America and Europe call truce in trade war: Brittan offers US suppliers greater access to EC markets and a relaxation of legislation on public procurement

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THE United States and the European Community agreed yesterday to call a temporary truce and to pull together to avert a trade war.

The main issues dividing the two blocs have not been resolved, but Leon Brittan, the EC commissioner responsible for trade, yesterday offered Mickey Kantor, the US special trade representative 'a substantive package' of measures to give American suppliers greater access to Community markets.

He also suggested waiving elements of new legislation relating to the award of government contracts - public procurement - that the US complains is particularly discriminatory.

The combination was enough to persuade Mr Kantor to hold back from imposing sanctions on EC imports, the first round of which are due this week, until after a further bilateral meeting in Washington on 19-20 April. However, he later told CNN television that the three-week reprieve would be the last - and would not be renewed.

Sir Leon said: 'No single step could achieve more for confidence and economic progress than the completion of the Uruguay round. Today was a small but significant step in the right direction.'

Mr Kantor said the market-access package offered by the EC, particularly with reference to industrial products 'is much larger than has been discussed in the past, both in terms of sectors involved and the reduction of tariffs'.

He reaffirmed the US intention to extend the 'fast-track' procedure that would allow him to push a Gatt deal unhindered by unrelated amendments through Congress and said an announcement on the details would be made soon.

Neither side was prepared to elaborate on the substance of the market- access package but Sir Leon stressed it was not a question of the Community having made unilateral concessions. Any deal 'safeguards our mutual interests,' he said.

Mr Kantor suggested later that the EC had offered a zero tariff rating for some products.

Semi-conductors now charged at 14 per cent were a possibility, but opening this market too far would most likely run into opposition from some member states.

Brussels officials are interpreting Washington's new-found flexibility as evidence, perhaps not of a change of heart by the Clinton administration, which came to power looking distinctly protectionist, but at least of a readiness to make deals.

Mr Kantor said: 'The US President has made it clear the US is happy to lead economic growth, but expects its trading partners to do so as well'. He described the EC offer as constructive but added: 'Whether we can reach agreement or not by April is another question'.

There are three outstanding issues of mutual disagreement. The US accuses the EC of dumping steel products; illegally subsidising the Airbus European consortium so that US manufacturers could not be competitive, and of operating a protectionist public procurement policy.

The first two are already under discussion; negotiators will take up the question of Airbus again tomorrow.

Public procurement, since it is easily the most commercially significant is proving particularly difficult.

The US complaint centres on the EC public utilities directive that took effect at the beginning of this year. In particular it opposes as unnecessarily protectionist article 29 of that legislation which gives the EC not only 3 per cent price preference but would rule out any bid the content of which is not at least 50 per cent European.

The EC counters that US public procurement policy is more restrictive thanks to the Buy American Act, which imposes a strong and mandatory price preference on products of US origin.

The political atmosphere was, according to those close to yesterday's talks, more relaxed than in recent weeks. 'At least this time, he (Sir Leon) did not call me a unilateral bully or a bureaucratic thug,' Mr Kantor joked.

On the vexed issue of agricultural trade and the oilseeds deal the new French administration has threatened to veto, Mr Kantor said only that he expected to see it implemented 'when appropriate, as quickly as possible'.