U.S. Must Come to Terms with the New Europe

LEE H. HAMILTON

July 15, 1992|By LEE H. HAMILTON

WASHINGTON. — Washington--The dramatic events of recent years have transformed Europe. Cold-war assumptions no longer apply. The military threat has been dismissed, and economic concerns have become more important. In this context, the 12-member European Community has emerged as a powerful international player.

The EC is a financial and political magnet for the entire continent, especially the new democracies of Central and Eastern Europe. Countries as diverse as Poland, Hungary, Switzerland, Sweden, Austria, Finland, Cyprus, Malta and Turkey want to join. The question is no longer who wants to join the EC, but who does not.

The Maastricht Treaty, signed by the EC member states in December 1991, provides a blueprint for progress toward European unity. It outlines a plan for monetary union, the creation of a single currency, and closer coordination of EC foreign and defense policies. At the time of the Maastricht summit, prospects for achieving the long-term goal of European union looked bright. Today, signals are mixed. Europeans are hesitating.

National approval by the 12 EC members of the Maastricht Treaty is off to a rocky start. On June 2, Denmark rejected the treaty by a narrow margin. The result of the Danish referendum sent shock waves through the community. It gave legitimacy to critics of the treaty in every EC state.

A solid ''yes'' vote in the June 18 Irish referendum bolstered treaty supporters, but the impression remains that Europeans are ambivalent about political and monetary union. Recent elections across Europe show a decrease in support for major pro-European parties and an increase in support for small parties and regional parties with nationalistic and local concerns.

In Germany, there is growing public anxiety over replacing the Deutsche mark with a European currency. In Britain, electoral success in April vindicated Prime Minister John Major's policy of exceptions for British adherence to the Maastricht Treaty. In France, the latest EC compromise on farm subsidies has met with strong opposition. President Francois Mitterrand's decision after the Danish vote to hold a referendum in September on the treaty indicates the weakness of pro-European forces in France, not their strength.

The jury may be still out on whether the EC will move toward one currency, foreign policy and defense policy, but the process of creating a single European market is well advanced. Most of the 282 directives to create uniform EC industry and trade standards are expected to be completed by January 1993. This development is of considerable overall benefit to the United States business community, but concerns remain.

Certain directives -- particularly on standards and testing, government procurement and broadcasting -- present major problems for U.S. exporters. In addition, differences in national interpretations of single-market rules will cause problems for U.S. firms in the EC market for some time to come.

On farm policy, last month's reforms of the EC's Common Agricultural Policy (CAP) were a first step toward bringing EC price supports into line with world prices. Europe has a long way to go: U.S. exporters still complain bitterly that the EC floods third-country markets with subsidized farm products. Contentious U.S.-EC agricultural issues remain the biggest obstacle to a new GATT trade agreement.

As the U.S. military presence in Europe diminishes, Europeans will need to take more responsibility for their own defense. Whether the Maastricht Treaty is approved or not, this defense role will take time to evolve -- perhaps a decade or more. A number of proposals have come from Europe regarding its future security identity.

The Maastricht Treaty gives the EC, for the first time, a role in European defense. It provides for closer cooperation between the Western European Union (WEU) and the EC, and outlines a timetable for incorporation of the WEU into EC decision-making.

In May, France and Germany took another initiative in the defense area. They announced the creation of a common 35,000-strong military corps, the so-called Euro Corps. The relationship of this Franco-German corps to existing institutions, including the EC, the WEU, and NATO, remains to be determined.

First, strong ties with Europe are essential to U.S. security and prosperity. Without doubt, the U.S. will have problems with a united Europe. But we will surely have greater problems with a Europe that is weaker or divided. It is in the interest of the U.S. that the EC succeed in efforts to create a wider and deeper community.

Second, decisions Europeans make about their future have significant implications for the U.S. and for U.S.-European relations. The U.S. should not sit back and wait to see what emerges from debates in Brussels. We need to play an active role in shaping the EC's decisions.

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