Making Peace on Trade

New European concessions in the tense trade negotiations clear the way for a settlement--something that the United States should quickly and cheerfully acknowledge.

The extreme 200% tariffs threatened by President Reagan over the Christmas holidays served at least two good purposes: They won the attention of the Europeans, and they reinvigorated the efforts of the Europeans to do something that they have said all along they would do. The flexibility now exhibited by the European community, just as the clock was running out on the American-imposed deadline, calls for reciprocity from Washington. The basis has been built for an agreement eliminating the risk of a destructive trade war at this time.

Reagan has understood that he must take tough positions in the battle for better access to foreign markets for American exports if destructive protectionist legislation is to be avoided in the new Congress. So the President took the position that he took, threatening to punish some of America’s best customers. The European community buys 23% of all U.S. exports, including $6.7 billion in agricultural products last year. And, faced with Reagan’s toughness, there have been concessions from the European community.

The origin of the dispute was the addition of Spain and Portugal to the Common Market a year ago. The two countries were required to adopt common community trade rules on farm imports--which meant, according to American estimates, a loss of 4 million tons of corn sales a year, of which 2.8 million tons would have come from the United States. Washington demanded compensation. The community agreed. But there has been a fight ever since over the appropriate amount.

This is not the only opportunity to “stand tall” in trade talks. The new round of negotiations with Japan will be watched closely by Congress to see whether the Japanese live up to earlier commitments. Americans are concerned that access to the Japanese market for U.S.-made semiconductors has not improved and that there is evidence that Japan continues to sell its own semiconductors below actual cost.

The vigorous pursuit of the European allies by the White House contrasts with the calm way in which the Reagan Administration has accepted the failure of another big farm-export customer, the Soviet Union, to live up to a contract to buy 9 million tons of U.S. grain each year. In the first four years of the agreement Moscow fulfilled its obligations only in the first year, had a 1.1-million-ton shortfall in the second year and a 4-million-ton shortfall in the third year, and made no purchases at all last year. The most conspicuous response of the President was to offer the Soviet Union a below-cost subsidized sale last summer, but even that was spurned by the Soviets.

There may be nothing that the United States can do to correct Moscow’s flagrant contract violation. There are, however, things that can be done to make sure that differences with the nation’s closest allies in Europe are not allowed to disrupt the enormous trade that now flourishes across the Atlantic and, more important, are not allowed to divert the forthcoming global trade negotiations. The President has demonstrated his vigorous defense of American markets. Now he can demonstrate his statesmanlike good sense of when it is time to make peace and avert a trade war.