None the less, they can also be very dangerous, as Lord Young of Graffham, a former Trade and Industry Secretary, stressed in suitably apocalyptic terms to the Institute of Directors annual convention yesterday. At a time when Europe and the US are combined in war over Kosovo, it seems a little hard to believe that the present tit-for-tat in trade relations between the two regions is going to end in a 1930s-style depression.
Yet Lord Young is right to remind us that it was a trade battle that tipped recession into depression in the pre-war years. The likelihood of this happening again might seem remote, but we should be careful to heed the warning signs.
With its burgeoning trade deficit, the US is in no mood to play softball. Increasingly, US policy makers are looking to destruction of what they see as unfair trade practices and barriers as a way of correcting this imbalance. By the same token, Europe's sluggish domestic economy makes a healthy export performance that much more necessary in staving off growing unemployment.
On both sides there is work to be done in upholding the principles of free trade, but it is impossible not to feel rather more sympathy for the US on these matters right now than Brussels. If it were not for the boom conditions of the US, the world economy would be in much worse shape than it is. At the same time, a trade deficit on this scale is unsustainable in the long term. Europe's stance on bananas and beef is going to end up hurting us all if we are not careful.Reuse content