Europe Chafes At U.S. Moves To Curb Exports
By William Drozdiak, Foreign Service
The Washington Post
August 12, 1984
BONN, Aug. 11 -- West Germany and other European allies are becoming increasingly upset by American efforts to thwart technology exports to Soviet Bloc countries and have warned the United States not to impose further restrictions on East-West trade.
The dispute comes two years after the United States and its allies settled a prickly quarrel over European companies supplying equipment for the Soviet trans-Siberian natural gas pipeline. It reflects the Europeans' concerns about the long-term revival of their economies as well as their desire to restore detente at a time when arms control prospects appear bleak.
Last week, in a blunt challenge to the Reagan administration, West German Economics Minister Martin Bangemann announced at a press conference here that the Bonn government "will not tolerate" any further tightening of controls on trade with the East.
West Germany is particularly worried by the administration's desire to toughen punitive measures in the Export Administration Act, the law that gives President Reagan the power to invoke sanctions against American and foreign companies that break export bans imposed for security or foreign policy reasons. Bangemann charged that the "extraterritoriality" clauses of the law were extremely unfair to European companies. He suggested that Bonn would combat any attempt to strengthen sanctions by following Britain's example and passing its own law forbidding West German firms from complying with the new restrictions.
European countries, still troubled by high unemployment and weak growth, insist that a boost in exports to East European markets is vital to the development of their industries and the long-term revival of their economies.
The Europeans also see enhanced trade with the East as an important tool in restoring detente.
While relations between Moscow and Washington show no signs of improvement, West European allies have made steady progress in reducing tensions and maintaining an East-West dialogue chiefly by emphasizing economic cooperation with East European countries hungry for special trade and financial arrangements.
Such contacts have encouraged Warsaw Pact countries such as Hungary and East Germany to shun Moscow's insistence on freezing relations with the West primarily because of the economic benefits they derive in their dealings with the West.
While the United States and Japan recorded a decline in exports to Soviet Bloc states last year, West European countries increased their total by 7 percent, according to the Paris-based Organization for Economic Cooperation and Development. France, Italy and West Germany were the biggest gainers.
But the European allies increasingly stress the political argument for increased trade with the East.
West European governments contend that offering more attractive trade prospects may be the most feasible policy to coax the Soviet Union out of its antagonism and toward greater cooperation on arms control.
Bonn, in particular, is expressing the view that since the European allies faithfully carried through the deployment of Pershing II and cruise missiles that angered Moscow, Washington should accommodate the Europeans in their quest to sell more goods and technology to the East.
Rather than becoming more pliant, the Reagan administration is seeking tighter controls and tougher sanctions to prevent the Soviet Union and its allies from closing the technology gap with the West. This policy has stirred a new wave of consternation as well as outrage among the West Europeans, who say they are being punished by shortsighted regulations.
The administration has sought to restrict strategic exports from getting to the Soviet Union mainly through two channels: the controversial Export Administration Act and the Paris-based Coordinating Committee, or Cocom, which devises lists of prohibited products through the unanimous consent of its 15 members, including the NATO allies and Japan.
The Europeans are most concerned about changes now being debated in the Export Administration Act. As one sanction, the Reagan administration is seeking the power to punish companies that breach American export controls by closing U.S. markets to those firms.
Such a drastic measure, if adopted, could cripple many European companies serving under license or as U.S. subsidiaries abroad.
West European governments contend that the law is unfair and that Cocom is a sufficient mechanism to reduce the risk of high technology exports that could be diverted to the Soviet military sector.
Lately, the United States and European countries have agreed to compromises that satisfied their respective governments.
Under strong U.S. pressure, Cocom agreed last month to stop all western sales of sophisticated telephone systems to the Soviet Bloc at least until 1988.
Shortly after the ban was decreed, Plessey and GEC of Britain and L.M. Ericsson of Sweden reluctantly withdrew their bids to provide central telephone networks for Bulgaria. But the Lorenz firm of West Germany, a subsidiary of ITT, plans to test the ruling in seeking permission to supply electronic telephone exchanges worth more than $10 million to Hungary.
Despite their reluctant decision to fall in line with the Americans in establishing and honoring an embargo on advanced phone systems, the Europeans, led by France and West Germany, believe that they also achieved an important victory last month in persuading the Americans to accept their position on when a product can be removed from the banned list.
The United States argued that such strategic goods as telecommunications and robotic systems should remain proscribed until the Soviet Union succeeded in developing the technology in question.
But France insisted that western firms should be free to sell their goods to the East once a product is surpassed by a new generation on the market. More commonplace eight-bit microprocessors, for example, are no longer subject to embargo, but those with 16 and 32 bits are still prohibited from being sold to the Soviet Bloc.
The ability of the Europeans to present a united front on this position, and the reluctance of the administration to provoke another nasty quarrel among the allies before the November election, led to the French view being adopted.
But senior European officials said they believe this may only prove to be a temporary truce if the controls are tightened on the Export Administration Act. They fear that the Pentagon, which wants to ban anything remotely useful to Soviet military purposes, is gaining the upper hand over the U.S. Commerce Department on trade policy toward the Warsaw Pact nations.