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U.S. SEEKS FREE TRADE BETWEEN WEST, FORMER EAST BLOC COUNTRIES

The United States called Wednesday for unrestricted trade between the West and the former East Bloc nations, arguing that economic barriers must be eliminated to give the free market system a chance to succeed in the emerging democracies.

Secretary of State James Baker told a group of European foreign ministers that the West should seek to spread economic prosperity across the continent."We must open our markets to free trade," Baker said in a speech before the Conference on Security and Cooperation in Europe.

"The economic transformation of Central and Eastern Europe and the Soviet Union requires that these countries have access to regional and global markets," Baker said.

The secretary of state urged that the conference - a group of 35 nations comprising all of Europe, the United States, the Soviet Union and Canada - first resolve such trade issues as agriculture, services, government procurement, trademark and market access.

"We need to work to eliminate specific barriers to export from Central and Eastern Europe," Baker said.

"For it is a simple fact that the new market democracies will not be able to draw foreign investment, to privatize, to build competitive businesses that will create jobs - if they are not allowed to compete fairly for markets," Baker said.

The European Community maintains certain trade barriers against the former East Bloc countries, making it more expensive for these nations to export their products and acquire needed hard currencies.

The United States has not granted the Soviet Union most-favored-nation status, a preferential trade treatment, because of congressional legislation that calls for the liberalization of Soviet emigration laws.

The Soviet Union is in the process of putting through a law that would grant its citizens the right to leave. The U.S. administration is expected to grant the Soviets preferential trade treatment once the law goes into effect.

"For our part, the United States is committed to increasing market access for the Central and Eastern Europeans," Baker said.

He noted that a team of top U.S. officials recently visited the region to discuss trade barriers and will recommend steps the United States can take to open up its markets further.

At the same time, Baker said that if the economies of Eastern and Central Europe and the Soviet Union are to transform themselves, they must shift their resources from the military to the civilian sector.

"In this endeavor, we in the West can provide technical assistance and advice," Baker said.

Baker cautioned, however, that real change must come from within these countries and that the Soviet Union and its former allies must fully develop a framework for privatization.