U.S. delays retaliation for EC's trade policy

March 30, 1993|By Los Angeles Times

BRUSSELS, Belgium -- Moving to head off a trade war, negotiators from the United States and the European Community lengthened the fuse on one of their most explosive disputes yesterday and began exploring the possibility of deep, worldwide tariff reductions.

Mickey Kantor, in his first visit to EC headquarters as U.S. trade representative, said the United States would delay for three weeks its threatened retaliation over an EC policy that favors European bidders on some government procurement contracts.

Sir Leon Brittan, the EC's chief trade negotiator, said he would urge the EC not to apply the "buy European" provisions during that period. The two negotiators will meet again in Washington in mid-April.

Mr. Brittan, who argued that the United States must itself act to quit favoring American bidders for government contracts, said he hoped to reach a final agreement on government procurement then.

Mr. Kantor, sounding less optimistic, warned that America reserved the right to retaliate, if Europe did not dismantle its current system. The 12 EC member nations give European bidders a 3 percent price break in competition with foreign bidders for government contracts.

"What was put on the table was constructive," Mr. Kantor said of yesterday's EC proposal, "but it is not acceptable in its present form.

"If we can't make significant progress" at the April talks, he added, "I'd be very pessimistic" about the chances of solving the problem short of U.S. retaliation.

Mr. Brittan also gave Mr. Kantor a new EC proposal for a worldwide reduction of tariffs on imports. Reducing tariffs is a central issue in global negotiations, now in their seventh year, aimed at liberalizing world trade; the United States has been disappointed with European tariff proposals.

Mr. Kantor said Mr. Brittan had put forward a "significantly enlarged" package of tariff reductions. Both sides declined to offer details, though Mr. Kantor said the EC proposal covered industrial products, agricultural goods and services.

Tariff reductions will be on the agenda of meetings in the next few months involving not only American and EC negotiators but also Japan, Canada and other industrial nations.

Mr. Kantor and Mr. Brittan both said they hoped tariff reductions would become part of a "prompt" conclusion to the Uruguay Round of international trade negotiations, launched nearly seven years ago in the Uruguayan resort of Punta del Este.

The talks have languished since becoming deadlocked in December 1990 over a U.S.-EC dispute over agricultural trade. That issue was apparently settled last fall, though France continues to threaten to veto EC ratification; a host of other issues now block progress.

The Clinton administration, retaliating against what it called the EC's unfair "buy European" policy for government utility contracts, threatened on Feb. 1 to bar European companies from bidding on millions of dollars' worth of American contracts.

On March 19, just two days before the U.S. measures were to take effect, Mr. Kantor met in Washington with Jacques Delors, president of the EC Executive Commission, and agreed to postpone the sanctions until after yesterday meeting with Mr. Brittan.

Mr. Kantor said he offered to postpone the sanctions only when Mr. Delors agreed that the EC would make new proposals not only on opening government procurement to foreign bidders but also on reducing tariffs worldwide.

EC officials argue that U.S. law books are crammed with "buy American" provisions that put up higher barriers to foreigners than does the EC.

The Europeans are taking this chance to try to tear down some of those "buy American" laws; Mr. Kantor acknowledged that the proposal made by Mr. Brittan yesterday "is certainly not one-sided."

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