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Text File | 1992-09-22 | 5.5 KB | 117 lines

                                                                                AMERICA ABROAD, Page 46

Beware of the Three-Way Split


By Strobe Talbott


    In the New World Order, the tension between liberal and
protectionist trade policies will matter as much as the struggle
between capitalism and communism during the cold war. That's why
GATT is an acronym worth understanding and a process worth
rescuing.

    The General Agreement on Tariffs and Trade is actually not
one agreement but many. It's an accretion of rules and deals
aimed at chipping away the barriers that impede the worldwide
import-export business. GATT has been unfolding since 1947 in
stages, or "rounds." The latest, which began in Uruguay in 1986,
has been stalled for a year and a half. There are many sticking
points, but the biggest is European agriculture, which is still
heavily subsidized and highly protectionist.

    Unless the seven major industrial democracies break the
impasse, the Uruguay Round is headed for disaster and GATT
itself for collapse. The result could be the wrong kind of new
world order.

    GATT is the imperfect, sputtering but indispensable engine
of globalization. It prods all nations in the direction of
vigorous, profitable and peaceful commerce with one another.
Paradoxically, GATT thrived when the world was divided between
the camps of the two superpowers and the U.S.'s principal
trading partners were also its military allies, united in the
common cause of opposing the Soviet threat. As recently as three
years ago, the U.S. and the West Europeans would have found a
way to finesse their current dispute over cereals and seed oil.

    At a moment when transatlantic relations are under new
strain, Europe is coming together as never before. The European
Community is the world's most advanced and promising experiment
in transnationalism. Meanwhile, the Free Trade Agreement between
the U.S. and Canada will soon embrace Mexico. And on the far
side of the Pacific, the booming economies of Southeast Asia are
increasingly tying themselves to Japan's.

    One of the most important questions for the coming decade
is whether this new trend of regionalization ends up being
compatible with globalization. The answer will depend largely
on whether GATT continues to nudge the world toward one giant
free-trade zone. If GATT survives, the odds are better that
regionalism will give way to transregionalism, just as
nationalism has already given way to transnationalism in Western
Europe. If, however, GATT dies, the opposite could happen: the
temptation to form regional clubs could, over time, supplant and
undermine global cohesion. Europe, North America and East Asia
may evolve into three internally open but externally closed
trading blocs.

    In that case, the E.C. would be less likely to expand to
include the nations recently liberated from communism. The
developing countries of Africa, Asia and the Middle East would
be largely locked out of the regional groupings, therefore
deprived of the benefits of free trade and thus less likely to
keep developing, either toward prosperity or democracy.

    Even with the fate of the Uruguay Round still up in the
air, there are already signs of creeping regionalization in its
more exclusive, divisive and competitive form. France and
Germany, the dominant powers on the Continent and the principal
culprits in the E.C.'s agricultural protectionism, have formed
a joint army corps that is clearly intended as a hedge against
the day when the U.S. pulls its forces out of Europe.

    The Bush Administration stoutly denies that that day will
ever come. But if the Uruguay Round fails, the American public
and Congress will, with some justification, blame the
Europeans, and pressures will build in the U.S. to retaliate by
withdrawing the G.I.s who are still supposedly defending Europe.

    Meanwhile, the Japanese feel too dependent on the American
market. They resent the rise of Japan bashing in both the U.S.
and Europe. They also fear that the growing strength of the
E.C., combined with the troubles in GATT, will stimulate the
formation of a Western Hemispheric Community, stretching from
Alaska to Tierra del Fuego, that will be less receptive to
imports from Japan. For all these reasons the Japanese are
concentrating on cultivating customers and suppliers closer to
home.

    Japan's neighbors remember the last such enterprise. It
was called the Greater East Asia Co-Prosperity Sphere, and it
was an imperialistic plan to guarantee access to raw materials
and markets in the region a little more than half a century
ago. The Japanese attack on Pearl Harbor was motivated largely
by the desire to prevent the U.S. Navy from interfering in
Japan's mercantile scheme for East Asia. That episode stands as
a reminder of what can happen when economic anxieties and
commercial quarrels get out of hand.

    The danger will be especially great if there are three
blocs. By its nature, a tripolar world would be less stable than
the bipolar one that existed when the U.S. and the Soviet Union
were squared off against each other. In geopolitics, three is an
awkward number: it encourages two to gang up on the third, or
one to play the other two off against each other. In 1984,
George Orwell imagined a global rivalry among three
superstates, Eurasia, Eastasia and Oceania. Postdate the title
20 or 30 years, and the novel is a cautionary tale with a
contemporary ring.