The protectionist onslaught of international free trade intensfied here today when foreign ministers of the European Economic Community set limits on textiles and minimum prices on steel brought into the nine member nations.
The ministers, working to shield an ailing European economy, imposed the restrictive measures during the end of a two-day session at Common Market headquarters.
The new steel plan, vigorously backed by the ministers, is effective immediately against cut-price steel sales by foreign steelmakers on the sensitive European market, where production has slumped as the jobless rate has spiraled.
The European plan differs from a recently announced American proposal because it can be triggered immediately by customs officials who detect imports entering under the set "base price." A dumping charge under the U.S. proposal, the ministers estimate, would take up to two months to confirm.
The prices for the steel brought into Common Market countries will be based on the lowest cost of production in normally competitive exporting countries such as Japan and South Korea.
The system will remain in effect for three months while the Common Market seeks trading agreements with its principal steel suppliers, including Japan, Spain and Eastern Europe. The U.S. plan contained no such protective element.
The textile trade pact has aroused hostility from the 30 supplier countries it affects. Its slow gestation has also caused anxiety among U.S. textile negotiators, mingled with relief that Europe has at least avoided more strident protectionism.
Some officials here have been concerned that the textile deal will further raise American industry's protectionist hackles. Stepped-up congressional pressure is considered possible to ensure that the hard bargain driven by the Europeans will not lead to increased exports to the United States.
Yet there is widespread relief that the accord reached should at least avoid a total breakdown in international textile trade, currently assured by the "Multi-Fibers Arrangement (MFA)," which is scheduled to run out at year-end. Europe voted today to continue as a member of the MFA, of which the Carter administration has een the major supporter.
The MFA provides for a growth rate in world textile trade of 6 per cent annually, while the new pact calls for expansion levels of between .03 and 4 per cent for some sensitive products.
The textile deal, covering some 1.1 million tons of texile imports, severely limits imports growth for Asian countries, which are also leading exporters to the U.S. market. In the case of South Korea and Hong Kong, the Common Market's major supplier, imports have been cut back. This had lead American officials here to wonder whether the EEC has done better than the United States in its talks with aggressive textile exporters.
At the same time, it is recognized that the Common Market countries have taken the brunt of the tidal wave of textile exports since 1974 when the MFA first came into force.
Following the tight controls imposed by the United States on import growth, the world's textile exporters, it is claimed here, honed in on the Common Market, whose cumbersome machinery was much slower in responding to the import threat posed by the MFA accord. U.S. diplomatic sources here adit that the EEC "was strategically outmanuevred by fast-moving LDCS," as the developing countries are described.