Senior American officials forecast privately today that prospects now seem "quite good" for eventually granting most-favored-nation trade status to the Communist government of Hungary.
Hungary, with probably the least repressive government within the Soviet-led Communist bloc, has for many years sought to expand its trade with the United States under the more favorable tariff conditions that go with such status.
The situation, however, has been stalmated because of a 1974 U.S. law linking trade with emigration and by the delicate relations between Budpest and Moscow.
At a press conference here yesterday day, U.S. Secretary of State Cyrus R. Vance acknowledged that he had discussed the trade question in talks with Hungarian Foreign Minister Frigyes Puja and that he was "encouraged by those discussions and hope that we will make progress in the future."
Vance, however, stressed that the purpose of his visit to Hungary was the return of the Crown of St. Stephen, "from the American people to the Hungarian people" and that it would be "inappropriate to dwell" on other aspects of relations at this time.
Vance clearly did not want anything overshadowing the dramatic events of recent days here.
Nevertheless, it was the first face-to-fact dicussion on the subject at such a high level, and both State Department and diplomatic officials here said that while no agreement was actually made, they were optimistic that an arrangement would be worked out and would be supported in Congress.
Vance told reporters he would characterize U.S.-Hungarian relations as "very good" and said they "will, in my judgment grow stronger as a result of the return of the crown," Hungary's 1,000-year-old symbol of nationhood that fell into U.S. hands in the closing months of World War II.
Vance said that discussion of the most-favored-nation questions will now be continued here by U.S. Ambassador Philip M. Kaiser, whom Vance also redited with a key role in "bringing about the return of the crown."
The major problem for the Hungarian government under Communist Party chief Janos Kadar has been the 1974 Jackson-Vanik amendment to the U.S. Trade Act, which is meant primarily to force freer emigration from the Soviet Union, especially for Jews, in return for the most-favored-nation status.
The dilemma for Kadar is that while his government has probably done more to protect what is left of the Jewish population here than any other Eastern European county, his ability to practice a unique form of domestic liberalism in Hungary grows out of his unfailing allegiance to the Kremlin's foreign policy.
Thus, even if the way is cleared in the U.S. Congress for Hungary, there still could be problems with Moscow which, along with most of the Eastern European countries including Hungary, considers the law itself as an "insult" and an intereference in their internal affairs.
Although it does not have a tight emigration policy, hungary allows the only Jewish rabbincial seminary left in Eastern Europe to continue operating and Kadar has personally resisted pressures to remove Jews from the many prominent positions they still hold in government, religious and cultural life here. Hungary's deputy vice premier, Gyorgy Aczel, who is also Kadar's right-hand man, is Jewish.
The only two Soviet-bloc countries that have most-favored-nation status are Poland, which had it before the new law, and Romania. Both of these countries, ironically, are viewed by Western officials as much more anti-Semitic than Hungary.
Hungary's trade with us, even without the most-favored-nation status, has increased from about $50 million in 1973 to close to $200 million annually now.
Asked today how he would assess Hungary's performance in human rights and family reunification, Vance's answer dealt only with reunification of divided families. The Hungarian government, he said, had made "substantial progress". He said that only a few cases remained and these were receiving prompt attention by Budapest.
Vance also echoed an Emerging theme of the Carter administration, saying "our relations show that countries with different economic, political and social systems can work together on matters of mutual interest to our peoples."
He said, in reply to a question, that the Carter administration was indeed seeking to improve its relations with the countries of Eastern Europe but that the best way to deal with the problems and face the issues was on a face-to-face and case-by-case basis.
Despite the significance of the return of the crown, the Vance visit here has been very low key. Newspaper gave major coverage to the crown's return and television, while not showing the ceremonies live, did rebroadcast them in their entirely.
Yet, there was no real spontaniety surrounding the event or big turnout of crowds in the streets because the public was not admitted to the formal ceremonies, nor was it told the precise schedule of events.
Similarly, it will be probably be some time before the crown jewels go on public display, although Hungary, in announcing the U.S. decision to return the crowd, pledged that the government would place the crown "on permanent public display in an appropriate historical location in Budapest for the population of the country, Hungarians living abroad and foreigners alike to see."
This delay, ostensibly, will give the crown's caretakers time to set up its display but it will also undoubtely provide time for the Communist government to get to public used to that fact that the crown is back and avoid a perhaps embarrassingly large display of public emotion over a relic that symbolizes not only independence but religious freedom.
The impact on the Hungarian people at this point is hard to measure.It seems clearly that people over 45, whose memories reach back to World War II and earlier have expressed deep gratitude for its return. A sampling of young people, however, reveals no really widespread feelings either way about the relics.