THE row between the European Community and United States over the

oilseeds subsidies is a legally separate issue but is holding up the

entire Uruguay Round of the General Agreement on Tariffs and Trade.

Washington's insistence on oilseeds also reflects the powerful

political leverage of the American Soybean Association, representing

some 400,000 farmers, especially during a US presidential election

campaign.

The United States has twice complained to the Gatt that EC oilseed

subsidies favour European farmers and caused American soybean exporters

to lose market share.

Since the United States first complained to Gatt in 1988, EC output of

rapeseed, sunflower seed and soybeans has doubled to 12.5 million tonnes

in 1991. But the EC says it remains a large net importer of oilseeds,

notably soybeans.

The Gatt dispute panels ruled in favour of the United States in

January, 1990, and last March, but Washington says Brussels has still

not complied with their rulings.

The EC refuses to accept binding arbitration and has proposed the

creation of a working group under article 28 of the Gatt to settle the

dispute.

The United States estimates that EC subsidies cost American and other

oilseed exporters $2000m in lost exports annually. The EC has offered

$400m compensation to the US and nine other oilseed exporting countries.

Washington said last Thursday that from December 5 it would impose

punitive duties on $300m of imports from the EC -- mainly white wine,

rapeseed oil and wheat gluten used in baking.

The American move followed the collapse of the latest round of farm

trade talks between the EC and United States in Chicago on November 3.

Washington was said to be demanding that EC output be limited to 8.5

million tonnes a year, compared with a weather-hit crop of just over 11

million tonnes in 1992.

The EC also said this would exceed cuts agreed in a radical reform of

the EC's Common Agricultural Policy in May, 1992 -- the Community's

''bottom line'' in negotiations.

The European oilseed crushers body, Fediol, says the EC has already

made major concessions to the US on oilseed subsidies and output even

though the two Gatt panels made no specific rulings on these points.

An alternative EC offer to discuss limits on oilseed plantings was

rejected by Washington because it gave no guarantee on future levels of

output as yields are influenced by the weather, improvements in seed

varieties and other factors.