Bush Proposes Trade Changes to Aid Soviets

President Bush, proposing a modest but nonetheless unprecedented program of U.S.-Soviet economic cooperation, told Soviet leader Mikhail S. Gorbachev on Saturday that he wants to lift most U.S. restrictions on trade with Moscow by next June and take other steps to help Gorbachev move his moribund state-run economy toward the West.

Bush told the Soviet leader in the first session of their two-day summit meeting here that he is ready to begin negotiations immediately toward a new U.S.-Soviet trade agreement, a key part of the process of granting “most-favored-nation” trade status.

At the same time, Bush proposed a series of other steps, from a new treaty to protect U.S. investments in the Soviet Union to internships for Soviet managers at American corporations, all intended to encourage Gorbachev’s halting steps toward a Western-style market economy.

“You already know that I support perestroika, “ Bush told Gorbachev, using the Russian word for “restructuring,” according to an aide. “Now I want to show that I mean it with some specific ideas.”

The President’s proposals were relatively modest in substance, as even his own aides acknowledged. They included no direct aid or loans to the Soviet Union, and appeared unlikely to have any immediate, dramatic effect on the Soviet economy.

Nevertheless, senior Bush aides said, they marked the first time in the history of U.S.-Soviet relations that an American President has taken a personal role in helping a Soviet leader’s domestic programs. “Economic cooperation has never been discussed in this kind of specificity at any previous summit,” one aide said.

Indeed, U.S. officials said, one goal of the measures was to offer Gorbachev a gesture of encouragement that could help him politically at home, even if the immediate economic impact is slight. At the same time, they acknowledged, the plan should help Bush answer critics in Congress who have complained that the Administration has done too little to assist with Soviet internal reforms.

“What the President did was to try to show the Soviets that we recognize where they’re trying to go, and that--within narrow limits--we’d like to help them,” another aide said.

The plan also reflects the unusually strong interest in helping the Soviet Union’s economic reform shown by Secretary of State James A. Baker III and one of his top aides, Robert B. Zoellick. Baker and Zoellick have spent hours advising Soviet officials on the workings of a Western market economy, and they offered more free advice in meetings here. One of Bush’s formal proposals, in fact, directly urged the Soviets to move quickly toward “market prices at the wholesale level.”

On trade, the President told Gorbachev that he wants negotiators to conclude a new U.S.-Soviet commercial agreement by their next summit meeting in June, 1990. If the pact is ready--and if Moscow’s legislature, the Supreme Soviet, has passed a new law by then guaranteeing free emigration to Soviet Jews--Bush said, he will grant most-favored-nation trading status, according to aides.

Under the Jackson-Vanik Amendment to the 1974 Trade Act, the Soviet Union and other Communist countries were barred from most-favored-nation status--a category that imposes relatively low tariffs on a nation’s exports to the United States--unless they allowed free emigration by their citizens.

The law was passed in an era when the Soviet government refused exit visas for tens of thousands of Soviet Jews. During the past two years, however, Gorbachev has permitted virtually unlimited emigration--to the point that the U.S. Embassy in Moscow has been swamped with applicants for entry to the United States.

Bush also offered to explore lifting the current stringent limits on Export-Import Bank credits and loan guarantees for U.S. firms’ trade deals with the Soviet Union, aides said.

And he called for preliminary talks on a U.S.-Soviet investment treaty to protect American corporations and entrepreneurs who want to invest in joint ventures and other projects in the Soviet Union.

“Those may sound like dry issues, but we believe private Western capital could play an important role in the development of the Soviet economy,” an Administration official said. “These agreements would be a key to increasing that flow of capital.”

Bush proposed a new flow of Western technical help as well: a new program to send U.S. advisory teams, including both government officials and private businessmen, to advise Soviet officials on how a capitalist economy works.

Aides said they envisaged U.S. advisory groups on finance, agriculture, small business development, budget and tax policy, antitrust regulation, statistics--and even how to run a stock market.

In a reversal of previous Administration policy, Bush told Gorbachev that he will support observer status for the Soviet Union in the General Agreement on Tariffs and Trade, the organization that administers world trading rules, after a current round of tariff negotiations is complete.

As recently as October, Baker dismissed any talk of Soviet membership in GATT as premature.

However, officials said they still believe it is too early to discuss Soviet membership in other international economic organizations such as the International Monetary Fund.

Finally, Bush also urged the Soviet leader to seek closer ties with the Organization for Economic Cooperation and Development, an association of the world’s market-based economies. In particular, aides said, the President suggested that Gorbachev seek help from OECD experts on how to navigate the transition from a state-run economy to a more open system.

U.S. officials said Gorbachev and his aides had no opportunity on Saturday to respond specifically to Bush’s proposals, since the summit sessions--aboard U.S. and Soviet ships--were cut short by a major Mediterranean storm.

“But they seemed receptive, as far as we could see,” one said.