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US-Europe After `92

`Cultural disdain,' not trade barriers, biggest hurdle

LATE in 1988, many congressional and corporate representatives (and some United States government officials) were spreading alarm regarding ``Fortress Europe,'' stemming from plans of the European Community to eliminate by Dec. 31, 1992, internal impediments to the free movement of goods, people, capital, and services between the 12 member nations. Recently the mood has changed. The basic reason for the change has been the improved political guidance to US and EC trade negotiators. President Bush, in one of his first pronouncements, said that problems like the beef-hormone issue must not be allowed to endanger the overall political relationship between Europe and the US.

Progress has been made over recent weeks on a number of important issues. Americans were understandably concerned that decisions on standards and technical specifications might be used by the EC in a protectionist manner. The US secretary of commerce and the European Commission have worked out plans for continuing consultation, which would seem to prevent this issue from disturbing the relationship. Furthermore, conversations between the US government and the commission have done much to relieve the concern within the US banking community of the possibility that the commission's emphasis on ``reciprocity'' might deprive US banks of a fair role within the strengthened EC.

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A number of high ranking corporate officials have recently made public statements welcoming the proposals for Europe 1992. The retired chairman of DuPont has said that ``1992 is an idea whose time has come.'' Alan F. Jacobson, chairman of 3M, has pointed out that his company has operations in every EC country except Luxembourg, and he expects that with a more unified EC the corporation can reduce its European inventory by one-third by 1992 because of improvements in manufacturing, marketing, packaging, and distribution. Officials of other major US companies already well established in Europe also have made reassuring statements.

Prospects are favorable for large, well-managed American concerns already committed in Europe. Smaller or middle-sized companies not well established there will have to move aggressively if they are to benefit. The same is true for smaller European corporations.

Some broad political problems remain. Jacques Delors, president of the European Commission, in Washington on June 15 referred to prospective negotiations with the EFTA countries (Austria, Finland, Iceland, Norway, Sweden, and Switzerland), which would seem to indicate a special concern with those nations' trading relations with the 12 EC countries. It is difficult for Americans to accept the idea that, merely because they are European, EFTA countries should receive preferential treatment.

President Delors also stressed the prospect that the EC may be expected to play a more active role on foreign policy issues. He assured the American audience that the community can be expected to be in agreement with the US on most such issues. Yet in 1988 the EC took positions on Latin America, the Middle East, and Eastern Europe at variance with positions of the US government. This author welcomed these informed dissents from US policy, but many other Americans disagree.

It is difficult to envisage the role of the United Kingdom in a strengthened European Community. Margaret Thatcher's attraction to sovereignty is similar to that in the past of Charles deGaulle. Recently, however, the head of the Labour Party, Neil Kinnock, publicly advocated European unity without any indication of serious concern about loss of sovereignty. Furthermore, Michael Haseltine, a prominent Tory, has broken sharply with Mrs. Thatcher on the very important issue of the European Monetary System, describing it as a step toward a European currency without which ``no truly unified market can exist.'' Perhaps in time, if the specific issues can be treated rationally, the British will move along with the rest of Europe.

Perhaps the most troublesome consideration for Americans derives from what American journalist David Broder has called the ``cultural disdain'' of Americans toward learning foreign languages and shaping products and services in a manner designed to make them attractive to foreigners. The Economist of June 17, 1989, refers to a survey by the Columbia Business School and Korn/Ferry which - according to the magazine - concludes that ``today's American chief executives do not expect their successors to need much international experience.'' In contrast, Japanese and European executives ``expect international competition'' and are ready ``to compete on product quality and innovation.''

Regardless of US government negotiations designed to open up foreign markets, there is little prospect of success for those companies falling into the category described in the survey. If these are a substantial percentage of US concerns, then, ``Fortress Europe'' or not, there is little prospect for early substantial improvement in the US trade balance.

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