Leaders of seven major industrial democracies ended their economic summit meeting today with France blocking agreement on the key question of when to begin a new round of talks to reduce barriers to world trade.
The stalemate, reflected in the final communique released today, was a major rebuff for President Reagan, who had come to the summit with his principal goal to overcome the French objection.
The trade dispute, while not unprecedented at such summits, was unusually public and blunt. U.S. officials told reporters that France had been "isolated" from its allies. President Francois Mitterrand responded, "They say I am isolated, but I have a lot of friends outside this summit."
The impasse over trade talks was only one of several issues on which the summit adjourned today on a note of discord among the participants. France rejected outright Reagan's invitation to participate in research on his Strategic Defense Initiative. The summit leaders also expressed disapproval of Reagan's decision to impose trade sanctions on Nicaragua, but they endorsed U.S. positions at the Geneva arms negotiations.
With the economic summit meeting completed, Reagan moves to the next stage of his European trip Sunday with controversial visits to a German military cemetery at Bitburg, where 49 members of the Waffen-SS are buried, and to the Bergen-Belsen concentration camp site.
About 10,000 demonstrators marched peacefully in Bonn today to protest Reagan's visit to the military cemetery, but afterward gangs of youths smashed windows in an area about two miles from the site of the summit conference. In a separate demonstration, a group of Jews, many of them Americans, camped at the Bergen-Belsen site to protest the cemetery visit, news services reported.
The U.S. officials, trying to put the best face on the failure on trade, stressed that all the summit participants agreed that new trade talks are needed to head off rising protectionist pressures and perhaps even a world trade war.
But even the French had agreed before the three-day summit began that such talks are needed. At issue was a commitment to a firm date so that the required preparatory talks could move quickly. The leaders said these preparations should begin before the end of the summer.
Without a date, some nations could try to stall until they achieved a tactical advantage in setting the agenda or priorities for the talks.
Reagan, unlike the other national leaders, did not hold a news conference today after the summit concluded. Asked on a sidewalk outside the West German Chancellery by reporters about sharp disagreements on trade talks, he responded cheerily, "We all got what we wanted."
Except for trade, the summit communique emphasized points of agreement on issues ranging from the need to "sustain noninflationary growth and higher employment" to enviromental protection and aid for drought-stricken Africa.
Treasury Secretary James A. Baker III said Reagan and other members of the U.S. delegation were pleased that other nations appear willing to follow the American lead in making their economies more market-oriented in hopes of ensuring growth.
"The best contribution we can make to a lasting new prosperity in which all nations can share is unremittingly to pursue, individually in our own countries and cooperatively together, policies conducive to sustained growth and higher employment," the communique said.
However, a senior U.S. official conceded that such steps as cutting long-term unemployment benefits or reducing business and financial regulations, which Reagan advocated here, are not likely to spur growth of European economies this year.
Both Baker and White House chief of staff Donald T. Regan had said in interviews this week that action is needed to increase such growth to "pick up the slack" as the expansion in the United States slows down.
The U.S. official said that none of the summit leaders, or their finance ministers, indicated that their countries would cut taxes or pursue easier monetary policies to spur their economies and reduce unemployment. Jobless rates are in double digits in most of the European countries and Canada.
And even in the area of reducing these "structural rigidities" in the various economies, there were no promises of immediate action. As Secretary of State George P. Shultz put it, "You look around, and when people take the pledge, sometimes it works and sometimes it doesn't. We'll have to see."
The trade controversy swirled through the entire summit meeting. During the summit sessions themselves, in private meetings with Reagan and other leaders and at a press conference afterward, Mitterrand did not budge an inch.
U.S. officials attributed some of his intransigence to next year's French elections, possibly coinciding with the trade talks, and to Mitterrand's current political need to be seen as defending the interests of French farmers, who he fears would be hurt by the trade talks.
More fundamentally, Mitterrand's spokesman said, "The negotiations dealing with agriculture will have to take into account the specific nature of that sector and must under no circumstances call into question the basic mechanisms, internal or external, of national and European Community agricultural policy."
That European policy is based on a structure of high subsidies for farmers, tight controls on agricultural imports and subsidies -- about $4 billion in France's case -- on sales of farm products abroad.
Opening European markets to U.S. farm products and reducing allowable export subsidies are among the U.S. goals in the proposed trade talks.
Other leaders warned Mitterrand that a failure to show progress by setting a date for the trade talks could cause a protectionist backlash in the United States and elsewhere. Mitterrand countered these and other arguments with sometimes "emotional" replies, U.S. officials said.
"I am responsible for France, not for defending any country of the world against itself," Mitterrand declared at his press conference.
"I have said no. . . . I am not isolated by vocation, but in measure of our responsibility to farmers, to Europe. . . . To be alone at Bonn doesn't mean that we are alone in the world. This will be shown quickly as preparations for GATT go ahead."
The trade talks are to be held under the terms of the General Agreement on Tariffs and Trade, or GATT, which has 90 members. Changes in GATT rules, U.S. officials said, must be by unanimous consent. If two-thirds of the members agree to changes, they can have the changes apply only to those who agree to them.
Thus, France appeared to be in a strong position to extract, in advance of the actual talks, promises that would exclude or limit changes in current rules. France's position is strengthened by the fact that other members of the European Community, including West Germany and Britain, who backed the U.S. position, could find it hard to proceed so long as France remains opposed.
The summit communique reflected both the agreements and the differences between France and the other nations.
"Protectionism does not solve problems; it creates them. . . . We need new initiatives for strengthening the open multilateral trading system," the statement said. But this note of agreement was followed by an acknowledgement of disagreement on when a new round of trade talks should begin. "Most of us think that this should be in 1986," it said.
It noted that "world economic conditions are better than they have been for a considerable time." Since last year's meeting in London, it said, "further progress has been achieved in bringing down inflation and strengthening the basis for growth. The recovery in the industrial countries has begun to spread to the developing world. The debt problems of developing countries, though far from solved, are being flexibly and effectively addressed.
The summit leaders spent little time on the monetary question or in discussing the strength of the U.S. dollar, a major reason for the large and growing American trade deficit.
The French discussed the need to have negotiations on trade and reform of the international monetary system conducted on a parallel basis, but U.S. officials made no such offer, saying that they did not understand what the French meant by parallelism. The French, not prepared to make any concessions on the trade front, were not insistent on a statement about progress on the monetary front.
Instead, they agreed to wait for completion in June and discussion within the International Monetary Fund of a report being prepared by a committee of industrial-nation representatives on the world's monetary system.
Also, the communique urged that aid be continued or increased, if possible, to developing nations. It welcomed agreements between Third World countries and commercial banks stretching out debt repayment and said, "We continue to stand ready, where appropriate, to negotiate further multiyear reschedulings of debts to governments and government agencies."