Storm flags fly as US trade team visits Europe
The new Reagan international economic team, in a round of get-acquainted talks with its European counterparts here, has departed from the low-key tolerance of the previous administration. It has assumed instead a combative stance on a number of issues that some officials feel could lead to a bruising transatlantic trade clash.
While these talks in Brussels took place in typically subdued diplomatic fashion, officials from both sides indicated there were a number of irritants that would have to be confronted soon. The conversations included visits with their EC counterparts by Malcolm Baldridge, commerce secretary; Myer Rashish, undersecretary of state for economic affairs; Bill Brock, chief trade negotiator; and John Block, agriculture secretary.
At the forefront of the problem areas are difficult ongoing negotiations on the government export credit terms granted to customers by rival countries; squabbling over general international economic consultations and coordinating interest rate policy; and renewed American impatience with European farm and other export subsidies.
There were also ominous signs that this latent friction could worsen in coming months. The soaring value of the dollar has made American exports less competitive on both the international and domestic marketplace. Moreover, European governments, faced with record unemployment of 8.5 million, which is expected to reach 10 to 12 million this year, are seeking to stimulate their own job-creating exports.
The first notes of major discord since the Reagan administration took over appeared as a result of the high interest rates in the United States. This triggered a rise in the dollar and disrupted other currencies. Also, the US prodded Japan into limiting exports of Japanese cars to the American market.
In both instances, European officials complained that there was inadequate consultation by the US with Europe over the disruptive effect of these actions. During the talks in recent days, both Mr. Block and Mr. Rashish heatedly replied that there had been enough prior consultation and that there was no way the American policies could have been changed.
In speaking to the press after their meeting, Rashish and the top EC trade negotiator, Sir Roy Denman, played down their differences over these problems. Sir Roy referred to them as "a few teething problems during a transition period, " and Rashish acknowledged that "there may have been a hitch or two."
But a few days later Mr. Brock was especially blunt about these and other American policies toward the Common Market. He first indicated Europe should stop complaining about the high US interest rate and dollar and take advantage of the increased trading opportunities that would open up in the US as a result.
And he also expressed "preoccupation" and "concern" about the EC policy on export credit and farm export subsidies. He said the subsidies aimed at exporting farm surpluses "create very severe strains on our trading relationship . . . . It would be somewhat difficult to describe the present situation as just and equitable." Referring to the current competition between Europe and the US in offering more generous export credit terms to potential customers, Brock hinted darkly at a spreading trade war over this problem.
Talking of such a trade war between the US and the EC, he said, "I hesitate to use that much-abused word, but that's what it is." He said the US "would not rule out any action" in the export credit race, including linking progress in this field with other problems of interest to the EC. "We are not unwilling to discuss other trade areas in the same context."
Agriculture Secretary Block also laced into the European farm export subsidy program as "unfair competition" against US farm exports, especially wheat, on the world market. "We are not going to sit back and let this happen with no action. We are going to defend our markets," he warned.
On another front, the EC has increasingly resorted to restrictions against what its chemical and synthetic-fibers industry has termed unfair dumping at low prices by US producers benefiting from lower US government-controlled oil and natural gas prices. It has also complained about changes in US import rules for steel, affecting Europe's crisis-riddled steel industry.