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Office of the Press Secretary

For Immediate Release December 18, 1998
                            PRESS BRIEFING BY

                              The Briefing Room

3:10 P.M. EST

COLONEL CROWLEY: Good afternoon. We had a very successful U.S.-EU summit here today, with the President participating in a couple of sessions with his European Union counterparts and then hosting them for lunch. And here to give you a readout on these sessions, we have two distinguished briefers -- Don Bandler, who is the Senior Director of the National Security Council for European Affairs; and Stu Eizenstat who, I'm tempted to say, is the Under Secretary of State for all things extraordinarily complicated -- but Under Secretary of State for Economic, Business and Agricultural Affairs. Don Bandler will start off.

MR. BANDLER: Thank you, P.J. Good afternoon. Well, we just concluded our semi-annual summit meeting with the European Union. The current President of the EU, which is Austrian Chancellor Klima, and the President of the European Commission, Jacques Santer, led the EU side. Secretary Albright, Secretary Rubin, Daley, Glickman and Barshefsky, participated from our side; while the Austrian Foreign Minister, Mr. Schuessel, and the Economics Minister the European Commission Vice President, Sir Leon Brittan, sat in from the European side.

The format was that trade and economic officials met early in the morning in a ministerial-level session -- first with experts and then followed by a full ministerial at the Blair House. The President hosted his counterparts for a small working lunch, which lasted about 40 minutes, 45 minutes, before chairing a full plenary in the Cabinet Room here in the White House. He spent about two hours with the EU leaders and delegations overall.

As you know, the EU is embarking on a new phase of economic integration on January 1st, with the start of the European Monetary Union. Chancellor Klima presented the President with the first two Euro coins. Unfortunately, the President will not be able to use them until 2002, when they become legal tender. But, during the interim, they look pretty.

The leaders focused on the contribution of the U.S. and the EU to global economic growth, financial stability; and both stressed the importance of open markets, highlighting our shared roles as engines of growth for the international economy at a time when it has experienced severe difficulties.

They acknowledged the work done to frame and start the action plan for implementing the Transatlantic Economic Partnership, which was agreed last May at the London U.S.-EU summit. They also engaged in lengthy discussion on joint political cooperation in areas of common interest on foreign and security policy, touching on Iraq, focusing as well on Kosovo, the Middle East peace process, Russia and some issues of regional and global cooperation, including Y2K, climate change, terrorism and international crime.

Under Secretary Eizenstat will address the new Transatlantic agenda, economic and trade issues, which were a very important element of the whole summit. And if there's time and interest we can come back and touch a little more on some of the foreign policy issues.

UNDER SECRETARY EIZENSTAT: Thank you, Don. On the economic side, the two parties stressed the fact that the U.S. and Europe were the engines of growth and stability in a very uncertain global economic environment, and that we therefore had a special responsibility for pro-growth policies. We noted the fact that there have been interest rate cuts on both sides of the Atlantic and that we both were pursuing pro-growth policies; and that we had an additional responsibility as the twin engines of growth and stability in the world economy, and that is to keep open markets.

There was a recognition that this was a difficult process. The fact that we launched the Transatlantic Partnership negotiations today, which will cover electronic commerce, technical barriers to trade and mutual recognition agreements in areas like professional services, insurance, air courier services, elevators, telecommunications, cosmetics, calibration equipment -- we'll be working on food safety and biotech issues, intellectual property rights and the environment -- is a recognition that we can show the way for the world to keep markets open during this difficult time by ourselves liberalizing our own trade.

We have the largest trade relationship and economic relationship in the world -- $1 trillion a year -- and therefore we have a special responsibility to show the world that open markets are the way to go. At the same time, it was recognized that there are pressures because of the growing trade deficit. The President mentioned several issues in particular. He talked about the fact that there was a surge in steel imports, a 500 percent increase, for example, in hot rolled steel. And he asked the European Union to do more to help absorb steel, particularly that coming from Russia; and asked them to be sympathetic to the requests that Russia has made for the European Union countries to take more steel -- as, in fact, we are having to absorb ourselves -- to take some of the burden off the United States.

We noted in the trade area the areas where we are in significant agreement -- the conditions for China to enter the World Trade Organization, the need for greater transparency and openness in the World Trade Organization, the need to come to a resolution on the issue of privacy over the electronic commerce and Internet, how close we're coming to a veterinary equivalence agreement. But we also noted several differences that were mentioned by Ambassador Barshefsky and by the President.

Those were air bus subsidies, where the President specifically mentioned -- as did Charlene Barshefsky -- the need for greater openness and transparency on subsidies and, in particular, concern about new government support from Europe for a new generation of super jumbo jet. And there was a discussion as well about the importance of implementing WTO panel decisions in favor of the U.S. and against the European Union in the banana and beef issues.

We believe that these are very important issues in and of themselves, but also because they go to the heart of compliance with the WTO system. We have to have confidence that when we win WTO cases that the results will be implemented. We have won on three occasions with respect to bananas and we still believe that the European Union does not have a WTO-consistent regime. But at the same time we thought it important to stress that the resolution of the banana issue should be done consistent with the WTO, in WTO-consistent ways; and that as important as these issues are -- and they are very important -- that we will not allow our relationship to purely be defined by these and that overall our trade relationship and economic relationship is strong, healthy and we have an essentially balanced trade relationship while our trade relationship with Asia and other regions is very imbalanced.

We also dealt with a range of global issues. The President mentioned two in particular -- the importance of cooperation between the European Union and Russia in dealing with what we call the Y2K issue, the problem of the computers not reading a four-digit 2000 figure and the disruption that this could potentially have. The President made a special plea that we cooperate together in terms of developing countries and with Russia and the Ukraine.

The President also made a very, very strong statement about the importance of cooperation on climate change. He noted the fact that we are doing a great deal domestically but that, in order to make climate change affordable -- and the Kyoto Protocol affordable -- it was important that we have the opportunity to trade without artificial restrictions and caps, and that we needed to cooperate to avoid putting these artificial constraints on trading, as well as to cooperate in getting developing countries to participate.

At the ministerial level, the global issues were discussed also in terms of nonproliferation, where we noted the increasing degree to which the European Union is working with us on controlling exports of sensitive, high-tech material to third countries, the increasing cooperation we have. And we noted in particular our desire to cooperate in the safe disposal of excess Russian weapons-grade plutonium, and we called on the European Union to cooperate in this regard.

We noted, in the area of terrorism, that we are working on ways to control funding for terrorist groups, and that, on international crime, we are dealing with issues together -- child pornography on the Internet -- and on extending our existing cooperation in anti-drug efforts, from Latin America to Asia and Africa. And we noted that the European Union is cooperating -- even on Peruvian cultivation -- indicating that they are now going beyond their own region and engaging with us on a whole range of global issues as well.

So I think that the basic two points of this summit are a recognition of our shared responsibility as engines of growth and stability in an uncertain global economic environment; and, second, the degree to which -- enforced by four joint statements, one dealing with -- these four statements dealing with the global economy, with the Middle East peace process, with the agenda that we have to broaden our dialogue with environmental groups and consumer groups, and on the western -- the Balkans; that we are now cooperating politically as never before.

We noted that the European Union was the largest donor to the Middle East peace process; they made a pledge, November 30th, of just under $2 billion; that they were the second-largest donor, last week, to the Hurricane Mitch cleanup; that our envoys are working particularly closely in the Western Balkans -- and Don will deal with these political details shortly. So our cooperation is really exceptional and our summit was very successful.

Q Under Secretary, as a sideline, sir, Leon Brittan said earlier that he thinks that this banana trade war could be actually settled within a few weeks. I was wondering if the U.S. also shares this viewpoint?

UNDER SECRETARY EIZENSTAT: We're continuing to try to work our way through the very difficult banana dispute. At least on the procedural side, there has been some narrowing, but we have not yet reached an agreement. We think it's very important to settle this expeditiously and in a way that is consistent with the World Trade Organization procedures, and we will be doing that.

But at the same time, we have waited a very long time -- this dispute has been going on for six years -- and it is time to resolve it. We have won three panel cases, and there is a question of how long one can be patient before acting. So we hope that this can be resolved. We will do everything we can to resolve it. But, again, we do have some concerns about the length of time this has taken, and the fact that, in our opinion, even after winning another panel decision recently, the EU's proposed remedy, we believe, is still not consistent with that panel's decision.

Q Just to follow up, will the U.S. continue to delay publication of the retaliation list?

UNDER SECRETARY EIZENSTAT: I think the USTR will be making some judgments on that but there will be no further delays with respect to the actions that will be taken, and they'll be taken in a WTO-consistent manner.

Q Sir Leon was talking about an extension of maybe a few weeks, in which he thinks that these things could be worked out at a technical level. Is the United States prepared to show that much flexibility in order to put this whole thing behind us?

UNDER SECRETARY EIZENSTAT: Well, we're trying to consider some new proposals that have been discussed. I'm not in the position yet to say what we can accept and what we can't accept, but we want to resolve this as quickly as possible. We are willing to consider as many options as possible, but we do not think, at the same time, that we should postpone some of the actions that have been planned to keep this process moving in the interim, while we discuss the question of March 3rd versus other dates.

Q On another issue, you mentioned, or your predecessor mentioned the Middle East peace process and the European contribution to the whole development. Is the United States prepared to give the European Union a broader role in the actual mediation process?

UNDER SECRETARY EIZENSTAT: I think that the role that the United States plays in the actual negotiation and mediation process is accepted by all the parties. We're viewed as the indispensable party. And the European Union has been supportive of that.

At the same time, we have a much greater transparency and cooperativeness with them on the political side of the peace process. There are regular debriefings that Dennis Ross does in real time their own special envoy. We also believe that their financial contribution is an absolutely critical component to undergird the peace process.

They have been the largest contributor to the Palestinians. They will remain the largest donor, with a very large, $1.9 billion pledge that they made on November 30th. And I think that the current division of responsibilities works very well. But, again, we do try to keep them increasingly engaged and knowledgeable on what's happening on the political side and make a special outreach effort in that respect.

Q You said that there were some new proposals that were put out for discussion on the banana dispute. Was that the United States or the European Union that put forward these proposals? And can you give us any idea of what they're on?

UNDER SECRETARY EIZENSTAT: No, I think I shouldn't go into any details. At this point, they're really procedural issues as to what type of WTO process might be involved and whether or not that can be accomplished by March 3rd or sometime shortly thereafter. Those issues are all being considered at this point and we haven't reached any final decision on that.

But other parts of the process have to continue to go forward and will go forward, while we're continuing to work on the procedural side of this.

Q Under Secretary Eizenstat, I was wanting to ask you about the beef/hormone issue, too. What actually happened on that issue --

UNDER SECRETARY EIZENSTAT: Secretary Glickman raised this very strongly at the ministerial and mentioned that in some respects this could potentially dwarf the banana issue in terms of its impact. We have won a WTO panel decision. The EU is supposed to come into compliance in May. And that, again, it is very important so that there is confidence in the public in this country and on Capitol Hill that when we take matters to the WTO process and avoid taking unilateral steps, that that WTO process, when we're successful, can be faithfully implemented.

That is critically important with beef. Secretary Glickman, again, made a very strong statement about the importance of this. We do have until May, but it was noted that we needed to get moving on this. This is, we know, a very sensitive issue. But it has been shown by the WTO, as well as by scientific data, that the hormone issue is not a safety issue, it is not a health issue and we hope, again, the EU can come into compliance. This is a very, very large issue for us, a very important issue.

Q Is there any time line for the U.S. and the EU under the TEP to come up with a common position on the upcoming trade negotiations? When do you expect a statement on that?

UNDER SECRETARY EIZENSTAT: Well, we hope we can make progress on a lot of the bilateral issues by the time of the December 1999 ministerial or the fall ministerial, whenever the actual date is set. But some of these issues will go beyond that. We don't have an artificial deadline. We want to have early harvests for as many of these issues as possible. We have everything from marine safety equipment to a lot of other MRAs. We hope that those can be done fairly quickly.

Some of the food safety and biotech issues may take longer. We need to get our scientists and regulatory agencies together. So we're not trying to put artificial deadlines on this but we do hope that there can be some early harvests by the time of the ministerial. And, again, I hope you'll understand that with respect to the banana issue it is at a sensitive stage at this point. I can't go into a lot of details. We both want to try to resolve this in ways that bring the EU into compliance with the WTO requirements and to do so in a WTO-consistent way.

MR. BANDLER: Let me just a few -- tell you a little bit more about the foreign policy side of the discussions. In the leaders' lunch, and then in the follow-on session as well, it was really quite a meeting of the minds among the leaders, that the US and the EU have a very large role together working on shared goals in common on foreign security policy and as Under Secretary Eizenstat mentioned, these are not only in Europe, although some of them are in southeastern Europe, but also in other parts of the globe.

So they started on Kosovo. Here we expressed a lot of satisfaction with the level of cooperation that we've had with the EU in setting up the OSCEs Kosovo verification mission, the KVM, and working toward a political settlement in Kosovo. We're pleased that the EU has agreed to accept a leadership role in Kosovo in the reconstruction side, in the rebuilding of civil society which is the next step after we're able to get that political solution in place; including the EU's leadership and willingness to organize a donor's conference in connection with the settlement. I think that that provides an important incentive to the parties to make that settlement.

Both sides are particularly concerned about the recent escalation of violence in Kosovo and the risk of the cease-fire breaking down. We would like to see through this winter an intensified effort to make that negotiation a success, to bridge the differences between the parties so that this winter is not just a small window -- it is a window of opportunity, but we want to see a peaceful springtime where we begin peace implementation activities, and not a cycle of violence.

So the statement, the joint statement -- and I would like to again to call your attention to these five joint statements because they represent a lot of work and there is a lot of substance in them -- one of them on Kosovo; one on the Middle East; one on our work together on Russia and the Ukraine, the senior leadership group report, which has a lot of details on foreign policy as well; and one on people-to-people contacts between the U.S. and the EU.

In any case, that statement condemns Belgrade's attack on the independent media, and highlights the importance that we -- both the U.S. and the EU -- attach to having independent media operating there, and strong support for the emerging democracy in Montenegro. It's fair to say that the U.S. and the EU share a commitment to insure that the reform movement and democracy in Montenegro is not snuffed out.

We agree that a Federal Republic of Yugoslavia that respects these democratic rights, and the human rights of those citizens, and upholds international obligations is really a linchpin to the possibility of building a regional peace and some stability.

Q Did the President's personal problems come up?

MR. BANDLER: No. Not at all. On Russia, everyone agreed on the importance of working with Russia over the next year and the period ahead, to help them over the economic crisis that they're in. We're prepared -- both the U.S. and the EU -- to give priority attention, also, to the Ukraine, that is having serious economic problems as well.

The President talked to the leaders about the importance of Y2K and addressing the problems of the millennium bug in advance of the year 2000; of civil nuclear energy and the importance of safety in the whole nuclear area -- which has been one of the cornerstone areas of cooperation between the U.S. and the EU, including nuclear waste cleanup; and of our common efforts to work with Russia and Ukraine to achieve economic reform and systemic reform, including reform of the banking sectors, which are very important; giving potential investors confidence that investments will be made and can yield fruit because the systems will be in place, needed, to generate private activity, and to sustain private activity; and also the importance of a sound system of taxation for Russia's economic future.

On the Middle East, Under Secretary Eizenstat mentioned, this is an area of keen interest on the EU as well as the U.S. side. We kept them very closely briefed during the Wye talks, have worked with -- we were very pleased that the EU gave such a handsome contribution, pledge to the Palestinian Authority, $1.4 billion. It's really very important to ensuring that the Palestinians feel that they can have some confidence in an economic future.

And the leaders talked about the ways in which security and economics are intertwined in the Middle East peace process. Both the Israelis and the Palestinian side have contributions to make -- security helps on the economic process, economic light at the end of the tunnel for the Palestinians in Gaza, and on the West Bank will help with security.

I would say those were some of the main points.

Q Any discussion on Iraq?

MR. BANDLER: There was some discussion on Iraq. The EU leadership reaffirmed what they have said before, that they assign responsibility to the current situation, clearly, to Saddam Hussein and to Iraq's unwillingness to cooperate with UNSCOM and to respect its obligations under a variety of U.N. Security Council resolutions.

Q Did the United States raise Turkey as a potential member of the EU in this discussion?

MR. BANDLER: That is a subject that we have discussed in other summits, but it did not feature in today's discussions.

Q Thank you.

END 3:40 P.M. EST