EC Chiefs Warm to East Europe, Warn US on Trade Ties

THE European Community has resisted mounting pressure to resort to protectionism to safeguard its troubled economy - at least for now.

In their final words as they left their two-day summit in Copenhagen Tuesday, EC leaders offered no sign of the kind of market protectionism and defensiveness that French President Francois Mitterrand had urged earlier.

The 12 EC countries endorsed a rapid reprise of international trade liberalization talks, with a view to completing the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations by the end of the year.

Even more significant - especially given the EC's usual economic defensiveness toward its Eastern European neighbors and projections of a 0.5 percent shrinking of the Community economy this year - is the adoption of a landmark set of measures that pave the way for closer economic and political ties with the countries of Central and Eastern Europe.

The measures, affecting Poland, Hungary, Slovakia, the Czech Republic, Romania, and Bulgaria, include quicker and broader access to Western European markets, and for the first time pledge that the East's six most advanced countries "shall become members" of the EC, if they choose, once they meet certain economic and political conditions. The EC already has "association" agreements for intensified economic and political cooperation with the six countries.

Yet despite the EC leaders' upbeat tone - orchestrated purposely to try to dispel what Mr. Mitterrand called a "psychology of doubt" hanging over the EC - there were signs of trouble ahead.

On GATT, the leaders' communique read like an open letter to the United States. In an overall get-tough tone, the statement signaled that the Community is not in a compromising frame of mind on the numerous points of contention with its world trading partners that have held up the talks since December 1990.

In their GATT conclusions, the leaders said "real progress" in the negotiations on trade in services and intellectual property depended on "contributions from all GATT partners," a statement showing the EC contention that the US remains too closed in these areas. They also called for creation of a "new, rules-based world trading system in which unilateral action is ruled out," a clear reference to US trade law, which mandates retaliatory measures on countries that "dump," or underprice, their products in

US markets.

By calling on the EC's Commission to pursue the Uruguay Round talks "while preserving the European identity throughout the negotiations," the leaders appeared to back the view of France and other, mostly southern, EC countries, that in agriculture and audiovisual products, too much openness risks eroding a distinct European culture.

FRANCE and other EC countries reject international trade laws that force them to give up strict quotas on programming of American movies and TV series on their television channels. Generally these same countries argue that liberalized agricultural trade would doom Europe's rural populations and thus condemn a traditional way of life.

The summit's text meant an EC-US accord on agricultural trade from last November "is not cut in marble," said French Prime Minister Edouard Balladur. The US opposes reopening the contentious agriculture issue, which would almost certainly result in additional delays in the trade round's conclusion.

Despite the wording, however, Mitterrand acknowledged that the EC still does not "speak with one voice on GATT, because a number of points of disagreement remain."

Aside from the tariff reductions, the EC will set up a joint legal committee to help the six eastern countries tailor their legislation to EC law, and will extend an economic and technical aid program for infrastructure development.

The summit conclusions also appear to give a picture of the Community that current EC leaders envision for early in the next century. They call for entry into the Community of Austria, Sweden, Finland, and Norway, four countries in membership negotiations, on Jan. 1, 1995, plus subsequent admission for the Eastern European six. Mention is also made of the applications of Malta and Cyprus.

But for countries farther east, such as Ukraine, nothing beyond "cooperation" is specified.