U.S. trade inconsistency

The government of a global economic power cannot afford to act mushy on trade. Its behavior reflects either a commitment to international commerce or a lack thereof. Against the coarse gauge of world opinion, which matters greatly on this subject, commitment has no degrees.

Oct. 20, 1997

4 min read

In its approach to trade, the U.S. is trying to straddle an impossibly high fence. Last week, its negotiators met with counterparts from the European Union to try to avoid a clash over extraterritorial provisions of U.S. sanctions against Cuba, Libya, and Iran. Just a month earlier, the administration of President Bill Clinton sent Congress legislation renewing presidential fast-track authority in trade negotiations.

In Washington, D.C., sanctions and fast-track authority are distinct issues. Outside the U.S., the moves look contradictory.

U.S.-EU controversy

U.S. and EU officials met at the end of a 6-month truce over the Helms-Burton law against Cuba and the Iran-Libya Sanctions Act. In both laws, the U.S. claims the right to penalize governments not supporting its trade sanctions.

The EU filed a complaint with the World Trade Organization against third-party provisions of Helms-Burton, then suspended action pending the outcome of last week's negotiations. But there was no outcome. Negotiators agreed to extend the deadline and to continue discussions during a meeting this week of the Organisation for Economic Cooperation and Development.

Delicacy of the proceedings grew when Total, in a venture with Russia's Gazprom and Malaysia's Petronas, signed a $2 billion agreement with National Iranian Oil Co. to develop South Pars gas field in the Persian Gulf. To the Clinton administration and much of Congress, the deal represents a challenge to foreign policy. To France and most of the EU, it is preeminently a matter of trade.

Inconsistencies within the government make the U.S. stance no less difficult to interpret from abroad. The Clinton team pursues aggressive enforcement of sanctions against Iran and Iraq in keeping with its policy of "dual containment" of those regimes. It seems less concerned about Libya and delayed implementation of Helms-Burton. The inconsistency grows out of disagreement between the administration and Congress over what does and does not constitute priorities of foreign policy-an important debate, to be sure, but the source of a problem nevertheless.

Foreign governments have reason to wonder where trade fits in U.S. foreign policy. So do U.S. companies seeking opportunities abroad.

Clinton has been eloquent on behalf of trade in pursuit of fast-track negotiating authority. And he has been correct. He should have the authority. Yet it is beginning to look as though trade is a U.S. priority in the Western Hemisphere only. Elsewhere, it is a lever of policy. Can anyone wonder why European governments are upset with Washington, D.C.?

And how does the administration square its invocations of trade's importance in the fast-track issue with its subordination of trade to a geopolitical stance with which the rest of the world so obviously disagrees? Fast-track opponents will use the discrepancy to their advantage if they ever notice it.

Last chance

Last week, Commerce Sec. William Daley warned that if Congress doesn't renew fast-track authority this year it probably won't do so at all until at least 2001. Absence of the authority would make strategic trade agreements difficult to achieve for the rest of the Clinton presidency. It was an ironic distraction from the EU negotiating jam: Daley issued his warning in Rio de Janeiro during a presidential tour of South America promoting hemispheric trade.

Trade is global. Its role in international affairs grows as economies develop and barriers to communication fall. By failing to find a consistent and consistently constructive role for trade in foreign relations, the U.S. is mainly hurting itself.