THE WHITE HOUSE

                     Office of the Press Secretary
________________________________________________________________________
For Immediate Release                                   December 18, 1998


PRESS BRIEFING BY UNDER SECRETARY OF STATE STUART EIZENSTAT AND SENIOR DIRECTOR OF THE NATIONAL SECURITY COUNCIL FOR EUROPEAN AFFAIRS, DON BANDLER, 18 December 1998

                              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


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