Regional Outlook : East Europe Looks for EC Sales, Gets Little : The former East Bloc wants to market its textiles, farm products and steel in Western Europe, but the Community’s trade barriers are keeping the door closed.

Eugeniusz Powierza, who still uses a horse-drawn plow to cultivate his 47 acres of fertile farmland in central Poland, wonders angrily why he can’t export his cattle to Italy. If he knew, he would probably be angrier still.

The reason is a complex set of trade barriers erected by the 12 Western European nations of the European Community against the former Soviet satellites of Eastern Europe. Poland sold its entire 1991 quota of cattle in just the first three months of the year. It can sell no more.

In fact, fumes Powierza, meat from the EC--particularly from what used to be East Germany--is showing up in Polish markets. “The government should stop that,” he says. “Meat is being imported when there is plenty of meat already here.”

After 45 years of deprivation under their Soviet Communist neighbor to the east, Poland and the rest of Eastern Europe are now looking west for a measure of capitalistic prosperity.

But they are finding instead a Western Europe that is intent on preserving its own wealth. The EC’s trade barriers along its eastern frontier cover not only farm products but also textiles and steel--which happen to be the three kinds of goods that Eastern Europe is best positioned to export.

“It is deeply regrettable,” said Michel Camdessus, director of the International Monetary Fund, “that so little has been done by the industrial countries to open up their markets to imports from the reforming countries.”

Singling out Western Europe as having a special obligation to help its neighbors to the east, Camdessus added: “This reluctance could put in jeopardy the historically momentous process of systemic reforms in Eastern Europe.”

To be sure, most Eastern European countries are believed to have run trade surpluses with the EC in 1990; Poland’s surplus was nearly $1 billion in the first nine months of the year, for which official figures are available. But Eastern European officials uniformly insist that they could have sold still more if the 12 EC countries had opened up their borders.

The trade issue is paramount in negotiations between the EC and three Eastern European countries--Poland, Czechoslovakia and Hungary--that are seeking some form of associate membership in the Western European economic club.

But negotiations with all three countries--typically, a session of several days each month--have bogged down, and success is far from certain. “Maybe June will be different, but we have a long way to go,” said a Polish official who asked not to be identified.

EC officials say Poland--unlike Czechoslovakia and Hungary--has delayed the talks by failing to submit a list of proposed trade levels in farm products.

The talks with Poland have also become complicated by that country’s decision, which it is still in the process of implementing, to fight back by imposing tariffs or quotas on Western European products.

“They (the EC countries) can’t start liberalizing until Poland finishes ‘deliberalizing,’ ” said a Western diplomatic source. “There’s plenty of blame to go around.”

Nor is trade the only land mine for the EC and Eastern European.

Among others is the explosive issue of emigration from east to west. Eastern Europeans are already flocking to the more prosperous EC nations, looking for such low-skilled but--by East Europe’s standards--lucrative jobs as handymen in Brussels and gardeners in the Dutch tulip fields.

Eastern European leaders are also seeking greater exports to the United States. Hungarian President Arpad Goncz, meeting late last month with President Bush in Washington, complained that several U.S. laws brand Hungary a Communist nation and deny it full access to U.S. markets.

White House Press Secretary Marlin Fitzwater said U.S. officials were visiting Hungary to seek ways to overcome U.S. barriers to Hungarian goods. Expanded trade with Eastern Europe, Fitzwater said, will be high on the agenda of the July summit in London of the seven leading industrial nations.

“This is part of our effort to assure the new democracies of Central and Eastern Europe the widest possible access to U.S. and European markets, which we expect will be a major theme” of the so-called Group of Seven summit, Fitzwater said. Represented at the summit will be not only the biggest four EC nations--Britain, France, Germany and Italy--but also the EC itself. (The other Group of Seven members are Japan, Canada, and the United States.)

For Poland, an opening to the West could not come too soon.

Henryk Staniszewski, production director for Huta Warszawa, a gigantic steel mill on nearly 75 acres of land on the outskirts of Warsaw, listed EC trade barriers among the reasons for a sharp drop in his plant’s output.

Wieslaw Jasinski, who as vice director of the Foreign Economic Cooperation Ministry is responsible for negotiating with the EC, said Poland itself is probably more to blame. Huta Warszawa and other Polish plants are so technologically backward, he said, that they cannot make the quality of steel that EC countries demand.

But as for textiles, Jasinski said, the EC’s trade stance--a stifling combination of quotas and tariffs--”is a great problem for us.” The EC sells more fabrics and clothing in Poland than Poland sells in the EC, he said.

In the agriculture sector, Jasinski said, Poland’s sales to the EC last year totaled $1.2 billion, far more than the Community’s $200 million worth of exports to Poland. But Jasinski estimated that without EC trade barriers, Poland could increase its sales by 50% to 100%.

More damaging than outright EC quotas and tariffs, Jasinski said, is the EC’s massive farm subsidy program, budgeted at $38 billion this year. EC subsidies, he said, give Western European farmers an unfair price advantage in competition with agricultural products from outside the Community.

This is the same issue, when voiced by the United States and other major agricultural exporting nations, that led to the breakdown last December of Uruguay Round negotiations among more than 100 nations aimed at liberalizing international trade.

Although the EC has promised to scale back its farm subsidies, the political power of Western Europe’s farmers has meant scant progress to date.

The consequence could be an outright trade war between Eastern and Western Europe. Poland’s farmers, demonstrating some political clout of their own, have won an agreement by the government to impose some reciprocal barriers to EC farm products. The government, which fully opened its borders to foreign trade shortly after the defeat of the old regime in 1989, is still in the process of formulating the promised relief.

Hungary and Czechoslovakia, which are also trying to arrange some sort of associate membership in the EC, are encountering the same frustrations. Early in the talks, Hungary presented the EC with a list of farm products it wanted to sell there.

“So far, the (European) Community has not replied officially, but its silence eloquently betrays the near impossibility of accommodating the Hungarian demand within the current political confines of the EC’s heavily protected farm system,” said Chris Horseman, an analyst for the London consulting firm Agra Europe.

Hungary sold nearly $1 billion worth of farm goods to the EC in 1989, against the EC’s scant $165 million to Hungary, Horseman said. And Hungary could sell still more, he said, if the European Community would open up.

“For the Western European farmer,” Horseman said, “his Polish, Hungarian or Czechoslovak counterpart is a threat rather than a colleague. . . . All three countries, given adequate levels of investment, competent farm management and foreign market opportunities, could produce substantially more, and the prospect of such quantities flooding onto a less-protected EC market has struck terror into the hearts of community farmers and politicians.”

Times researcher Isabelle Maelcamp contributed to this story from Brussels.

EAST MEETS WEST

Trade by five Eastern European nations with the 12 countries of the European Community during the first nine months of 1990, in millions of dollars.

Imports Exports from EC Balance to EC Poland $3,664 +$974 $4,638 Czechoslovakia 2,238 +241 2,479 Hungary 2,907 -201 2,706 Romania 1,166 +402 1,568 Bulgaria 875 -317 558

Source: European Community