Bully-boy tactics may backfire

Date: 11/03/1999

“There is no alternative.” This famous quote from Margaret Thatcher, which ruled out economic policies other than market liberalisation, privatisation and inflation-busting, also sums up the world's relationship with the United States today.

No one is yet in a position to challenge US power, be it economic, cultural or military. As the German commentator Josef Joffe recently pointed out, despite Germany's weight in the world, former Chancellor Helmut Kohl chose to send his two sons to the universities of Harvard and MIT rather than to their rivals in Paris, Heidelberg or London.

But recent events have underlined more than ever the price of the US' global dominance. President Bill Clinton's decision to start the process of introducing sanctions in the bananas row before the World Trade Organisation has ruled on whether the EU's revised regime complies with its rules, the acquittal by a US court of the pilot who brought down a cable car in Italy causing 20 deaths, and the execution of two people who held German passports have all raised questions about the differences between American and European cultural and economic values.

Specifically, Washington's decision to move beyond the usual trade war rhetoric and launch measures which will really hurt EU exporters has shocked its trading partners. US ambassador to the WTO Rita Hayes claims the requirement to post bonds will not affect importers' decisions. But does she honestly believe that traders view their business as a big game of roulette where there is nothing more exciting than taking a punt on what final import price you will pay?

Across a range of issues, the US is increasingly appearing as a global bully, throwing its economic weight around without having to worry that there might be someone bigger in the playground who could fight back. European observers also see the visible hand of US companies behind pressure from Washington over a range of trade issues from bananas to hush kits, raising questions about democracy on Capitol Hill.

While there is a case to be made for every nation pursuing its interests aggressively, the US should beware that it can backfire. After all, the EU has managed to occupy the moral high ground over bananas even though it has dragged its feet for years over changing its import regime to comply with WTO rules - and, armed with the euro to bolster its courage, appears increasingly prepared to stand up to the US.

The more Washington asserts itself on international issues without any apparent concern about the effect on public opinion beyond its borders, the higher the risk that its trade and political partners will pull up the drawbridge. At a time when the US is facing a huge and growing trade deficit, that is the last thing that Clinton needs.