

The trade dispute between the U.S. and the European Community had been simmering for months. In March, Portugal and Spain, the two new members of the E.C., put added tariffs on American agricultural exports that would cost U.S. farmers $500 million a year in lost sales. The U.S. responded with a threat to retaliate by July 1 against a host of European consumer items, including Perrier water, Brie cheese and Heineken beer. The E.C. came back with talk of restrictions on more products. Said Sir Roy Denman, the E.C. ambassador to the U.S.: "This is the nearest approach to trade war across the Atlantic I've seen in 35 years."

But last week the U.S. and the E.C. proclaimed a cease-fire just before the first shot. On a TWA flight from Washington that arrived at dawn in Paris, U.S. Trade Representative Clayton Yeutter struck a last-minute deal with top E.C. officials. While the Community did not revoke Spain's new tariffs, it promised to take away their sting. The E.C. pledged that Spain would not reduce its imports of agricultural goods this year. The Portuguese measures, in any case, were not expected to have an impact until 1987. Satisfied that American farmers will not suffer any immediate losses, Washington promised not to proceed, for the time being, with retaliatory actions.

The temporary accord will remain in place until Dec. 31. Meanwhile, trade officials will try to hammer out a permanent pact. "It buys time," concluded Frans Andriessen, vice president of the E.C. commission. Said a pleased Yeutter: "U.S. exports will be unharmed while we negotiate a fair settlement."