W. Europeans, Soviets Sign Trade Accord

In a development rich with economic and political potential, the Soviet Union on Monday signed its first-ever trade agreement with the 12-nation European Community.

The sweeping 10-year accord covering areas from banking to nuclear energy is expected to ease Soviet access to important sources of Western technology and know-how as well as reduce trade restrictions on a wide range of raw materials and finished products.

The European Community countries, including West Germany, collectively make up the largest single source of Western technology for the Soviet Union. Soviet-EC trade in 1987 was roughly $25 billion.

The agreement comes as the United States and its main Western allies are reportedly considering a relaxation of some of the more arduous restrictions that have traditionally accompanied the sale of Western high technology to the Soviet Union and its East European allies. Any new European Community trade with Moscow would still be subject to these restrictions.

Although economic in nature, the Trade and Economic Cooperation Agreement, as the pact is formally called, is laden with political significance.

At a formal signing ceremony here, Soviet Foreign Minister Eduard A. Shevardnadze called the accord “a large-scale European blueprint for the future.”

“Its nature reflects the dynamism of the process of renewel in Europe,” he said. “Its content brings the construction of the economic foundation for a common European house one step higher.”

French Foreign Minister Roland Dumas declared, “This agreement opens up hope for the future--hope for broadening our economic, trade and also our political relations.” He added that the accord will fit “neatly with the rapprochement between East and West.”

Shevardnadze signed the agreement on behalf of the Soviet Union, while Dumas and Frans Andriessen, EC executive commission vice president, signed for the community. All 12 community foreign ministers were present at the ceremony.

The Soviet foreign minister is in Belgium on a two-day visit, which included talks with Belgian Prime Minister Wilfried Martens on Monday.

Today, Shevardnadze is scheduled to make the first visit by a senior Soviet official to the North Atlantic Treaty Organization headquarters here before departing for London later in the day for talks with British Prime Minister Margaret Thatcher.

Referring variously to a “common European economic space” and “the gradual formation of an integral economic complex on our continent,” Shevardnadze called for a trilateral commission of the continent’s three major trading blocs. These three are the EC, the Soviet-dominated Council for Mutual Economic Assistance, known as Comecon, and the European Free Trade Assn. (EFTA), a six-member group.

At a news conference after the signing, Shevardnadze said that it is impossible to ignore the three blocs and that cooperation is merely the next logical step.

“There is no other purpose behind it,” Shevardnadze said of the proposed commission.

The foreign ministers of EC and EFTA are scheduled to meet here today to explore greater integration, but there has been little Western interest in dealing with Comecon, an obsolete organization constrained by central planning and barter arrangements.

Monday’s accord constituted an important breakthrough for the 12-nation community, adding to its fast-growing global political profile. It hopes to scrap all internal borders and create a single market by the end of 1992 and is committed in principle to eventual full economic and political union.

Last week, U.S. Secretary of State James A. Baker III proposed that the United States and the community strengthen their ties, and work has already begun to formalize what some have called a new “special relationship.”

The trade agreement also increases the EC’s importance for the nations of Eastern Europe.

It is the fourth such accord concluded with an East European country in the 16 months since Moscow first established diplomatic relations with the community. It is also the largest ever concluded with a non-EC member and completes the community’s transformation in Soviet eyes from a capitalist pariah to a vital trading partner in less than two years.

The community has previously signed commercial and trade agreements with Poland, Hungary and Czechoslovakia. And at the Paris economic summit last July, the community’s executive commission was given the job of organizing Western aid to Poland and Hungary.

The new Soviet-EC agreement covers a broad range of economic cooperation, including banking, insurance, industry, the environment, science and nuclear-energy technology and safety.

Under terms of the accord, the community has agreed to phase out quotas on the export of Soviet manufactured goods to EC countries over a five-year period but will not permit the import of Soviet agricultural products.

The agreement is expected to allow EC companies to negotiate directly with individual Soviet enterprises rather than work through central export agencies, and also to repatriate profits.