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EU: Trade Tensions Shadow Festive Gathering

Prague, 28 May 1997 (RFE/RL) -- At today's summit meeting in The Hague between the United States and the European Union, the subjects the leaders apparently avoided discussing were nearly as significant as those they did discuss.

The meeting brought together President Bill Clinton and Dutch Prime Minister Wim Kok, current head of the EU's rotating presidency, and EU Executive Commission President Jacques Santer. It took place in the festive atmosphere generated by the marking of the 50th anniversary of the Marshall Plan, that generous act of assistance which did so much to bond the United States to a devastated Europe after World War II.

But the aura of past success was somewhat shadowed at today's summit by trade tensions between a revitalised Europe and its American friends. Officials on both sides said beforehand that the leaders would not dwell in detail on these problems during their session, but they were sure to have exerted a background influence.

Chief among them is the decision of two U.S. aeroplane manaufactures, Boeing and McDonnell-Douglas, to merge. The EU's competitions commissioner Karel van Miert of Belgium has objected vehemently to the $13 billion merger on the grounds that the resulting mega-group threatens fair competition in Europe.

Considering van Miert's position that the deal is "clearly unacceptable" as it now stands, and considering how unlikely it is that the two giant U.S. corporations will drop their plans, the stage seems set for storms. Van Miert's concern is that a united Boeing-McDonnell Douglas, which would hold more than two-thirds of the world's market for large passenger planes, could strangle competition, which in this case consists of the European Airbus consortium (made up of companies from France, Britain, Germany and Spain). The merger could also have a significant impact on the military aviation market.

The companies themselves are ready for a fight, with Airbus complaining of a U.S. blanket over the market, and Boeing saying the Europeans will not be allowed to stand in the way. Some of the Americans have also questioned the EU's motives, asking whether they are self-interest hiding behind a mask of impartiality. The very fact that the EU feels it must investigate the merger of two foreign companies in a foreign land shows the extent of globalization of trade issues. If the EU rules the deal breaches European competition laws, then the two U.S. companies could be banned from operating in the EU.

The aviation issue follows on the heels of other severe disputes, such as the EU move to sue Washington in the World Trade Organization. That quarrel is over U.S. legislation that would punish companies--including Europeans--who trade with Cuba. The Cuba dispute has been only temporarily sidestepped by a truce under which the U.S. will refrain from prosecuting Europeans, and the EU has suspended its move to sue.

However, on the positive side, a potential irritant in U.S.-EU trade relations was averted overnight. Top trade representatives from both sides managed to reach basic agreement on the mutual recognition of testing procedures in such areas as medicines and telecommunications equipment. A recognition accord will eliminate months or even years of bureaucratic delay in introducing products to each others market. Such an agreement will boost trade in an area worth almost $50 billion annually.

In all probability trade disputes between the trans-Atlantic partners will continue now and in the future, more intensely at some times than at others. But few believe that trade issues, however heated at any given moment, will be able to shake the bonds forged in peace and war between the United States and Europe. As Kok said today after the summit: "There is a lot that unites us and little that divides us."