A great debate on trade legislation is going on. What worries this European is that the stakes for the United States and the world are much bigger than some of the arguments used in debate.
Take unfair trade practices. It is understandable that with a trade deficit last year of $170 billion, there should be growing impatience with practices that impede U.S. exports. But the trade deficit here is not essentially the result of unfair trade practices elsewhere. The trade deficit results from a combination of macro-economic factors (in this case the budget deficit), the exchange rate (now rapidly being changed) and the competitiveness of domestic industry. If all the "unfair" trade practices elsewhere were abolished, there might be a marginal change in the deficit -- it has been estimated -- of between $10 billion and $20 billion.
The second point is that trade practices seen as unfair are not limited to the trading partners of the United States. We updated a few weeks ago a list of some 30 U.S. trade barriers that impede European Community exports. These vary widely.
Machine tools used by the Department of Defense cannot be bought from outside the United States or Canada. EC suppliers of switching and transmission equipment find difficulties in selling into the U.S. market because of lengthy and costly approval procedures. The Federal Aviation Administration has announced onerous new inspection requirements for imported spare parts for aircraft -- likely to discourage U.S. buyers from purchasing aircraft manufactured in the European Economic Community. Customs user fees have been imposed on imports -- tantamount to enacting an additional tariff. These are just some examples from a list of 30.
We did not circulate this list with any hostile or aggressive intent. We did so to set the record straight. Practices that impede trade are not limited to foreigners.
It is dangerous to establish a rule that trading partners running a surplus with the United States should be beaten over the head if trade barriers objected to by the United States are not removed within a certain time scale. In 1981, the United States ran a trade surplus with the EEC of $18 billion. With the falling dollar, it could easily do so again. Would it have helped the United States if we had threatened or would threaten to cut U.S. exports if the trading practices mentioned above were not abolished?
Several other possible provisions of the new legislation have the same thrust. Unilateral restrictions on imports of textiles; unilateral toughening of the internationally agreed provisions on subsidies and dumping. A requirement for reciprocity in one particular sector (telecommunications) where foreigners could easily point to sectors where they give more favorable treatment to imports than the United States and demand reciprocity.
In all these cases where there are disputes, the way to deal with them is to negotiate a solution either bilaterally (we and the United States have managed to settle successfully a range of disputes between us on these lines) or multilaterally -- and here the new Trade Round provides an excellent forum.
The choice before us is a fundamental one. Do we continue with the one-world trading system, built up since the war with a great deal of American help, American vision and American leadership? Or do we take a sledgehammer to the Swiss watch-like mechanism of international trade, take the path of unilateral action, let the new trade round of negotiations go bust and go back to the 1930s?
The one-world trading system -- set up under the aegis of the General Agreement on Tariffs and Trade -- is not a perfect one. No human institution is. But it has made possible over the last 40 years the biggest increase in prosperity in the recorded history of the West. World trade is up in volume terms by a factor of seven, U.S. exports by a factor of five. The United States is now three times richer than it was at the end of the 1940s. A major contribution to this has been made by its rapidly increased involvement in world trade.
One-fifth of American industrial production is now exported. Forty percent of American farmland now grows for export. Five million American jobs now depend on exports. They are at risk. If we turn to the path of unilateral action, retaliation and counterretaliation, the one-world trading system will very quickly unravel. Do we want to throw these gains away on either side of the Atlantic and travel back to the dark days that followed Hawley-Smoot, the days of "Buddy, can you spare a dime?" and once prosperous businessmen selling apples on the streets?
Hegel once said that the only thing men learn from history is that they learn nothing from history. Let us hope this time we can prove him wrong.The writer is head of delegation of the Commission of European Communities.