The United States and Hungary have concluded an agreement granting "most favored nation" tariff status to Hungary for its exports to the United States, reliable sources said yesterday.
The agreement, subject to approval of Congress, will allow Hungarian goods to enter this country on the same basis as those of other countries paying the lowest U.S. tariff rates. Nations without MFN status have their exports to the United States taxed at higher rates.
In exchange, the agreement will exempt U.S. products exported to Hungary from higher tariff scales in effect there. These higher rates have, in the past, hindered U.S. firms from competing in the Hungarian market on equal terms with West European firms.
The sources said the agreement was initialed yesterday in a private ceremony at the State Department by Hungarian Deputy Trade Minister Istvan Torok and Philip Kaiser, U.S. ambassador to Budapest. Formal signing of the agreement will take place in approximately 10 days, the sources added.
If Congress then approves the agreement under provisions of the 1974 Trade Act, Hungary will become the fourth East European communist country to achieve MFN status. The others are Romania, Yugoslavia and Poland.
The Trade agreement marks the latest step in improved U.S. Hungarian relations - a tend that was symbolized most vividly in January when Secretary of state Cyrus R. Vance visited Budapest for ceremonies marking the return of the 1,000-year-old crown of St. Stephen, legendary symbol of Hungarian nationhood, after 32 years in American custody.
It also comes against a general background of efforts by the Carter administration to upgrade and improve relations with those East European nations allied with the Soviet Union in the Warsaw Pact. Following the 1968 Soviet invasion of Czechoslovakia. Washington had followed a policy of downgrading its dealings with these countries and concentrating instead on Moscow as the leader of the bloc.
That makes the trade agreement potentially more significant in diplomatic than in actual economic terms. U.S.-Hungarian trade has been small in the past.
Last year, for example, the United States sold about $88 million worth of goods, mostly heavy machinery, to Hungary. Hungarian exports to the United States lst year were worth roughly $47 million: and consisted mainly of hams, electric bulbs and pharmaceuticals.
Diplomatic sources said the new agreement is expected to cause some modest increases in this trade. The most immediate impact, they added, is likely to mean an increase in U. S. sales to the Hungarians.
Under the so-called Jackson amendment to the Trade Act. President Carter, when he submits the agreement to Congress, must certify that he has received assurances from the HUngarian regime that it is taking reasonable steps to allow immigration by Hungarian citizens wishing to leave the country.
The sources said these assurances already have been given to the Carter administration. They added that, in terms of the goals set by the Heisinki agreement on European security and cooperation, Hungary's record on permitting immigration for humanitarian reasons is the best in Easter Europe.