East Europeans Lay Plans to Scale The Walls of `Fortress Europe'

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IN the eyes of Eastern Europeans, the European Community's Single Market is both an immense opportunity - and a potential threat.

Sitting on the doorstep of the world's biggest market, which boasts a combined GNP of over $6 trillion, Eastern European countries are responding to the EC's economic pull by gradually harmonizing industrial production norms, opening to joint ventures, and generally gearing their economies to the day - early in the next decade for the most advanced among them - when they, too, expect to be inside the internal market.

The EC has negotiated association agreements, setting out various trade and other economic advantages, with Poland, Hungary and the former Czechoslovakia; others are in the works for Romania, Bulgaria, and the Baltics.

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But Western Europe's economic openness has not been what some East Europeans had anticipated. Concern is growing that a borderless internal market will lead to higher hurdles for goods from the outside, and that the trade-hungry East will be increasingly used as a scapegoat as the EC seeks to pull out of its own economic slump.

"We do not believe in the fortress Europe," says Jan Truszczynski, economic counselor at Poland's mission to the EC. "The Community has shown by its general assistance and help in the industrial adaptation process that it wants our countries to evolve," he says. "But we still worry that our neighbors will try to erect new barriers to trade as old barriers fall."

Adds Peter Gottfried, Hungary's deputy chief of mission to the EC, "We have the growing impression that we are sometimes used as an argument in internal discussions, when in fact our impact in most areas is insignificant." Recalling a recent farmers' protest in Paris, where a poster read, "French farmers need protection from Eastern beef," Mr. Gottfried says: "What we're talking about is 5,000 tons of meat, or about one-tenth of 1 percent of the Community's internal consumption. Nevertheless we're presen ted as a threat."

Eastern Europeans cite the EC's levy in November of steep anti-dumping tariffs against steel from Poland, Hungary, and Czechoslovakia as the most troubling recent example of market tension between Eastern and Western Europe. Eastern Europeans say their steel exports cannot constitute dumping because, unlike EC steel, their production enjoys no direct state subsidies.

"We believe the increasing criticism of imports from Eastern Europe simply serves to deflect attention from the real problems facing the Community's steel sector," says Mr. Truszczynski. That argument should not ring foreign to the EC, because it is precisely the same reasoning it used to attack a decision by the United States earlier this month to slap heavy anti-dumping duties on steel imports from the EC.

EC officials acknowledge that much of the Community's steel industry remains inefficient, with about 30 percent over-capacity. But they argue that Eastern Europe cannot expect a free ticket into the Single Market to disrupt EC industry.

"Our imports from Eastern Europe [since 1989] are up about $2 billion a year, while US imports from there are actually down, so we don't think we have lessons to learn from anyone on this issue," says one senior EC official. "The problem is that the East's exports are in the very three sectors - agriculture, steel, and textiles - where we face our biggest problems." Boosting trade within Eastern Europe

From the EC's perspective, the best solution is for the Eastern European countries to redevelop trade among themselves, which since communism's fall has plummeted by better than 50 percent. The so-called Visegrad countries - Poland, Hungary, Czechoslovakia - are expecting to sign a free-trade agreement once the Czech-Slovak split is ironed out, but none of them places high short-term hopes in that market.

"Trade among us is experiencing a negative evolution, with more raw materials and less trade in durable goods," says Truszczynski. "The general view is that it is more attractive and even cheaper to enter the EC market," he adds. "It's seen as the future."

For Eastern Europeans, meeting the Single Market's standards and product norms is one of the tests for entering the modern, prosperous world, which is why developing trade with former partners in the old East bloc doesn't have the same allure.

As Gottfried notes, Hungarians' standard of living continues to fall, and the economic adjustment is confronting more difficulties than some people had anticipated, "but there is no nostalgia for the past. People still have their eyes set on the future," he says, "and for most people, that is the EC and its market."

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