Trade Talks Get Boost From Transaltantic Truce

By backing off sanctions over government procurement bids, the US has cleared the way for accelerated talks on other GATT issues

IT'S been said before. But observers of the international trade climate believe a window of opportunity has opened to clear the air over transatlantic commercial disputes and conclude the six-year-old Uruguay Round of trade liberalization talks.

"Despite all the tough talk, we have right now an opportunity to make some deals, settle some disagreements, and conclude the Uruguay Round" conducted by the General Agreement on Tariffs and Trade (GATT), says Jacques Pelkmans, an economics specialist with the Center for European Policy Studies in Brussels.

The storms that have disrupted trade liberalization talks for nearly three years have not suddenly blown away, and observers warn that protectionist pressures could still carry the day. Nevertheless, several factors encourage trade-liberalization proponents.

Top United States and European Community trade negotiators have agreed to take advantage of a truce in a transatlantic public purchasing row to accelerate bilateral negotiations in other trade areas related to the Uruguay Round.

"We succeeded in giving a good push to a step that is much needed," said Sir Leon Brittan, EC commission vice president, after meeting for three hours March 29 with US Trade Representative Mickey Kantor. Later Sir Leon said "nothing could be gained" by putting off a Uruguay Round timetable beyond December, a target the US also accepts.

In his talks with EC officials and in a speech to the American Chamber of Commerce of Brussels March 30, Mr. Kantor said the US is ready to "lead global growth" but expects its trading partners to share responsibility and "play by the rules of global economic competition."

The new administrations in Washington and Paris also are factors in the cautious optimism.

Although President Clinton and France's new center-right leadership took a stance for trade liberalization in their campaigns, both administrations face domestic pressures to push for an accord that would benefit economic sectors such as services.

Several of France's most influential new right-wing leaders said during the campaign that they were prepared to force a crisis in the EC and international trade negotiations before accepting a key US-EC farm trade accord agreed to last November. That deal was a "pre-accord" to the Uruguay Round, which would liberalize trade regulations in such areas as textiles, services, intellectual property, and agriculture. Despite France's tough talk, however, EC officials say they believe the new French right's ele ction win was so resounding that they have maneuvering room to accept a farm trade accord.

That scenario is complicated by the fact that several of France's tough talkers on trade - including Paris Mayor Jacques Chirac and former President Valery Giscard d'Estaing - are now positioning themselves for presidential elections in two years.

"That is one reason there's no time to lose," says Mr. Pelkmans, the economist. "With some face-saving concessions to take home, the new French government could limit the political damage, but it has to be long enough before the presidential elections."

On the US side, Kantor agreed to hold off on imposing sanctions against the EC on government procurements until the two sides meet in Washington April 19-20.

Kantor held a breakfast meeting with EC Commission President Jacques Delors March 30, and then met several other EC commissioners responsible for such areas as audio-visual policy, taxation, and agriculture.

The US threatened the procurement sanctions in response to an EC regulation granting an edge to European bidders for government purchasing contracts. The detente gives the US time to study undisclosed EC proposals for settling the dispute. In return, Sir Leon has agreed to begin the process of waiving the EC provisions.

That issue set aside, EC and US negotiators will seek to resolve disputes over steel and aircraft subsidies. Kantor and Sir Leon also said that accelerated GATT talks would be extended to Japan and Canada by early May.

Still, the improved climate could take a turbulent turn if the procurement talks fail, and the Uruguay Round still faces major hurdles. In his Chamber of Commerce speech, Kantor said no Uruguay pact would be reached until "major improvements" were made in the draft act.

EC officials caution that reaching agreement on procurements will not be easy. The EC will not be satisfied with better access to federal contracts, EC officials say. State and local governments will have to open up, too.

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