French Block U.S. Bid on Trade Talks : Mitterrand, ‘Odd Man Out,’ Won’t Yield at Summit

President Reagan’s hard-fought struggle to persuade the economic summit to set a date next year for beginning a new round of global trade talks ended in failure Saturday when France refused to budge from its opposition to starting the talks in 1986.

The seven-nation summit adopted a final communique saying only that a new round of talks under the General Agreement on Tariffs and Trade (GATT) should begin “as soon as possible” and that “most of us think that this should be in 1986.”

For Reagan, it was a disappointing end to a three-day summit that was overshadowed from the start by controversies over his trade embargo against Nicaragua and his plan to pay a visit today to the Bitburg cemetery where 49 Nazi Waffen SS troopers are buried. Reagan had tried to get French President Francois Mitterrand to agree to trade talks in 1986 ever since the summit started.

A Flat Rejection

Mitterrand, described by Reagan officials as “the odd man out” at the summit, flatly rejected his trade talk proposals, then also announced that France would refuse to participate in Reagan’s Strategic Defense Initiative or “Star Wars” program of research to develop a space-based defense against nuclear missiles.

Under the rules of the U.N.-related agency, a new round of GATT talks cannot begin until there is general agreement by all contracting parties. There have been four rounds of GATT talks--each requiring several years--since the mid-1950s.

Reagan Administration officials say that another round, which would involve more than 100 nations, is urgently needed to lower tariffs and remove trade barriers that seriously impede international trade.

The other five national leaders of the summit had supported Reagan’s proposals, and West German Chancellor Helmut Kohl, British Prime Minister Margaret Thatcher and Japanese Prime Minister Yasuhiro Nakasone had urged Mitterrand to agree, but the French president was adamant.

The senior officials of the summit nations who do the preparatory work for discussions and the drafting of documents--called “sherpas” in summit parlance--stayed up until 4 a.m. Saturday trying without success to reach a compromise that would satisfy Mitterrand. And Kohl held a final session with the French leader shortly before the summit ended, but got nowhere.

Mitterrand Unsmiling

After Kohl read the communique at the summit’s final session in the West German Parliament, an unsmiling Mitterrand told a press conference:

“I bother about France and I don’t give myself the job of protecting every country against itself. I have many friends outside. To be alone in Bonn is not to be alone in the world.”

Mitterrand said that the other summit leaders “wanted the date 1986 out of me but I said no” because the GATT nations would be “ill-prepared” to begin trade negotiations next year.

Mitterrand also has argued that trade talks should not be held unless negotiations for reforming the international monetary system are held at the same time and that “it is not wise to force the pace of the Third World to agree on a new trade round.” Reagan’s position has been that trade talks should be conducted independently of monetary talks and that starting the talks in 1986 would not work to the disadvantage of the developing countries of the Third World.

Also attending the summit were the leaders of Canada and Italy and the Commission of the European Community.

Reagan, in his regular Saturday radio address, broadcast from Bonn, said that he was “heartened by the progress” the summit had made in pushing for GATT talks since last year’s summit in London, when a majority of the leaders did not support setting a date for the talks.

“We’re pleased that plans for these negotiations, so important to world prosperity, have gained momentum,” the President said.

Other Administration officials, although contending progress has been made, were candid about being dejected at the final outcome.

Treasury Secretary James A. Baker III said the Administration is “disappointed” that a date for the talks has not been set and added that the United States will keep pushing for an agreement.

If a date is not set after a “reasonable time” he said, “we will simply sit down with those countries willing to negotiate” and proceed with trade talks without GATT’s sanction.

Secretary of State George P. Shultz criticized France for “dragging its feet” on the trade talks issue and brushed off Mitterrand’s suggestion that monetary talks and trade negotiations should be held at the same time. Each issue is so complicated and involves so many nations, he said, that “to imagine parallel talks is impossible.”

Depression of ‘30s

Shultz called GATT talks important to the continuation of the rising standard of living in the United States and other countries and pointed out that the world was thrown into a deep depression in the 1930s after the proliferation of tariffs and trade barriers.

Proof of the value of GATT talks “in the broadest sense,” he said, is the experience of the 1930s compared with the 1950s, 1960s and 1970s when three rounds of talks drastically lowered tariffs and removed trade barriers.

“So, what we need to do is, on the one hand, keep from slipping back, and on the other, keep expanding this open trade regime to new countries and to products, services and other things that come to be very successful, but which aren’t covered in the GATT rules,” Shultz said.

The summit leaders also agreed that senior officials of their nations should hold a meeting before the end of the summer to reach a broad consensus on the subject matter to be covered in any future GATT talks.

IMF Meetings Noted

Although they did not call for monetary reform talks, they declared that it is “essential” to improve the functioning of the monetary system. And they noted that “the finance ministers of the (International Monetary Fund’s) Group of 10 will complete its study of the functioning of the monetary system in June and it will be discussed at an IMF meeting in Seoul in October, with a view to making the international monetary system more stable and more effective.”

The summit communique, drafted for the most part in general terms, also included sections on environmental policies, science and technology, and relations with developing countries.

The summit leaders agreed to:

--Cooperate to solve such pressing problems as acid rain and air pollution from motor vehicles and all other significant sources and to address other concerns such as climatic change, the protection of the ozone layer and the management of toxic chemicals and hazardous waste.

--Strengthen protection of soils, fresh water in the sea, particularly regional seas.

--Harness both the mechanism of governmental vigilance and the disciplines of the market to solve environmental problems and develop and apply more widely the principle that the “polluter pays.”

Reagan’s Invitation

In the field of science and technology, the summit leaders welcomed positive responses of member nations of the European Space Agency to Reagan’s invitation for them to cooperate in the U.S. Manned Space Station Program “on the basis of a genuine partnership and a fair and appropriate exchange of information, experience and technologies.”

“Discussions on intergovernmental cooperation and development and utilization of permanently manned space stations will begin promptly,” the communique continued. “We also welcome the conclusions of the (Space Agency) council on the need for Europe to maintain and expand its autonomous capability in space activity, and on the long-term European space plan and its objectives.”

Declaring that they were “deeply concerned about the plight of African peoples who are suffering from famine and drought,” the summit leaders pledged to continue to supply emergency food aid and said that they welcomed the positive response from citizens and private organizations, as well as substantial assistance provided by the governments of many countries and the establishment by the World Bank of the Special Facility for Sub-Sahara Africa.

Pesticides, Fertilizers

They said that they are prepared to promote increases in food production by supplying agricultural aid, such as seed, pesticides and fertilizers, within the framework of agricultural development projects. And they called upon the Soviet Union and other Communist countries “to assume their responsibilities” in helping relieve the hunger crisis in Africa.

The leaders also emphasized the crucial role of the IMF and the World Bank in supporting policies by debtor countries necessary to strengthen the confidence of domestic and foreign creditors and investors.

“We agree to work to ensure that these institutions are equipped with the necessary resources and instruments,” they said, “and we stand ready to discuss an increase in the resources available to the World Bank which may be necessary in the coming years.”

For the first time since the summit nations began their annual sessions in 1975, the final communique included a brief statement of each leader’s specific priorities of national policy.

Reagan, according to the communique, “considers it essential to achieve a rapid and appreciable cut in public expenditures and thus a substantial reduction in the budget deficit. He stresses also the need for further deregulation and for a reform of the tax system aimed at encouraging the efficient use of resources and stimulating new saving and investment.”

Japan will play host to the summit in Tokyo next year, and Nakasone said that it will be scheduled in early May.