Frosty first meeting with new US negotiator bodes ill for trade talks

THE CLINTON administration gave no ground yesterday in America's trading dispute with the European Community and indicated that it may attempt to reopen past agreements, notably on subsidies to the aircraft maker Airbus.

Signs that the trans-Atlantic trading relationship may be bound for unprecedented turbulence emerged after a difficult first meeting in Washington between the new US Trade Representative, Mickey Kantor, and the EC external trade commissioner, Sir Leon Brittan, also new to his job.

On a hopeful note, Mr Kantor announced that President Bill Clinton will ask Congress for an extension of the 'fast-track' authority for the world trade talks of the General Agreement on Tariffs and Trade. The authority, due to expire next month, bars Congress from trying to amend an agreement once one is presented to it by the President.

But on the specific disputes that have arisen since Mr Clinton's inauguration - the imposition of high tariffs on steel imports and the exclusion of EC companies from federal contracts in power-generation and telecommunications - positions appeared entrenched. The confrontation may sour talks here in two weeks between Mr Clinton and John Major.

At a joint press briefing with Mr Kantor, Sir Leon notably declined to withdraw comments he made a week ago to the effect that Mr Kantor had been guilty of 'unilateral bullying'. Instead he commented, somewhat tartly, that he hoped the EC could 'regard these early actions as aberrational'.

With the friction between the pair almost tangible, Mr Kantor returned fire, arguing that he had only 'enforced the law' in taking the steps. 'I'm going to enforce the law and that is not bullying and it is not unilateral', he said, adding he had never before been called 'aberrational'.

On Gatt, meanwhile, where agreement has been stalled for over two years, Mr Kantor broadly hinted that the new administration was unhappy with the compromise text and would seek modifications, for instance on textiles. Sir Leon interjected that both sides should 'limit our ambitions' in unpicking elements already agreed.

In a television interview later, Mr Kantor confirmed he did not consider that a Gatt agreement was close, emphasising misgivings he held in several areas. While the Bush administration had suggested a Gatt deal was within reach, he said he was 'surprised' to discover how many loose ends remained. 'The fact is we're not close to an agreement at all', he stated. 'We'd rather have no agreement than a bad agreement.'

Certain to cause additional alarm is the apparent determination of Washington to reopen an agreement reached last year on subsidies to Airbus. On television on Wednesday, the President commented that 'either the Europeans are going to have to quit subsidising Airbus . . . or we're going to have to meet the competition. I'm not going to roll over and play dead.'

Mr Kantor said Airbus was 'clearly something we're concerned about, clearly something we're going to raise'. That in turn prompted Sir Leon to retake the microphone to say pointedly that the EC was 'confident' that the US intended to 'stick to those agreements' it was party to.

Mr Kantor would not specify how long a fast-track extension the administration would be seeking, leaving open how long he expects the Gatt round to continue. EC officials privately expressed concern that Congress might attach some conditions to the extension, specifically the revival of the Super 301 trade provision, a potentially highly protectionist weapon to protect US industry.