Clinton Team Says Shift To Asia Is Long Overdue
By focusing on NAFTA and new Pacific alliance, US increases its exports but may lose key chance to take advantage of European concessions on trade
WITH President Clinton's dogged pursuit of the North American Free Trade Agreement and all the fanfare surrounding his meeting this week with Asian leaders, Washington seems to envision a diminished role for its once all-important transatlantic trade partners.
Europeans may not be very happy about the change of direction, but Clinton administration officials say it is long overdue.
``We've been a very European-centric country,'' Robert Rubin, chairman of the White House's National Economic Council, said at a recent Monitor breakfast.
Today, he said, dynamic growth in Asia and an economic rebound in Latin America are good reasons for United States policymakers and business to broaden their focus. These developing economies, from Mexico to Malaysia, will spend vast sums on costly infrastructure; their consumers will spend more on US products as their standard of living improves, he says.
Europe still attracted half of all overseas investment projects by US manufacturers last year. But intra-European trade continues to outpace the US share of the European market. Though Europeans are wealthier consumers who have provided the largest single market for US exports, most of the European Community (EC) is mired in recession, and demand for imports has been shrinking.
European cooperation in the global trade talks, now in their eighth year, has been very slow to surface. US negotiators have adopted a tough stand, given the EC's continuing refusal to lift farm subsidies in order to reach a comprehensive trade agreement.
The Clinton administration seems to perceive a possible failure of global trade talks as an opportunity to deepen regional ties. With 365 million consumers, the North American market - composed of the US, Canada, and Mexico - is on par with the 380 million consumers in Western Europe. And President Clinton's attendance at an unprecedented meeting of Asia Pacific leaders emphasizes that the US has shifted its sights to the East.
``Clinton and his trade policy- makers have based [this shift] on the assumption that America's economic trajectory has been arching in the wrong direction for well over a decade,'' Jeffrey Garten wrote in the journal Foreign Affairs shortly before becoming undersecretary of Commerce for international trade.
Mr. Garten's assessment was based on actions - such as sanctions against the European community for maintaining procurement barriers against US goods and services - that clearly agitated the Europeans.
``The Clinton team has acted as if the United States has no choice but to make bold departures from existing policies, and that the risk of inaction is greater than the dangers inherent in dramatic change. They are dead right,'' he wrote.
But many Europeans argue that Clinton's new policy is short-sighted.
European Parliament member Gijs de Vries concedes that ``the new focus on the importance of Asia is logical and long overdue.'' But the way US policymakers make it sound, he says, ``Europe is out of fashion, and Asia is the flavor of the month.''
``In recent months,'' he explains, ``[US Trade Representative Mickey] Kantor, [Secretary of State Warren] Christopher and even President Clinton have spoken in glowing terms about Asia while downplaying or criticizing the role of Europe.''
Mr. de Vries disputes the assertion that the US diversion to Latin America and Asia will scare Europe into a conciliatory trade stand. It is ironic, he says, that just when the EC is ready to make further concessions with the US, Washington is too engaged with its Latin and Asian initiatives to take much notice.
France, the strongest holdout on lifting farm subsidies, is now ready to relax a bit. ``You need momentum to keep the French going,'' he says, stressing that their efforts must not go unappreciated.
But the American shift may help Europe in at least one way - by showing the continent the benefits of Far Eastern trade. So far, European businessmen have been heavily focusing on trade with other European countries and with North America.
A recent report by the European Round Table, a group of leading industrialists, warns that European firms are losing ground to their American and Asian competitors in two dominant growth markets: Asia and Latin America.
In Asia, where emerging markets are growing 6.5 percent a year, European investment fell from 15 percent of direct foreign investment in the mid-1980s to 12 percent by 1990. In Latin America, whose economies are growing 4 percent a year on average, European companies' share of the investment market dropped from 24 percent to 20 percent over the same period.
De Vries says European governments have little consciousness of the need to penetrate relatively unknown emerging markets - despite isolated efforts, such as those by British Prime Minister John Major. ``European leaders are frozen in their chairs,'' he says. ``The US shift toward Asia and Latin America should jolt them out of their passivity.''