Two confidential memos exchanged between top United States and Europe Economic Community trade officials, obtained here exclusively by the Washington Post, dramatically reveal the precarious state of transatlantic efforts to reach a European-American trade compromise permitting a successful end to the multilateral trade negotiations under way in Geneva.
The EEC letter, sent late week to Robert Strauss, President Carter's special trade representative, reveals a new hard-line stance being adopted by Washington in crucial trade talks with the Europeans. This has created "a situation gravely prejudicial to a successful conclusion" of the MTN, claimed the author of the letter, chief EEC negotiator Wilhelm Haferkamp.
But in a secret memo recently received here, Strauss stressed the problems he is encountering in his attempts to woo Congress into accepting the emerging MTN liberalization package. Strauss' letter appears to suggest that his task could well prove impossible unless the EEC grants new trade concessions favoring U.S. exporters. This the EEC clearly will not do in view of what European officials see as a new bout of American protectionism which has crept into the trade negotiations.
According to the Haferkamp letter, the major focus of the European complaint is the recently announced American intention to raise tariffs on a whole range of chemicals imported into the U.S. The EEC letter said the administration's move provoked "a background of shock" against which European negotiators cannot respond positively to the demands outlined by Strauss.
The central request in the Strauss letter is for a reduction of EEC tariffs on paper products in an effort to maintain the American paper industry's competitive position on the markets of the nine-nation EEC. Strauss warned in his letter that such an Eec/ gesture "is absolutely essential for me politically" in his struggle to get Congress to agree to the trade package. President Carter recently said he intends to send it to the Hill in the coming weeks.
But the terse European reaction to the Strauss request appears certain to remain "no dice" for as long as the president's trade representative does not instruct his negotiators, led by Ambassador Alonzo McDonald in Geneva, to soften the administration's tough position on chemical imports.
According to EEC negotiators, who had a "disappointing" meeting here with McDonald last weekend, the new conflict centers on the American selling price, a system which they say has been used by Washington to artificially increase the price of certain chemicals imported into the U.S. to protect domestic manufacturers.
In response to other agreements reached in the MTN, the ASP is to be phased out, but disgruntled Eec/ officals complain that Washington now has revealed that it intends to replace it by applying higher customs duties on a whole range of chemicals, even including those not protected by the ASP mechanism.
This has come as a hard blow to European negotiators, one of whom bitterly complained that "the Americans are trying to pull a fast one." Another griped that Washington "is simply not playing it straight."
The Haferkamp letter claimed that the net impact of the move would be to raise U.S. tariff protection on chemicals from 12.5 percent "to rates of 20 percent or more before falling to 13.5 percent by 1987."