THE European Union should move towards establishing a free trade area with the US, Senator Chris Dodd told the Sean Lemass Memorial Lecture in Dublin last night.

Speaking at the lecture organised by ELEC, the European League for Economic Co operation, Senator Dodd also firmly backed moves towards further European integration and a widening of the union.

The chairman of the Democratic Party said it was "imperative" that the historic transformation underway in central Europe and the former Soviet Union be institutionalised as soon as possible.

Senator Dodd also spoke about the importance of the relationship between the US and Europe, and about Ireland's contribution to the evolution of the union. The lecture was sponsored by the Scottish Provident Ireland and, The Irish Times.

"Just as President Clinton has proposed the establishment of a free trade area for the Americas by the year 2005, so I too believe it is in the interests of the US to actively pursue such a relationship with Europe," he said.

Speaking to The Irish Times after the lecture, Senator Dodd said Europe and the US needed a free trade area not only in the interests of world trade but also to "stop the juggernaut of the Asian economic bloc".

"People have no idea how powerful Japan and China are going to be. They are going to be absolutely huge and we need to get together to counterbalance that," he insisted.

"Despite the thorny issues that confront us in the agricultural sector and other politically sensitive sectors such as textiles, the economic benefits to both sides of the Atlantic would be real and substantial," he added.

Any agreement should also provide for the accession of central and eastern European countries as they reach the threshold for participation.

Mr Dodd told the audience that he was "unequivocal" in his support of economic and political union in Europe. "That view is widely shared in my country including, most importantly, by President Bill Clinton."

He said that the admission standards that will be required of governments as they seek entry into the EU should serve to lock in democratic and market reforms across the continent.

"Our shared sorrows, and triumphs over much of the last 50 years have irrevocably committed both sides of the Atlantic to protect and strengthen the US/European relationship," he told the assembled guests.

"Together we have helped transform former adversaries into allies and dictatorships into democracies.

He printed to trade and investment links between Europe and the US. In 1994, 22 per cent of US exports went to Europe while 14 per cent of US imports were of European origin. In addition, investments by US and European firms have generated jobs that are keeping millions of American and European workers gainfully employed, he said.

Mr Dodd said he expected the EU to soon admit Poland and Hungry and then the Czech Republic, Bulgaria, Slovakia, Romania and Slovena.

He also told the audience that, although economic and monetary union will mean a loss of national autonomy, he has "no doubt that monetary union in Europe will someday be a reality and its benefits will be felt both inside and outside Europe".

On behalf of ELEC, Senator Dodd also unveiled a bronze bust of Mr Sean Lemass, which will be presented to the Government. Mr Ronan Tynan, chairman of ELEC, said that Sean Lemass showed immense leadership in focusing Ireland on Europe.

"Our full participation in an expanding European Union owes much to his vision and hard work. We wanted to recognise Lemass's achievements in a non partisan way. The lecture would become an annual event, he added.