A Dangerous Friction Among Allies : Europe, U.S. Must Keep Unity Market in 1992 From Becoming a Wall

Ernest Conine writes a column for The Times.

Barring an unlikely degree of wisdom and forbearance on both sides, the United States and its European allies are headed for what could be the most jarring collision since World War II.

The result could well be a splintering of global commerce into two or three big, antagonistic trading blocs, and a dangerous deterioration in Western security cooperation.

The danger comes from the confluence of three major currents.

One is the growing conviction here that, in light of our budget squeeze, the now-wealthy European allies should carry a larger share of the burden for defending Europe.

Another current is the European Community's accelerated movement toward a truly integrated European economy. There is growing concern that this "single market"--which is supposed to be in place by 1992--will discriminate against outsiders.

Rep. Don Bonker (D-Wash.) reflected these misgivings at a conference in Seattle sponsored by West Germany's Conrad Adenauer Foundation.

"It is hard to see how further integration of the community will result in anything other than more intra-European trade and a smaller market share for the United States and other exporting nations," Bonker said.

Finally, the Europeans, for their part, see the pending trade bill as evidence of a protectionist tide on the American side. They are especially unhappy at suggestions that trade frictions will become entwined with U.S. pressures for a greater European burden-sharing in defense.

It is nonetheless difficult to see how the trade and defense issues can be kept separate if U.S. exporters are seen as not getting a fair shake in the integrated European market.

Sentiment for cutting the U.S. troop presence in Europe would rise in lock step with irritation over real or perceived trade discrimination by the Europeans. The Europeans would find themselves under pressure, which they would greatly resent, to spend substantially more for defense to make up for a declining U.S. role, and/or trade concessions to mollify the Americans.

Since they do not see themselves as sinners or Americans as victims, they would be disinclined to do either. U.S.-European relations could turn nasty.

The best way to avoid this is to keep trade frictions within bounds. The United States has its own responsibilities in this regard, but it is hard to exaggerate the importance of the direction taken by the single European market.

Washington has long supported the idea of a united Europe, and officially still does, on the ground that it would be a stronger and more prosperous Europe and therefore good for America. Now that the Europeans are getting serious about the completion of the economic integration process, unease has set in.

The elimination of the remaining tariffs and quotas within Europe are just part of the single-market grand plan. Much more important is the goal of uniform or compatible environmental and safety regulations, technical standards and product certification requirements.

The prospect of a truly unified market of 320 million prosperous Europeans is mouth-watering to U.S. business people. The question, though, is how open the club will be to Americans, Japanese and others.

European spokesmen assert that the single market is not intended to be protectionist, but skeptics nonetheless see cause for concern. German beer-purity laws recently were changed to allow imports from other community countries, but not from the United States.

The European community insists on the local manufacture of 40% of the components used in products assembled in Europe. A local-content law, when proposed in the U.S. Congress, was loudly denounced as protectionist.

So far the community has left the question of foreign access to post-1992 Europe in abeyance. But a French study warns that U.S. and Japanese firms might be the biggest beneficiaries of Europe's internal trade liberalization. There is a widespread feeling that a transitional period of import restraint will be necessary to prevent that from happening.

As America's own track record attests, "temporary" trade restraints have a way of becoming permanent. West German participants in the Seattle conference assured U.S. colleagues that such concerns were unwarranted, given good-faith efforts on both sides to reconcile differences. They argued that it would be counterproductive for the single European market to use new communitywide technical standards as a protectionist device, for example, because it would boomerang on European export opportunities elsewhere in the world.

Let's hope that the optimists are right. Otherwise, European wall-building will lead to counteractions by the United States and other outsiders, and the result might be the crumbling of the entire multilateral trading system that has served the world so well.

Soviet leader Mikhail S. Gorbachev is an improvement over his predecessors, but he would have to be a saint not to exploit the opportunities for mischief that would be created by massive disarray among the Western allies.

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