Essay Title: 

IR250

April 3, 2016 | Author: | Posted in government, social sciences

NEGOTIATION STRATEGY MEMO word count 1 ,228

TO : Willy de Clercq , Ambassador to the EC

FROM : Vanden Abeele , Belgian Representative in the Directorate General

DATE : 5 December , 1986

THE PROBLEM

The latest negotiation on trade involves the reduction of subsidies for sale of EC grain products overseas . This action is taken to protect the community preference model of CAP and also to appease the American trade interests . This proposal was necessitated by the accession of Spain and Portugal into the EC and restrictions into these markets for US grain products [banner_entry_middle]

p OUR GOALS

To preserve the economic and political unity of the European Community

To preserve the mechanism of CAP for maintaining agriculture within the EC

To maintain good economic relations with the United States , and to prevent a trade war

DIAGNOSIS OF THE SITUATION

The outstanding issues today include

Does the GATT entitle the United States to sector-specific compensation when a third party trade agreement affects the trade balance ? The United State claims that GATT is sector specific , while the EC claims GATT is over the entire balance of trade

CAP has been under close examination , particularly the portions which subsidize exports in to effectively sell surpluses . The United States claims that this practice is an unfair trade agreement , and the EC has found this practice is becoming more expensive as domestic production increases

The United States claims that the annual loss from the accession of Spain into the EC for the grains sector is 400 million . The EC claims that this amount will be compensated in industrial areas where the tariffs are lower . The United States claims that the sector specific impact is greater than what can be made up in other sectors , and doubts that the US will see the benefits promised by the EC , as Germany and other EC members will still receive preferential treatment for industrial supplies to Spain and Portugal

The United States is proposing an implementation of tariffs on many French products including cognac , brandy , and cheese in to recapture the estimated loss from grains . The amount the United States estimates to be loosing is 400 million annually . Of course , the costs to the US are not only economic and measurable in dollars . The Farmer ‘s Association in America is politically powerful and active . In addition the United States is experiencing extreme criticism of its trade policies , as many sectors are blaming the United States of allowing more goods in than what the United States is able to export . One of these export areas is with farm grains . Since the EC subsidizes farm exports the price of EC goods is much less to other nations around the world effectively pricing the United States out of this market . A resolution that addresses this inequality would create great value for the United States internally

The EC stands to loose financially if the United States implements the tariffs they are discussing . With the accession of Spain and Portugal the EC does not suffer an economic… [banner_entry_footer]

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