Why the fuss? in part, because economists are convinced that within the mindnumbing text of GATT lies an enormous stimulus to the world economy as tariffs are reduced and new markets opened. True, all guesses about the benefits of a completed GATT agreement are suspect. But the Organization for Economic Cooperation and Development in Paris estimates that a trade deal would increase world output by more than $270 billion a year by 2002. A prize that size is worth a little indigestion in Geneva.
In Washington, the trade talks have a second and arguably greater significance. Though the talks went very slowly, it seemed just likely that a deal would be done by Dec. 15. If it is, one of the shadows that have cast a pall over relations between the United States and its allies in Western Europe will have been lifted. Anthony Lake, the national-security adviser, is still bruised by European rejection of America’s plan to lift the arms embargo on Bosnia. He agrees that there has been a “scratchiness” to transatlantic relations all year. To thin-skinned Europeans, the scratchiness became most irritating when Secretary of State Warren Christopher said in October that “Western Europe is no longer the dominant area of the world.”
In the GATT talks, the Americans have been engaged in a complex tit for tat. They’ve insisted that GATT should reduce subsidies for agriculture–particularly those that European farmers have enjoyed since the 1950s. Washington isn’t much worried about competition with American farmers. Since many agricultural products are bulky, perishable or both, trade in agriculture makes up only about 13 percent of total world trade. What the Americans really want is to open new markets for services in developing countries, many of which export a lot of farm products–without the benefit of subsidies. Hence the big idea: you can tempt developing countries into opening their markets if you reduce agricultural subsidies in some of the developed countries they compete with.
The problem was France, where a sentimental attachment to the land stirs the blood. A year ago the French nixed a deal between Europe and the United States on agricultural subsidies reached at Washington’s Blair House. That deal has just been renegotiated in such a way as to offer more protection to French farmers.
Are the French happy? Only partly. In a country where Adam Smith is just one economist among many and free trade is an Anglo-Saxon ideology, the trade talks have been portrayed by some as a plot to subvert national identity. Hence the latest manifestation of a crisis of faith: defense of the French film industry from a Hollywood thought to be as ravenous as a Spielberg dinosaur.
In some ways, France’s touchiness about its identity is shared by much of Western Europe, which is in a distinctly uneuphoric mood. Unemployment in many countries is more than 10 percent and rising (in the United States it is 6.4 percent and falling); last week European leaders considered a plan to spend $283 billion on infrastructure and create new jobs. But unemployment is only half the story. West Europeans are beginning to realize that, in many industries, their expensive social benefits have placed them at a cost disadvantage compared with East Asia; in others, they are at a technological disadvantage compared with America.
So even if the trade deal gives the French all that they seek–a reasonable bet–a certain European grumpiness with the world, and particularly with America, will remain. Bosnia remains a transatlantic disagreement; the future security framework of Europe remains fraught with potential difficulty. Lake calls relations with Europe a “top goal” for the next year and says, nicely: “The heart of any effort on the tough issues of the world requires cooperation with Western Europe.” Bill Clinton will visit the old continent at least three times next year.
And yet for a younger generation of Americans, Christopher’s strictures are accurate. Western Europe really is no longer dominant in the American imagination. Once a cheap place in which college students could breezily spend a summer, it is now an expensive vacation. At the height of the American-European love affair in the 1950s, Elvis Presley, that unlikely GI, sang a verse of “Wooden Heart” in German. Difficult to imagine Pearl jam warbling in French.
