This study examines competition between the U.S. and the European Community (EC) in world markets for high-value agricultural products (HVPs). The EC and the United States are the world's largest exporters of HVPs. A comparison of U.S. and EC •export shares during 1970-87 shows that the EC; the world's leading exporter of high-value products, has successfully competed against the United States for a number of leading processed products including dairy products, meat, and flourd EC agricultural exports have benefited for many years from subsidies which make their HVP exports competitive in world markets. The United States, with its plentiful supply of high-quality, low-priced inputs and efficient processing capacity has the potential for increasing its share of the HVP market. While U.S. policy changes authorized under the 1985 Farm Bill and the lower dollar have bOosted U.S. HVP exports; future expansion will depend upon U.S. competitiveness and changes in foreign demand.