French Stall on Trade Rules Hit as ‘Blackmail’

WASHINGTON —  Angry Administration officials today accused France of economic “blackmail” by blocking a crucial reform of the rules for international trade that could boost sales of a wide variety of U.S.-made products.

David Mulford, assistant Treasury secretary for international affairs, bluntly criticized France for deferring discussions on closing a major loophole in international trade rules. He warned that Congress is already building a $1-billion “war chest” with which to outbid competitors.

The loophole in trade law allows countries to mix large subsidies with export financing, to the further disadvantage of American-made machine tools, steel, telecommunications products, mass transit equipment and many other products already made less competitive by the strong dollar.

A Major Issue

Mulford and other officials at a news conference--called with only 30 minutes notice--made it clear that the Administration wants to make the French position a major international issue ahead of the economic summit in Bonn this spring and an earlier meeting of trade ministers of 22 industrialized countries.

“A point has been reached where this highly unreasonable attitude is going to become a major issue,” Mulford said. “The frustration level, as we have tried to warn people in Europe, is rising in the United States on this question. We are sick and tired of this unfair treatment.

“Everybody, with the exception of the French, wants to accomplish a solution to this.”

Only six days ago, a Treasury Department spokesman assured Congress that the subsidy negotiations were generally going well and that “only about 15 to 20 cases” of problem subsidies occurred in the last year.