U.S., Europeans Declare Temporary Truce on Trade

Declaring a temporary truce on trade issues, the Clinton Administration agreed Friday to delay a new round of sanctions against European goods while the European Community signaled its willingness to consider giving American firms greater access to its markets.

The joint announcement was coupled with the disclosure that a potential irritant in U.S.-Japanese relations has been eased now that Japan has met a negotiated target for purchases of foreign-made computer chips. The disclosure indicates greater access by the United States, South Korea and Europe to the $19.2-billion Japanese industry.

Thus, after two months of mixed signals about the direction of the Clinton Administration’s trade policies, in which talk of free trade has been coupled with hard-edged decisions suggesting a protectionist approach, the outlook appears to be improving: The possibility of U.S.-imposed sanctions that could have spurred retaliation by major trading partners has been averted, at least temporarily, and Washington’s goal of improving U.S. access to European markets is being given top priority.

The developments came at the conclusion of a two-day visit to Washington by European Commission President Jacques Delors. Delors, who heads the European Community’s administrative body, is said to have warned Clinton and other Administration officials against launching retaliatory actions that could have triggered a new round of protectionism in the midst of Europe’s current economic recession. Clinton, in turn, declared during a break in his meeting with Delors that he has no interest in launching a trade war.

Still, officials familiar with the latest developments expressed a cautious view that the decision to refrain from imposing sanctions on European manufacturers--in this case involving their access to the U.S. government’s market for communications equipment--did not lift the cloud hanging over the U.S.-European trade relationship.

At the center of the dispute are what the Administration sees as discriminatory new rules by the 12-member European Community governing purchases of communications and other utilities equipment.

In response, U.S. Trade Representative Mickey Kantor said a week ago that he was almost certain to announce on Monday limits on European sales of about $45 million to $50 million in communications gear to government purchasers here. A notice announcing the action had already been prepared for Monday’s issue of the Federal Register.

But Friday, the United States and the European Community announced jointly that any action would be deferred until after Kantor meets in Brussels on March 29 with Leon Brittan, the community’s commissioner for external relations.

The joint statement also announced that they were “committed to negotiate a significantly larger market access package in both goods and services as the first order of business” when negotiators resume the multilateral talks intended to reduce tariffs and other obstacles to international trade. Placing the question of greater access to markets, and thus improving the opportunities for increased international sales, at the top of the agenda was a high priority of the Clinton Administration.

Kantor told reporters that “we made no commitment whatsoever” to obtain the Europeans’ agreement to put market access at the top of the trade talks.

But, another source close to the developments said: “If you read between the lines, there is a little bit of a quid pro quo in this.”

So, he said, the Europeans “bought themselves a little delay” in the sanctions, which could still be imposed if the Brussels meeting at the end of the month produces no sign of improved U.S. access to the European communications market.

The announcement that Japanese industry in the final quarter of 1992 had bought 20.2% of its semiconductors from foreign manufacturers--just barely surpassing a negotiated target of 20%--eased a point of tension between Washington and Tokyo. Of that amount, about 85% came from U.S. manufacturers.

“This is a very impressive increase,” Kantor said of the fourth-quarter figure, which was a gain of 4.3 percentage points over the third-quarter level.