What is France Up To?

WILLIAM PFAFF

October 18, 1993|By WILLIAM PFAFF

Paris. -- France is forcing a confrontation between the United States and Europe on trade issues. The Balladur government in Paris has hardened its public position on GATT disputes in recent days, despite German Chancellor Helmut Kohl's offer last week to mediate between Mr. Balladur and the equally obdurate American trade negotiator, Micky Kantor.

Why is Paris doing this? The idea, fondly received abroad, that all this is about French peasants, or even French movies, explains nothing. It is a caricature. The notion that the world's fourth-ranking industrial and trading power would jeopardize its exports of commercial aircraft, high-speed train systems, computer software and nuclear installations for the sake of subsidies for a few hundred farmers is derisory.

Nor can it be taken seriously that France would jeopardize the future of Europe for trivial reasons. If GATT negotiations fail because of France, there will be a full-blown European crisis. Britain on most trade issues is on America's side. The small countries of Europe depend on trade and don't want crisis. Germany is extremely alarmed by this fight between its two main allies.

What, then, is going on? There are two possible explanations. The first is that Prime Minister Edouard Balladur and his government have badly miscalculated their own strength and their room for maneuver. The second is that Mr. Balladur has an ambition much more audacious than either his European allies or his American opponents have yet grasped.

Miscalculation is entirely possible. My own encounters with Mr. Balladur suggest that, despite his urbanity, he is also what the French describe as ''hexagonal'' -- looking out in a parochial way from that hexagon France occupies on the map. There are many in France's political elite who, although they speak other languages and have traveled abroad, fail to understand foreigners and non-French motivations.

Mr. Balladur's reported comment this summer that speculative attacks on the French franc have been politically motivated revealed a serious misunderstanding of New York and London currency traders. Wall Street and the City of London are driven by greed, not politics. They speculate against the franc -- or pound, or dollar -- to protect their market positions or to make money from instability.

Mr. Balladur's government has claimed that the Dec. 15 closing date for a GATT agreement is ''an American deadline'' that can be ignored. Members of his government have suggested ''partial'' agreement in December, setting aside the hard issues. The date was, in fact, initially proposed by Europe, and President Bill Clinton's congressional grant of authority to make an overall trade agreement expires then. If the date is allowed to pass, agreement will probably become impossible because Congress will paralyze the American negotiators. But possibly that is what Mr. Balladur wants.

Today the other European governments are disturbed and confused by what Paris is doing, as are American diplomats, who no longer feel they know what France expects. The French press and political class have become panicky. Nearly everyone says they support Mr. Balladur, but they add that they don't know what they are supporting. As one of the prime minister's supporters has plaintively said, ''He has to show us where he is going.''

I can see where Mr. Balladur may be going -- or think that he is going. France has always seen the GATT system as biased toward the United States. The United States has successfully ignored GATT rules when it suited Washington to do so. This happened when the Nixon Administration arbitrarily and unilaterally ended dollar-gold convertibility in 1971 and imposed a 10 percent surcharge on imports. It goes on today with congressionally mandated ''Super 301'' tariff retaliations, blasting open foreign markets for American exporters.

In the 1940s, as part of the Bretton Woods plan for the postwar economy, an International Trade Organization was supposed to have been set up. This never happened. However, the trade negotiations that began then were periodically renewed, within a framework provided by the GATT secretariat. Hence, the successive ''rounds'' of negotiations; we currently are in the ''Uruguay Round,'' which began in 1986 in that country. The United States has always been the engine of the GATT system. It forced Japan into GATT in the 1950s, over European -- particularly British -- opposition.

Many believe that GATT today should be replaced by a proper world trade organization. In principle, GATT negotiations are eventually supposed to produce a trading system that functions by international law rather than consensus and arbitration. The Europeans have supported this aim in order to block what they see as an American habit of selective protectionism by unilateral decision.

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