The U.S. Can’t Have It Both Ways : Washington sends mixed message on free trade

Two disturbing trends are emerging in the United States’ trade policy. One is the attempt to extend the reach of U.S. laws to limit the ability of other countries to conduct legitimate business with one another. The other is a reluctance to honor the rulings issued by the World Trade Organization when they run contrary to perceived U.S. interests.

As a result, the nation could soon find itself fighting U.S. allies in international courts and undermining the WTO, the global trade organization created at Washington’s initiative to reform and regulate the world trading system.

The Clinton administration and Congress should not send the world a mixed message suggesting that the U.S. is committed to free trade only as long as it suits current needs.

The administration has real trade problems brewing with many friendly nations. None of America’s business partners, including the 15 nations of the European Community, Canada, Spain, Mexico or Japan, are willing to forgo their sovereign right to trade with whichever states they want to. Of course various agreements already exist aimed at preventing certain goods from being sold to certain countries, especially goods that can be used to build nuclear or chemical arms. And the United States can always use negotiation and firm persuasion to dissuade allies from doing business with pariah states. But boycotts are another matter.

Consider the recent warning issued by France and Great Britain. They said that if Congress enacts legislation to impose sanctions on foreign companies doing business with Iran or Libya, they would have to take retaliatory action against U.S. companies.

They are referring to a bill sponsored by Sen. Alfonse M. D’Amato (R-N.Y.) that passed the Senate in December. A similar bill awaits action in the House.

In a separate case, Canada, the United States’ largest trading partner, has raised questions under the North American Free Trade Agreement because it objects to the Helms-Burton law, which allows Cuban Americans to file suits in U.S. courts against foreign companies that benefit from expropriated Cuban property and could ban executives from those companies from entering the United States.

Originally, the Clinton administration opposed the Helms-Burton bill. The downing of two civilian aircraft by Cuba last March--plus election year political considerations--prompted a change of heart. If the law is implemented, Mexico is likely to follow the Canadian example and raise similar objections under NAFTA.

U.S. national interests are better served championing free trade, because tit for tat responses don’t work.