Leading Article: Clinton's early trade test

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The Independent Online
FROM all quarters the advice yesterday was that the import duties on steel imposed by the United States Commerce Department are not a harbinger of a trade war with the European Community. The action, it appears, had been set in motion long ago; the move was largely automatic; and the decision was taken by senior officials rather than Bill Clinton's Commerce Secretary, Ron Brown. Mr Brown distanced himself from the ruling, which imposed varying tariffs on imports from 19 countries. The EC, for its part, stressed the rigour of its controls on subsidies, and its commitment to a multilateral international steel agreement to replace the export restraint agreement whose expiry last January led eventually to the new hostilities.

None the less, the initial alarmed reactions reflect European fears that President Clinton's professed commitment to free trade will turn out to be less than wholehearted. The Democratic Party itself is divided on the issue: part of it endorses free trade, another part inclines to protectionism.

These tensions are mirrored in Mr Clinton's cabinet appointments. His trade representative, Mickey Kantor, is a Los Angeles lawyer-lobbyist with no known views on the issue. But Mr Kantor has already shown a certain coolness towards the stalled Gatt talks on liberalising world trade. The new Labor Secretary, Robert Reich, is a former protectionist turned ardent free-trader. The President's chief economic adviser, Laura D'Andrea Tyson, believes - as she puts it in a new book - that 'the nation's trade laws (should) be used to deter or compensate for foreign practices that are not adequately regulated by existing multilateral rules'. She also favours government protection for key industries. Mr Clinton himself has said trade should be fair as well as free, a formulation that leaves the door open to protectionism.

His ability to take decisions that benefit the US economy as a whole rather than just powerful pressure groups will be tested very soon. Trade is not a zero sum game. Dumping may damage US steel producers. But it enables American importers to benefit from foreign subsidies and reduce the cost of their raw material. In the country of origin, subsidies for uncompetitive products pre-empt more useful investment, and probably cost more jobs than they save.

It is not just US steelmakers who are yet again claiming that numerous producing countries are unfairly dumping their products on the domestic market. Detroit's big three motor manufacturers are seeking punitive tariffs on car imports, claiming that almost all of them are being fraudulently priced; and huge companies such as IBM, involved in drastic cutbacks, are on the warpath. The litmus test will be the new administration's determination (or lack of it) to conclude the Gatt round.

It is not a good omen that Mr Kantor has expressed concern that last December's hard-won US-EC agreement on agricultural subsidies needed to be looked at again; nor that his three deputies respectively favour free trade, regional agreements such as the North American Free Trade Area, and a protected domestic market. Such appointments may ensure that all viewpoints are represented. They do not suggest the kind of commitment to free trade that the world needs to hasten and then sustain economic recovery.

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