The administration this week notified Romania, formerly Washington's best contact in the Soviet bloc, that its "most-favored-nation" trade status is being suspended because of that country's immigration policies.
The notification was given to visiting Deputy Foreign Minister Gheorghe Dolgu by senior State Department officials Monday, and is to be formally announced before the end of the week, according to official sources. It is likely to have serious consequences for U.S.-Romanian relations and major repercussions within eastern Europe.
The cause of the trouble is the "education tax" to be levied by Bucharest against persons emigrating to other countries. The tax, starting at about $3,600 for a person of high school education and increasing by about $4,000 for each year of college education, is intended to stop the Romanian "brain drain" abroad or, if it continues, to repay the state for the education being exported.
There is more than a hint in comments from Bucharest that a nationalistic reaction to the rough-and-tumble of the American political system is also involved.
Romania's case for "most-favored-nation" trade status, granted permanently and routinely to most non-communist nations, is considered every 12 months under the 1974 Jackson-Vanik amendment, and in recent years Romania has bridled at the annual debate here about its immigration policies.
Following adoption of the "education tax," Undersecretary of State Lawrence S. Eagleburger flew to Bucharest in January to warn President Nicolae Ceausescu that the United States would be forced to suspend trade benefits if the measure was carried out. Despite this plea, the tax was formally imposed last month.
Administration officials said the measure left them virtually no choice under the terms of Jackson-Vanik, originally prompted by the Soviet Union's adoption in 1972 of a similar "education tax" on immigration.
Moscow revoked the tax within a few months, but because of this history the U.S. law was specificially directed in part against trade benefits to communist nations that impose "more than a nominal tax on emigration."
Further official consultations between Washington and Bucharest are expected before the formal termination. But given the two sides' fixed positions, U.S. officials said it is highly unlikely that the action can be averted.
Withdrawal of the trade benefits probably would cost Romania about $200 million in sales to the United States because of sharply increased tariffs, sources said. Romanian sales here were about $350 million last year.
Loss of U.S. sales would be a new blow at a time when Romania's economic ties with the West are already in trouble. A shortage of foreign earnings forced Romania to suspend payments on its foreign loans for most of last year. This January, Bucharest informed creditor banks that it will withhold debt repayments of more than $1 billion this year barring a rescheduling agreement.
The most serious effect, however, may be political rather than economic. Despite efforts of U.S. and Romanian diplomats to limit the damage, the action is likely to be deeply resented in Bucharest.
Ceausescu, while pursuing unbending policies at home, had won unusual diplomatic autonomy within the Soviet bloc, with more freedom of foreign policy maneuvering than that of most other Warsaw Pact countries. This position of relative independence could well be affected by a rupture of trade ties with Washington, according to State Department sources.