By Randall Mikkelsen
QUELUZ, Portugal (Reuters) - President Clinton and European Union leaders began a summit Wednesday expected to focus on deepening trade disputes between the United States and Europe, the world's largest trading partners.
Clinton, European Commission President Romano Prodi and Portuguese Prime Minister Antonio Guterres entered Queluz Palace, an 18th century former royal residence near Lisbon, for what was expected to be a three-hour meeting.
The meeting was expected to focus on trade disputes over U.S. tax breaks for exporters, European banana imports, and a European ban on imports of hormone-treated U.S. beef.
Officials also hoped to agree on an effort to combat the diseases in poor countries, and to discuss security issues. But officials said no major discussion was expected on Washington's controversial idea of deploying a missile defense system.
Guterres, current head of the EU's rotating presidency, told reporters before the meeting he did not want it to be overshadowed by "irritants." EU foreign policy representative Javier Solana said he did not expect trade issues to weaken other aspects of the U.S.-EU relationship.
Clinton told reporters Tuesday at the start of a week-long trip through Europe that he hoped to resolve the various trade disputes.
No Breakthroughs Expected
But U.S. and EU officials were more pessimistic, and a senior U.S. official said he did not expect breakthroughs.
The official said the United States hoped to make progress toward an agreement on dealing with the trade impact of strict EU rules on commercial transfers of personal data.
It was also working to establish a scientific panel to deal with differences between the two trading blocs over the import of genetically modified foods, which the EU strongly opposes.
Earlier Wednesday, Secretary of State Madeleine Albright held talks with Portugal's Foreign Minister Jaime Gama and EU foreign policy representative Solana.
EU trade representative Pascal Lamy was to discuss the latest spats, involving U.S. tax breaks for exporters and Washington's threat to widen some trade sanctions against EU goods, in talks with his U.S. counterpart Charlene Barshefsky.
U.S. Threat To Retaliate
The United States Monday threatened to retaliate against EU export programs after the EU rejected U.S. revisions to the so-called Foreign Sales Corporation program aimed at bringing it into line with World Trade Organization (WTO) rules.
A second front opened Tuesday when an EU source said the 15-nation bloc would launch a WTO complaint against the United States if it went ahead with a plan to rotate sanctions on EU goods in the rows over bananas and hormone-treated beef.
These are in addition to U.S. complaints over European government aid for the Airbus consortium and over a new EU aircraft noise law which Washington says discriminates against U.S. equipment makers.
EU officials say the EU and the United States have the world's most important political and economic relationship. Two-way trade in 1999 totaled 341.2 billion euros ($319.8 billion), according to EU figures.
Clinton said Tuesday he hoped Washington and Brussels would cooperate on fighting diseases such as malaria, AIDS and tuberculosis, rampant in many developing countries.
U.S. officials said a Clinton administration proposal would bolster research funding for vaccines, help distribution of vaccines in poor areas, create financial incentives for drug companies to develop vaccines, and work with developing countries on prevention and treatment.:
