Work Is Complete on Trade Accord, U.S., Soviets Say

U.S. and Soviet negotiators Thursday completed their work on a comprehensive trade accord designed to pave the way for a further normalization of trade relations with Moscow during President Bush’s summit meeting May 30 with Soviet President Mikhail S. Gorbachev.

Thursday’s announcement, which followed three days of closed-door talks in Paris, came despite calls by some members of Congress for Bush to postpone the negotiations until Moscow resolves its current tensions with Lithuania. Bush has rejected pleas to delay the accord.

Julius L. Katz, deputy U.S. trade representative, said the negotiators still had some minor provisions to iron out, which he said would be taken care of “through diplomatic channels.” But he said the “fundamentals” of the accord were now essentially in place.

Under U.S. law, Moscow must take one more step to qualify for U.S. trade preferences: The Soviet parliament must enact into law provisions to ease restrictions on the emigration of Soviet Jews. The restrictions were relaxed in practice about a year ago.

Once that is done, Bush is expected to ask Congress to grant Moscow so-called most-favored-nation trade status, which effectively would reduce tariffs on imports from the Soviet Union from 34% to 6.7%--the same level that most other U.S. trading partners enjoy.

The United States is also expected to back Moscow’s bid to win observer status in the Geneva-based General Agreement on Tariffs and Trade, the 97-nation compact that sets and administers world trading rules.

Although Bush had said initially that the United States would hold up any GATT action until early next year, U.S. officials have indicated recently that Washington will not object if GATT members want to take the issue up in May--a timetable that now seems likely.

Washington has already granted most-favored-nation status, with its accompanying low tariffs, to Poland and Hungary and is expected to provide similar benefits to Czechoslovakia soon.

Moscow sought such preferences in 1972 but was blocked by Congress because of the Jewish emigration issue. The Jackson-Vanik Act, passed in 1974, has prohibited the granting of most-favored-nation status to East Bloc countries unless they ease emigration restrictions significantly.

The trade agreement completed Thursday is a first prerequisite for granting most-favored-nation status to such countries. In each case, Bush then must waive the provisions of the Jackson-Vanik Act and send a formal trade accord to Capitol Hill for approval.

Katz said there still is no firm indication of whether the Soviet parliament would actually be able to enact the new emigration laws in time for the Bush-Gorbachev summit, but expectations were that the deadline would be met. The trade accord would run for three years.

The agreement outlined Thursday covers a standard list of requirements set by the Jackson-Vanik legislation--from guarantees of property rights and currency exchange for U.S. firms doing business in the Soviet Union to establishment of consulates by each government.

It also spells out detailed requirements for steps Moscow must take to protect copyrights, patents and trademarks of U.S. corporations doing business in the Soviet Union. Katz said the Soviets are “in the process of enacting (enabling) laws where they do not have them.”

For all the controversy in Washington, U.S. officials said the two sides did not discuss the Lithuanian issue during their three days of talks in Paris, but they conceded that the problem loomed in the background.

Although Bush has insisted that for the moment he will hold up on imposing any sanctions against the Soviet Union, senior Administration officials have indicated that the trade accord most likely would be among the first casualties if the situation with Lithuania worsens.

Granting of most-favored-nation status to Moscow would not make the Soviets eligible for low-interest trade-financing from the U.S. Export-Import Bank. Bush has said he will discuss that with Congress this summer.

Moscow is seeking all the help it can get to earn hard currency. The Soviet Union already is facing severe shortages, high inflation and a deepening recession. Gorbachev is seeking more trade and investment from the West.

Even if Moscow wins observer status in GATT in May, full-fledged membership is likely to be years away. Western governments have warned repeatedly that Moscow will have to make sweeping economic reforms before it can become a full-fledged member of GATT.

U.S. officials had no formal estimate of how much the normalization of trade relations with the United States might be worth to Moscow. Analysts say there are serious questions about how much more the Soviets will be able to sell here until quality and productivity there improve.