Tumult in the Trade Scene

December 07, 1992

Carla Hills has now been burned in effigy, an honor rarely bestowed on cabinet-level officials. The conflagration occurred in Strasbourg, France, last week when 40,000 European farmers hoisted what Webster's defines as "a crude representation of a despised person" atop a wooden scaffold packed with hay and set the whole thing ablaze.

It was a scene replete with apt symbolism because the once-obscure post of U.S. Trade Representative (USTR) has become one of the hottest seats in government -- a post requiring constant negotiations with virtually every country in the world, plus Congress and virtually every economic interest group in this country.

Ms. Hills went up in flames, figuratively, because she engineered an oilseeds agreement that will reduce the outlandish subsidies the European Community has been dispensing to its farming population. The Socialist government in Paris has threatened to veto the deal and has indulged in some spectacular anti-American rhetoric.

But Ms. Hills hasn't blinked, and neither should her successor in the Clinton administration. She probably figures (a) the French government will withhold any veto until it gets through March elections and (b) it might not veto even then because this could kill reforms now being negotiated under the General Agreement on Tariffs and Trade.

As if to prove the point that the lame-duck Bush administration is willing to risk a trans-Atlantic trade war, Ms. Hills imposed temporary import taxes on steel from 12 countries, mostly European. This, on the basis that they had given their steel producers unfair loans and other financial deals to compete in the U.S. market. Again, there were squeals of protest from the EC but notably no threats to scuttle GATT.

For good measure, Ms. Hills accused China and Taiwan, both with huge trade surpluses, of manipulating their currencies to gain unfair pricing advantages in the U.S. market. These same countries will be on the steel hit list if Washington, a week after the Clinton inauguration, brings dumping charges against more than 30 steel exporters.

This is just a portion of what will be on the next trade representative's plate. He/she will have the job of steering the pending North Atlantic Free Trade Agreement and an expected GATT accord through a wary Congress. So it matters what the president-elect really intends in devising an international economic strategy. And it matters greatly how Bill Clinton tilts in the selection of Ms. Hill's successor. The Bush administration is a lot more protectionist than it admits. We trust the Clinton administration will be a lot less protectionist than the Democratic faithful in Congress.

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