President Clinton and European leaders today agreed to an "early warning" program in an effort to head off potentially contentious policy proposals before they escalate into major trade disputes.

The new program is designed to avert repeats of such battles between the United States and the European Union as the current dispute over European limits on banana imports.

Clinton, nearing the end of a week-long European visit, praised the accord during a morning news conference in Bonn with German Chancellor Gerhard Schroeder and European Union President Jacques Santer.

"We discussed the need to have unresolved trade disputes not define our relationship at a time when we're working together so well on so many fronts," Clinton said. "It is inevitable that there will be occasional friction -- some small, some large. We must not let them cloud the fundamental soundness of our relationship."

Under the new "Bonn Declaration," Washington and European governments will supply each other with details of proposed policy initiatives in areas such as the environment, health, transportation and agriculture. A nation will be allowed to raise objections to or question another nation's policy proposals but will not have veto power.

Santer said: "Too often in the past, President Clinton and I have had to spend time on damaging disputes, like Helms-Burton, bananas and hormone-treated beef, even if 98 percent of our trade relations are trouble-free."

The Helms-Burton Act imposes sanctions against foreign corporations that do business with Cuba involving properties expropriated from U.S. citizens.

"By setting up an effective early warning system, we are seeking to resolve such problems before they become politically damaging," Santer said.

The EU faces sanctions imposed by the World Trade Organization, which has ruled in the United States' favor in the banana dispute. Europeans have favored banana imports from their former colonies, which has harmed U.S.-owned companies in Central America.

Clinton gently chided his European hosts, saying: "I think it is important that all of us honor the decisions of international tribunals when they are rendered on these trade matters."

Clinton also acknowledged that many European leaders are concerned about the safety of imported food products, especially those treated by hormones or other additives. Food safety is "an important priority for me," he said. "And it's important for our farmers because they have an enormous interest in providing safe and wholesome food to the world."

"We need to develop open and scientific regulatory processes in each country that actually command the full confidence of ordinary citizens," Clinton said. Some analysts say public fears about food safety often are unfounded, an issue Clinton indirectly addressed. "The only thing that should matter," he said, is " `What is the truth?' `What does the science tell us?' And that will be my commitment."

Clinton also said he hasn't given up on reaching agreements with China this year that would open the way for its entry into the World Trade Organization. Talks were sidetracked this year by accusations of Chinese spying in U.S. nuclear weapons labs, and by the U.S. bombing of the Chinese Embassy in Belgrade.

"This is a difficult, painful period for them and for our relationship," Clinton said. "But I haven't given up on the WTO. I'd still like to see it finished this year. And I think we'll work through this."

CAPTION: President Clinton, German Chancellor Gerhard Schroeder and European Union President Jacques Santer at a news conference in Bonn yesterday.