Bush May Speed Talks on U.S.-Soviet Trade : Summit: President also favors observer status for Moscow at world tariff and trade organization.

By DOYLE McMANUS

Nov. 30, 1989 12 AM PT

TIMES STAFF WRITER

WASHINGTON — President Bush, in a surprise move that is being readied for his Malta summit with Soviet President Mikhail S. Gorbachev, may offer to speed negotiations toward a new U.S.-Soviet trade agreement, Administration officials said Wednesday.

Bush also may tell Gorbachev that the United States, in a shift in policy, now favors the Soviet Union’s bid for observer status at the General Agreement on Tariffs and Trade, the Geneva-based organization that administers world trade rules, the officials said.

Both moves would be significant gestures of encouragement for the Soviet leader, who has publicly asked that restrictions on U.S.-Soviet trade be relaxed.

They also would answer widespread criticism at home that the Bush Administration has moved too slowly in helping Gorbachev reform the Soviet economy.

Senior Administration officials said Bush still does not intend to extend most-favored-nation trading status to the Soviet Union until Moscow enacts new legislation granting free emigration to Soviet Jews.

But they said the President may tell Gorbachev he is willing to push forward negotiations toward a comprehensive trade agreement with Moscow--even before the Supreme Soviet’s proposed new emigration law is passed.

“It’s on the list of ‘possibles,’ ” said a senior official involved in planning the Malta summit.

“It comes under the category of things that they will give a political push to,” another official said.

Under the Jackson-Vanik amendment to the 1974 Trade Act, the Soviet Union and other Communist countries were barred from most-favored-nation status--a category that imposes relatively low tariffs on a nation’s exports to the United States--unless they allowed free emigration by their citizens.

The law was passed in an era when the Soviet government was blocking exit visas to tens of thousands of Soviet Jews. During the past two years, however, Gorbachev has permitted virtually unimpeded emigration, to the point that the U.S. Embassy in Moscow has been swamped with applications for entry to the United States.

Bush said last May that he would ask Congress to waive the Jackson-Vanik amendment under two conditions: that the Soviet Union formalize its more liberal policy in a law and show that it is implementing the freer rules.

On Wednesday, Secretary of State James A. Baker III reaffirmed those conditions. “Our policy’s very clear,” he told reporters. “We need that legislation before we can actually waive Jackson-Vanik.”

At the Malta summit, he added, “There will be a full discussion of the question of Jackson-Vanik, the related questions of a trade agreement and related issues.”

Officials said the Administration is unlikely to conclude a new trade agreement before the Soviet emigration law is passed. But by beginning work on a pact now, they said, the lag between the Supreme Soviet’s action and the actual granting of most-favored-nation status could be made shorter.

Soviet and U.S. trade officials already have met to lay the groundwork for the negotiations between the two countries. In a two-day session earlier this month, they set forth a basic framework for new talks and agreed to continue meeting on an informal basis.

“They haven’t started the negotiations themselves, but they’ve pretty well agreed on the shape of the table,” one official said. “The next step is a formal mandate for the talks, and that’s what they’re working on now.”

After that session, Commerce Secretary Robert A. Mosbacher said he believed that the United States could lower trade barriers against Soviet imports “within the next one to three months.” Other officials said Mosbacher was speaking on the assumption that the Supreme Soviet would pass its new emigration legislation this month--an expectation that turned out to be wrong.

“It should not take more than a few months to negotiate an agreement once they get going,” Robert D. Hormats, a former assistant secretary of state, said. “It can all be done by spring.”

As for the Soviet Union’s desire for association with GATT, Baker said, “That’s a matter that will very much be on the agenda” at Malta.

“We wouldn’t rule out some form of observer status,” another official said.

As recently as October, Baker dismissed any discussion of Soviet membership in GATT as “premature.”

Some Administration officials have argued that association with the world trade organization could help the Soviets learn more about the Western trading system and how they would have to change their own practices to participate.

For example, officials noted, prices in the Soviet Union are fixed by government fiat--so it is difficult to determine whether the Soviet Union is engaging in the prohibited practice of “dumping,” or exporting goods at a price below their cost.

Sen. George J. Mitchell (D-Me.), the Senate majority leader, and other critics have long called on the Administration to grant most-favored-nation status to the Soviet Union as a signal of encouragement for Gorbachev’s economic reforms.

On Wednesday, Mitchell renewed that demand and urged that negotiations toward a new trade agreement begin immediately.

“By laying the groundwork now, we will be able to swiftly implement a new trade agreement once the political decision to normalize economic relations is made,” he said.

He also called on Bush to help the Soviet Union attain observer status in GATT.

“The American people are united in support of President Bush as he travels to Malta,” Mitchell told reporters. His statement appeared to be an attempt to walk a fine line between pressing Democrats’ disagreements with Bush on East-West policy while muting open criticism on the eve of the Malta meeting.

Ironically, most Administration experts believe that granting most-favored-nation status will not have any immediate major impact on the Soviet economy. Instead, the value is likely to be diplomatic--a public demonstration of Western interest in the success of Gorbachev’s reforms.

“They (such changes as trade status) don’t do anything to economic conditions in the Soviet Union in the short (term) and midterm,” said one official. “They are more political statements of support in the West for what is happening in the Soviet Union. . . . They just don’t do anything to life in the country as ‘Ivan’ feels it.”

Times staff writers William J. Eaton and James Gerstenzang contributed to this story.