Credit rates on Western goods spur another showdown in US-EC corral
Luxembourg — Once again, the United States and its West European allies appear headed for a showdown over trade with the Soviet Union. This time the conflict centers on an agreement between the two sides - plus Japan and other industrialized countries - setting minimum interest rates charged on credits to potential purchasers of Western goods.
The Reagan administration wants the rates to be increased, making it less attractive for the Soviet Union to buy Western products, while many West European governments - especially France - want them lowered for the opposite reason.
Differences of opinion over how the West should handle its trade relations with the East bloc have become something of a permanent feature of transatlanctic relations since President Reagan took office.
But this latest row could come to an unpleasant head next week when representatives of the 22 member governments of the Organization for Economic Cooperation and Development (OECD) meet in Paris to begin discussions on revising the year-old ''consensus'' on export credits, which expires May 1.
Last year, under pressure from the White House,West Europeans eventually agreed to boost the minimum permissible rate on export credits to the Soviet Union and other ''relatively rich'' countries by nearly 2 percentage points, effectively reducing subsidies needed to make up the difference between the OECD and the higher world market rates.
However, earlier this week (April 18), finance ministers from the 10 European Community countries had their first serious look at the question and agreed that the rates - which now range between 10 and 12.4 percent - should be cut by between 0.5 and 2 percent. The EC Commission will argue the community's case at the Paris talks next week.
The US is certain to oppose any reduction in interest rates on loans to the Soviet Union. But administration officials have said that if the West Europeans refuse to support a rate increase, the US might be prepared to accept stiffening credit terms in other ways - such as shortening the term.
Officials from both sides say the talks in Paris will be contentious.
In the long run, the Reagan administration would like to see government subsidies eliminated from the international trading system, particularly on exports to the Soviet Union, which, it claims, uses Western goods and technology to strengthen its economy and military capability. The US also argues that government subsidies in other areas - notably agriculture - enable many West European countries to compete unfairly against US exports to common third markets.
The West Europeans counter that international trading rules agreed to by all major trading countries, including the US (under previuous administrations), permit the use of subsidies to help close the gap between domestic and world market interest rates.
At stake in the battle over export-credit interest rates is more than $80 billion in Western trade with the Soviet Union as well as the tenor of several key international meetings to be held over the next few weeks, including the OECD ministerial meetings in Paris on May 9 and 10 and the summit of leaders from the seven major industrial powers in Williamsburg, Va., May 28 through 30.
West European leaders - most recently, West German Chancellor Helmut Kohl on his brief visit to Washington last week - have been urging that the issue of East-West trade be dealt with only lightly at the Williamsburg summit. Their aim: to avoid an embarrassing transatlantic split over the issue like that which characterized last year's summit in Versailles, France.
They know the US and Western Europe are still sharply divided over the problem.
''An argument in Paris over export credits could only embitter the atmosphere at Williamsburg,'' a West European government official said. ''We'll want to do everything to avoid that happening.''