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Bush Links Moscow-Baltics Status

Most-favored-nation move seen more profitable to America than USSR, and a Baltics boost. US-SOVIET TRADE

IF Washington's renewal of preferred trading status for the Soviet Union symbolizes an improving relationship with Moscow, a companion agreement for the Baltic republics demonstrates that it is largely on Washington's terms.US officials concede that most-favored-nation status (MFN) for the Soviets enables Washington to resume normal relations - with a high political profile - at little cost. A separate agreement for the independence-seeking republics reminds Moscow of United States respect for the integrity of the Baltic states. Last Friday, President Bush sent to Congress the proposal for a US-Soviet trade agreement. If it musters approval from Capitol Hill, the agreement will extend MFN tariff treatment to the Soviet Union and the Baltics. The Soviets export less than $1 billion worth of goods, mostly raw materials, to the US; distinctive Baltic trade with the US is yet to be quantified. Lower duties on Soviet imports to America are expected to have a marginal impact on the Soviet economy, principally because Soviet production does not adequately satisfy its own domestic demand. And what is produced for export is largely substandard for Western consumers.

Approval not certain The White House has been mindful that restoring MFN for the Soviets, a relationship that was abrogated in 1951, will not receive automatic congressional support. Moscow's policy of repression against rebellious republics, especially the Baltic states, is a thorn in the administration's side as it seeks to normalize commercial relations. Leaders from Lithuania, Latvia, and Estonia have frequented Washington during the past year, testifying before congressional committees and lobbying Bush for US support. The White House proposal "in no way alters the longstanding policy of the US not recognizing the forcible incorporation of Lithuania, Latvia, and Estonia into the USSR [in 1940] or our support for their legitimate rights," White House Press Secretary Marlin Fitzwater said on Tuesday. In addition to MFN for the Soviets and for the Baltics, Mr. Fitzwater says, the Baltic states will be entitled to "special provisions." US-Baltic trade statistics will be distinguished from US-Soviet trade, with separate accounting "for Baltic origin products." And Baltic governments would be eligible for "technical assistance in trade development and export promotion to improve our trade relations with them," says Fitzwater. Whether this seemingly separate but equal trade treatment of the Soviet Union and the Baltic republics calms congressional concerns about normalizing relations with Moscow remains to be seen. But Bush seems to have taken a cue from his critics. Sen. Bill Bradley (D) of New Jersey, an adamant opponent of "the administration's conciliatory approach" toward Moscow, blasted the White House last week, before Bush sent his proposal to Congress, for "declaring its acquiescence in the continued absorption of the Baltic states by the central Soviet government."

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Separate status sought On July 31, the day of a brutal Soviet attack on a Lithuanian border post, Senator Bradley introduced legislation that "grants the Baltic states MFN status separate from the Soviet Union and on the basis of their existing treaties with the United States [treaties that were suspended when the Soviets lost MFN status in 1951], effective when the Soviet Union receives MFN status." Two days later, on Aug. 2, Bush presented his proposal of companion MFN for Moscow and the Baltics. The merits of directly assisting the republics in addition to Moscow center is also a key issue at the International Monetary Fund and the World Bank - the two development institutions that will coordinate Western technical help for the Soviet Union. Although Moscow recently applied for full membership in these organizations - seeking full borrowing rights - the Soviets will be granted only special associate status for the time being, and that means technical assistance. Lawrence Summers, chief economist of the World Bank, says "the most important thing technical assistance can do is spread awareness and strengthen the hand of those who see the need for major systemic reform." Will the bank dole out that help on a republic level? "I expect the bank will be involved," Mr. Summers says. "I don't know whether we'll be involved in all 15 republics, but ... it's essential that the Western effort be everywhere. I was surprised and pleased that Bush went to the Ukraine [after last week's Moscow summit meeting with Gorbachev]. If the president of the United States can go visit a state of the Soviet Union, then surely a bank technical assistance mission can and should as well. "If all the carrots are for Gorbachev or for Moscow, that's not going to have a lot of sway at the republic level. And if you think it's going to fall apart, then you obviously want to be involved in what will become constituent parts. I think it's very important that the bank be seen as a credible voice and a useful institution not just in Moscow, but in the republics."

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