No Letup in Trade Bickering

Tuesday’s U.S.-European Union summit was not a resounding success. The hope that President Clinton would settle at least one outstanding transatlantic trade row before leaving office evaporated even before the meeting started. Instead, a new dispute over European government subsidies for the development of Airbus Industrie’s super-jumbo jet, the 550-seat A380, erupted into the open. The disagreements involve a tiny part of transatlantic trade, but they are poisoning U.S. relations with its closest allies and undermining the global trade system. President-elect George W. Bush should put resolution of the disputes among his top trade priorities.

Washington has encouraged European integration, stressing the need for the Continent to speak with one voice. But the more unified the voice becomes, the more assertive it is.

The transatlantic trade fights--whether over EU banana import curbs, a ban on U.S. beef produced with growth hormones or U.S. tax breaks for exporters--are symptoms of a growing rivalry in world markets.

The two economic powerhouses have become all too eager to ask the World Trade Organization to resolve their disputes. With some justification, they accuse one another of flouting the WTO. However, this subverts the WTO itself, which is already weakened by the perception among developing countries that it is an organization created for the convenience of the rich countries and their multinational corporations.

A threat by Clinton that the United States will take its complaint over the Airbus subsidies to the WTO is certain to lead to EU retaliation and even greater tensions. Both sides should get out of this downward spiral and settle their trade disputes in negotiations.