Leading Article: Transatlantic trade and diplomacy

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THE FOREIGN Office has been quick to play it down. But Ray Seitz, the United States ambassador to London, argued convincingly that trade frictions can have corrosive effects. If the current round of world trade negotiations goes badly, business confidence will suffer. Slower growth will force cuts in public finances. And when budgets are squeezed, defence is likely to be squeezed hardest. The ambassador was not issuing a point-blank threat to pull US troops from Europe unless a satisfactory trade deal is signed; but that was the prospect he raised.

The Gatt negotiations are important for their own sake. Concluded successfully, they will bring greater prosperity to the citizens of both the United States and the European Union; failure, conversely, might put an end to the cycle of falling trade barriers and economic expansion that has characterised the past generation.

But it would be wrong to link economics too closely with diplomacy. To be sure, the United States has a vast stock of capital investment within the European Union - greater by far than in Japan, its single biggest national trade partner. But the alliance between Western Europe and the US must stand or fall on its own merits. It would be wrong for Washington to take troops back across the Atlantic only because of a Gatt failure. It would be equally wrong to keep them in Europe only because of a Gatt success.

The Clinton administration faces a complex calculation in considering the future of the American military deployment on European soil. Reducing it would bring large long- term savings, albeit at high short- term capital costs (a phenomenon that helps to explain why British troops are still in Germany).

If it wishes to remain a world power, the US must keep troops on this side of the Atlantic. The Manichaean struggle in Europe between Communism and liberal democracy may be no more; but the prospect of nationalist rivalries on the crumbling borders of the old Soviet empire presents more complex challenges - in whose resolution the United States rightly wants to have an influence.

It is not merely the cultural links, the shared outlook on world affairs, that keeps the US close to Europe. If American and European forces are to co-operate successfully, they need to have an integrated command structure, which only the US military presence in Europe can keep alive. With the United States increasingly uncomfortable with unilateral action, such co-operation could be a critical element of its global influence in the next century.