Talk of 'fair trade' worries the Twelve

THE European Community is worried that Bill Clinton's economic strategy could set him on course for a head-on collision with Brussels. Officials reacted to his first big economic policy speech with caution yesterday, saying that its acceptance of the need for an international trade deal was welcome. But there was some concern about the tone of the speech, which referred to 'fair trade' - sometimes seen as a cover for protectionism - and the number of transatlantic disputes.

Sir Leon Brittan, the EC's Foreign Trade Commissioner, yesterday gave a broadly positive report on his recent trip to see Mr Clinton's senior trade officials. 'My visit to Washington has convinced me that a successful conclusion to the Gatt Uruguay Round negotiations can be achieved,' he told a Conservative Association meeting in Cheshire. But he also warned: 'In the short term, the temptation to seek protectionist short cuts to economic recovery will be a real one. But it must be resisted. If not, it will inevitably arouse strong reactions, and the climate required for constructive advance could be disastrously impaired.'

The change of administration has led to nervousness in Brussels, since there has been some suspicion that Mr Clinton was less committed to free trade than George Bush, and more inclined to put pressure on the EC - Washington's main trading partner. On Wednesday Niels Helveg Petersen, the Danish Foreign Minister and President of the EC Council of Ministers, said that the EC was awaiting a 'clear signal' of Washington's intent to sign and seal the Gatt deal, and it was evident yesterday that Brussels did not feel it had got that.

EC officials noted that Mr Clinton referred to 'aggressive, targeted attempts to create high-wage jobs' in internationally competitive sectors, and that he singled out aerospace - a sector where the US and the EC have traditionally been at odds, notably over EC subsidies to the Airbus consortium. Last week Mr Clinton said that he would 'not roll over and play dead' over Airbus, and it was reported that he intended to reopen a transatlantic accord on aircraft subsidies. The EC indicated yesterday that it would react harshly to such steps.

There are many outstanding trade issues between the two sides, any one of which could spark another row similiar to that which threatened to upset the Gatt talks last year. European officials returned yesterday from intensive but inconclusive talks in Washington, where they sparred over access to each others' markets for telecommunications products and public procurement. Progress was reported to be 'marginal'. There is also an outstanding conflict over US duties on EC steel exports. Part of the problem is that both Europe and the US are seeking ways to boost employment quickly. Henning Christophersen, the EC's Economics Commissioner, said there were parallels between Mr Clinton's economic plans and those Europe was sketching out. '(The Clinton plan) resembles the European Growth Initiative because they both in the short term try to support growth by strengthening public and private investments,' he said.