Bush's Soviet Moves Take Turtle Pace

PRESIDENT BUSH remains cautious if not slow in enlarging economic and commercial relations between the United States and the Soviet Union. One reason may be divided advisers. Carla Hills, the president's special trade representative, reluctantly suggested that the Soviets be granted observer status in the General Agreement on Trade and Tariffs (GATT) only after the important Uruguay Round of trade negotiations is completed at the end of next year.

``It might muddle the situation at this time,'' said a trade office spokesman.

Other key White House officials, such as Michael Boskin, chairman of the Council of Economic Advisers, and Richard Darman, director of the Office of Management and Budget, urged faster US approval for Soviet observer status in this Geneva-based, 96-nation organization which regulates international trade.

Mr. Bush took the trade office position at the Malta summit.

``That was a little timid,'' comments Harald Malmgren, a Washington trade consultant.

Bush called on the Soviets to use next year to move toward market prices at the wholesale level so its economy will become more compatible with the GATT system.

Mr. Malmgren holds that observer status would give Mikhail Gorbachev and other Soviet leaders a lever to nudge along internal economic reforms. In the West, politicians have often used GATT rules or other international requirements as a means of resisting domestic special interest pressures for protectionism or other measures. In the Soviet case, reformers would use their new adherence to the world economic establishment as a way of preventing old-line communists from stopping a shift toward a freer market.

There are hints that the Soviet Union will apply for observer status early in the new year. In theory, the Soviet observer status could be voted on at the next GATT Council meeting, in February. If approved, Soviet representatives would then be free to attend some GATT meetings, and with permission ask a few questions or make a statement.

But the Soviets could not participate in the current trade talks or cast any votes. Thus, GATT officials are quite puzzled as to how Soviet observer status would ``muddle'' the negotiations.

``There is very little possibility of disrupting anything,'' said one official. Rather the Soviets would ``become aware'' of what domestic changes will be needed to conform to world trade rules. These could change decidedly as a result of the Uruguay Round if the US succeeds in its goal of liberalizing trade in both farm goods and services.

The Chinese have been observers in GATT for a few years and and have not been disruptive. Their application for full membership in GATT was put on hold after the events in Tiananmen Square last summer. However, the negotiations with China, now in their third year, resumed ``warily and carefully'' Tuesday.

Mr. Malmgren believes Soviet disruptions are unlikely since the Soviets will be attempting to prove their worthiness for eventual full membership in the GATT and other establishment organizations, such as the International Monetary Fund and the World Bank.

``The Soviets are desperate for economic progress,'' he says. ``They are not about to disturb anything.''

At this time, an understanding has been reached that observer status for the Soviet Union implies no commitment by either Moscow or Washington over membership. Because of the large size and importance of the Soviet economy, negotiations for membership would probably take three or four years, GATT officials reckon.

The US is also targeting next summer's summit for granting the Soviet Union ``most favored nation'' status with its much lower tariffs. Since the Soviets are about to complete action on legislation permitting free emigration soon, the US Jewish community is not adverse to President Bush then granting a waiver to the Jackson-Vanik trade amendment requiring high tariffs.

Malmgren again wonders why this must be held up until summer. ``There is a lot that could be done faster without danger,'' he says.

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