War talk no one can afford

IN HER book The Guns of August, Barbara Tuchman quotes extensively from a 1910 bestseller which stated that a war in the 20th century was impossible. Given the economic interdependence of nations, the victor would suffer equally with the vanquished, it said. Therefore, war had become unprofitable and no country would be foolish enough to start one. So wrote Wayne Angell in The Great Illusion, which became a cult of its time - published in 11 languages.

Similar reasoning is advanced today to explain why countries will not again engage in a bitter trade war on the scale of the one in the 1930s that prolonged the misery of the Great Depression. However, just as Angell was proved wrong by the First World War, so might the pro-Gatt free-traders be proved wrong by the US and the EC, as they edge ever closer to an unresolvable trade dispute in the 1990s. At this stage in the world trade game, even a relatively small spark could light a big fire.

The past week was a case in point. There were more fierce words from Mickey Kantor, the US Trade Representative, on EC procurement practices, following his abrupt cancellation of talks on the dispute. The cancellation caused last-minute changes in a long-scheduled meeting between the EC President, Jacques Delors, and President Bill Clinton. Easing the mounting trade tensions became the predominant theme as Mr Delors sought to build a working relationship with the new US administration. EC officials said he wanted Mr Clinton to forget the trade bullying and engage instead in a new partnership with the EC on a growth initiative to revive the world economy.

US officials denied bullying. 'Our goals have not changed,' said a senior US trade official. 'We seek comparably open markets, and we are always willing to listen to reason.'

What is really going on here? Are the escalating tensions the result of too many ill-conceived statements by inexperienced US officials? Do they reflect leadership exhaustion in Europe among officials clinging to worn- out positions? Has there really been a sea-change in US thinking, as many Europeans claim, and as reflected in aggressive new US competition policies?

One fact is clear; there is mistrust on both sides. Clinton administration officials and key members of Congress blame Europeans for blocking completion of the seven-year Uruguay Round of trade liberalisation talks. The Clinton team is open in its criticism of European subsidies and of EC practices that restrict imports from Eastern and Central Europe, Japan, the US and elsewhere.

'We may not be totally free-traders but we are a lot freer than they are,' said an aide to Mr Kantor.

European officials, who had grown comfortable with the style and rhetoric of the Reagan and Bush administrations, mistrust the motives of the Clinton team and fear that it is anti- Europe. One EC official noted that he had searched in vain for a mention of Europe in Mr Clinton's State of the Union message to Congress; and at recent conferences in Britain and Italy, much has been made of a lack of gestures of solidarity towards Europe by the US administration. 'We are getting our signals from steel, Airbus, government procurement and other disputes, not from any articulated policy,' said an EC official.

Adding to the confusion are the tough statements by Mr Clinton, Mr Kantor and other senior officials, and the new emphasis on US competition policy. Some Europeans are predicting an outbreak of commercial warfare, with the main protagonists the US and the EC. It is true the Clinton Administration has yet to articulate a policy toward Europe, but this appears to result from a crowded agenda and the slowness of its own internal staffing rather than an anti- European attitude.

Indeed, Clinton officials were surprised to hear they are regarded as anti-European. 'Many of us are still filling out conflict of interest forms or crashing around the clock on Bosnia. We have not had time to work on an administration-wide policy,' said a senior State Department official. However, the Clinton team has had the time to articulate domestic policy on jobs, the reclaiming of dominance in high technology, and US economic revival overall.

Included in this effort is a determination to open markets for US goods and to fight foreign subsidies - even if this means working with whole US industries, as the President promised to do for the aircraft industry.

'I am not going to roll over and play dead,' he told workers at a Boeing plant in Seattle, Washington. Between such promises and his avowed commitment to open and free trade, and to completion of the Uruguay Round and a North American Free Trade Agreement, there is ample room for misunderstanding.

He would do well to negotiate immediately an overarching political framework with the EC that would allow both sides to better manage their sector-specific trade disputes, as well as any broader challenges. Without one, there is real danger that threats and counter-threats could erupt into a trade war.

Mr Kantor is undoubtedly aware that bluff is part of the game. If the objective is to expand trade, then it may paradoxically be necessary to threaten to restrict trade. But these are tactics that can be taken too far.

Life and Style
tech

Sales of the tablet are set to fall again say analysts

News
A Brazilian wandering spider
news

World's most lethal spider found under a bunch of bananas

Life and Style
fashion

British supermodel and hitmaker join forces to launch a 'huge song'

News
news

The Duke and Duchess of Cambridge announce they are set to welcome second child in spring

PROMOTED VIDEO
Life and Style
gaming

I Am Bread could actually a challenging and nuanced title

Sport
Mario Balotelli pictured in the win over QPR
footballInternet reacts to miss shocker for Liverpool striker
News
news

Footage shot by a passerby shows moment an ill man was carried out of his burning home

Voices
Sol Campbell near his home in Chelsea
voices
News
i100
News
Kimi the fox cub
newsBurberry under fire from animal rights group - and their star, Kimi
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Fans of Palmeiras looks dejected during the match between Palmeiras and Santos
footballPalmeiras fan killed trying to 'ambush' bus full of opposition supporters
News
people
Arts and Entertainment
filmsIt's nearly a wrap on Star Wars: Episode 7, producer reveals
News
i100
Travel
travel

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past