Summit Pledges to Spur Trade Talks : Diplomacy: Bush wins agreement to push for an end to the stalemate on agriculture. The President also attacks environmental critics as 'extremists.'

By JACK NELSON and TOM REDBURN

July 12, 1990 12 AM PT

TIMES STAFF WRITERS

HOUSTON —

President Bush on Wednesday won a pledge from leaders of the major industrial democracies to end a longstanding deadlock on trade negotiations that U.S. officials had feared could plunge the world economy into chaos and recession.

In a final communique ending the three-day economic summit, the leaders declared that the successful outcome of the current trade talks, known as the Uruguay Round, “has the highest priority on the international economic agenda.”

U.S. officials concede that reaching agreement on the specific elements of the broad trade pact remains a towering challenge, but they insisted it would have been hopeless without the priority-setting summit declaration.

“We had an impasse,” U.S. Trade Representative Carla A. Hills said. But with the summit statement, she said, trade officials are now under orders to deal with issues that the Europeans previously “were not willing to touch with a 10-foot pole.”

The key to breaking the overall stalemate on removing trade barriers is getting agreement on reducing the array of subsidies and protective measures enjoyed by farmers throughout the world. Although European and Japanese leaders were--and remain--reluctant to deal with the issue, Bush argued successfully that the subject must be addressed if world trade is to grow and an economic crisis avoided.

“The world looks to these summits for a lead on the larger issues,” British Prime Minister Margaret Thatcher said. “I believe we have once again provided that lead.”

On the sensitive environmental issue of global warming, meanwhile, the Bush Administration succeeded in deflecting a bid by European leaders to commit the seven major industrial nations to making substantial cutbacks in emissions of the so-called greenhouse gases believed responsible for the problem.

Instead, they made only a bland commitment on environmental issues, proposing a new program suggested by West German Helmut Kohl to support Brazil and other tropical nations in saving rain forests and beginning efforts to draft a new international treaty to protect forests worldwide.

The Administration contended that stronger action now could endanger economic growth.

Aware, however, that his action would draw a torrent of criticism from environmental groups, Bush used a news conference after release of the final summit communique to deliver a scathing attack on such critics.

“Extremists” in the environmental movement, he said, “don’t want this country to grow. . . . They don’t want to look at the human consequences” of the protections they seek.

The Sierra Club, the Wilderness Society, the Environmental Defense Fund and the Audubon Society were among the prominent environmental groups that accused Bush and other summit leaders of not coming to grips with the global warming problem.

The Sierra Club charged that Bush and Kohl, who sided with the President, made a “back-room . . . dirty deal” by agreeing to downplay the need for immediate action.

Environmental activists had hoped the summit would produce a strong statement pledging the seven countries to specific reductions in emissions of carbon dioxide and other greenhouse gases. They argue that such reductions can be achieved largely by improving energy efficiency.

The emissions are blamed for an apparent slow but ominous warming of the global climate that has been found by several scientific studies.

But Bush and his aides, led by Chief of Staff John H. Sununu, came here dead-set against any such pledge. The main source of man-made carbon dioxide emissions is the burning of coal, oil, natural gas, wood and other carbon-based fuels for energy. Any limits on emissions would stifle U.S. economic growth, Bush and Sununu believe.

Bush aides called the new proposal the President’s chief environmental initiative for the summit, and several environmental activists here initially called it a hopeful sign. But at his news conference, Bush quickly dampened their enthusiasm for the idea, saying that his commitment to negotiate international forest protections would not affect his policies toward forests at home.

The Administration has deferred action on protecting the remaining virgin forests in the Pacific Northwest out of concern for jobs in the timber industry, and Bush said he has no plans to change that policy.

Asked why environmentalists are so opposed to some of his policies despite his campaign pledge to be an “environmental President,” Bush said: “We cannot govern by listening to the loudest voice on the extreme. I’m not going to be persuaded that I can get some brownie point by appealing to one of these groups. . . . And the attacks that they made on some of my summit partners--I resent them, too.”

The economic summit annually brings together leaders from the seven largest industrial democracies--the United States, Japan, West Germany, France, Britain, Italy and Canada--and also now includes the head of the 12-nation European Community. They plan to meet next year in London.

Bush singled out West Germany’s Kohl for special thanks in helping to forge compromises on several key areas, but he downplayed suggestions the two of them had cut any sort of private deal.

“The Germans appreciate the fact that we have stood at their side on this question of German reunification,” Bush said. “But there isn’t any quid pro quo.”

On the politically charged trade issue, the seven leaders agreed Wednesday to provide stronger support from the top for the current talks in Geneva, which had threatened to break down as a result of the nasty dispute between the United States and Europe over agricultural subsidies.

The summit leaders issued specific instructions to their bargainers aimed at achieving a successful conclusion to the talks by the end of the year.

“We all know that agriculture has been a major stumbling block,” Bush told reporters. “What we’re trying to do is move the whole thing forward.”

Bush acknowledged that any agreement to cut agricultural subsidies would involve some sacrifice on the part of U.S. farmers.

“It’s a two-way street,” Bush said. “I expect there would be some political opposition because, like many of these countries, we protect. But I am convinced . . . if we all reduce barriers and we all make a freer trading system, that the United States can compete.”

Agriculture was the most contentious issue that the summit leaders discussed at Rice University, with the final compromise achieved after hours of predawn bargaining among lower-level negotiators.

Although U.S. officials embraced the final statement as a significant step forward in their effort to achieve fundamental reforms in agricultural trade, their main accomplishment was to heighten public awareness of the costly farm subsidy programs of the Group of Seven nations.

The objection to subsidies is that they encourage worldwide surpluses and, combined with other measures, make the home-grown products artificially competitive in price, at home and abroad.

European officials defended the subsidies as necessary to preserve the livelihood of 12 million small farmers against the future onslaught of commodities produced more efficiently in the United States, Canada, Australia and a host of less-developed countries such as Chile, Argentina and India.

Unless the Europeans accept sharp cuts in farm subsidies, U.S. trade officials fear that dozens of nations dependent on agricultural exports will walk away from the world trade negotiations in Geneva. The talks are aimed at opening the door to greater trade not only in agriculture but in sophisticated services, investments, computer software, entertainment and other products that are crucial to the economic growth of the advanced nations.

A failure in the trade talks could lead to greater protectionism, spurring a possible breakdown of the world economy into rival trading blocs that would undermine advances in global prosperity.

Specifically, the final communique orders trade negotiators to “reduce not only internal support but also export subsidies and import protection.”

U.S. officials said this marks the first time that European leaders have accepted an express statement about the need to cut export subsidies.

Some Europeans argued that the United States failed to achieve the breakthrough on trade it had sought coming into the summit.

“There are no substantial new elements in the text,” said Nico Wegter, chief spokesman on trade for the European Community, which had been particularly opposed to action in Houston on the subsidies issue. He also insisted that the communique does not single out export subsidies for special treatment.

But the European Community’s president, Jacques Delors, suggested that the Europeans may finally stop dragging their feet on the issue.

“We cannot keep saying, ‘No, no, no,’ ” he said.

Hills acknowledged that the United States and Europe remain far apart on many of the key farm disputes. But the summit statement represents at least an evolution in the European position, she argued.

“If it’s not a breakthrough, it’s progress,” Hills said.

Meeting in Bush’s adopted hometown, the leaders wrapped up their final session earlier than scheduled by adopting a wide-ranging final declaration.

The communique also provided an opening for West Germany and other nations to extend large amounts of aid to the Soviet Union. However, it cautioned that the Soviets must introduce a market economy and substantially curb their military threat to ensure “meaningful and sustained economic assistance” from the Western allies.

It welcomed the impending reunification of Germany, called for aid to Eastern Europe in moving toward democracy and free markets and adopted a modest new initiative to aid certain Third World debtors.