Wobbly Start on Trade Reform

March 24, 1995

Bad luck and bad diplomacy have combined to get the potentially powerful new World Trade Organization off to a bad start.

The bad luck was the fall from grace of ex-Mexican President Carlos Salinas, the North American candidate fervently backed by the United States as WTO's first director general. The bad diplomacy was a nasty trans-Atlantic spat between the U.S. and the European Union, which lobbied worldwide for the eventual winner, Italy's Renato Ruggiero -- recently labeled a "protectionist" and a prosaic bureaucrat by Clinton administration insiders.

Compounding this unreassuring mess were some last-minute, closed-door, big power deals that left Third World nations (especially Africans) in high dudgeon and threatening revolt. Mr. Ruggiero commented on the fracas by saying: "The danger of economic nationalism is extremely bad and worrying." Indeed it is. While ratification last year of the most sweeping world trade reforms in history was a landmark achievement, its promise will not be achieved until more open global commerce becomes a reality.

Even in the best of circumstances, the WTO would face immense difficulties. In the U.S., for example, such disparate characters as nativist Pat Buchanan, consumerist guru Ralph Nader and populist Ross Perot form an unlikely triumvirate clamoring for a return to protectionism. In Europe, a coddled and inefficient farming sector holds governments hostage against American demands for lower agricultural tariffs. In Asia, the Japanese compulsion is to seize market share no matter what feeds protectionist sentiment elsewhere.

In the worst of circumstances, which describes this scramble over WTO's directorship, the regional tensions dividing the U.S., Europe and Asia are a worrying harbinger of what may come.

For Washington, Mr. Salinas seemed the perfect candidate for putting the Western Hemisphere in charge of the WTO. The Japanese pushed for the supremacy of the Pacific Rim by backing a South Korean. And the Europeans with support from their former colonies in Africa tried and succeeded in maintaining their leadership of the world trade bureaucracy, The price, however, was creation of a fourth and unneeded (Asia) deputy's job for the South Korean, Kim Chul-su, and a promise that Mr. Ruggiero's successor would be a non-European. African nations now may demand a fifth deputy for themselves.

The United Nations, of course, endured far greater Cold War stresses to survive, merely because there seemed no rational alternative. With the global economy increasingly surmounting national borders, the WTO should also survive and gradually increase its effectiveness despite the blundering of mere bureaucrats catering to their own national interests. But to get the new trade organization off to a good start will take greater strength and international vision on the part of Mr. Ruggiero than Washington presently perceives.

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