Winds of Change.NET: Trade Wars Next?

March 7, 2003

Trade Wars Next?

by Joe Katzman at March 7, 2003 5:03 PM

In the March 5th Winds of War, I mentioned:

"Geitner Simmons blog makes an excellent point: if America's enemies in France and elsewhere continue to make international bodies a joke due to their resentment of America, have they considered the likely cost of America reciprocating that resentment? [Full article here, recommended] It really does look more like the 1930s every day."

Bill Quick neatly illustrates one of my thoughts when I made that last comment.

These fears of a trade war aren't completely fanciful; I could certainly see this as France's next game once U.S. retaliation (carousel retaliation and others) begins to bite their oil industry and beyond.

Indeed, a long term French campaign to introduce retaliatory and anti-USA tarrifs in the EU strikes me as not only likely, but probable.

First of all, they need another bogeyman to keep their dream of an EU counterbalance to the USA alive.

Second, they're going to be under all kinds of pressure from "New Europe" due to subsidy imbalances in a much more crowded trade zone - something that was an unspoken undertone in the famous New Europe 8 Letter. There's a lot of superficial attraction to "make room" by trying to push American trade out, rather than confronting their own protected populations.

Finally, raising the trade walls is probably the single most effective thing France can do to create an "all of us vs. them" mentality that forces the small nations of "New Europe" to go along and reduces American influence in Europe.
The French have defined the terms around Iraq: America's role in the world. They've defined their future role: leader of the opposing forces. They've also shown how far they're willing to take this - and the answer is everything and anything short of war. Writing recently in Forbes Magazine, historian Paul Johnson aptly described French governments' "unique mixture of shortsighted selfishness, long-term irresponsibility, impudent humbug and sheer malice." This would certainly fit the bill on all fronts.

As for my "1930s" crack, it goes deeper than global threats and a fifth-column "peace movement" led by hard-core cadres. Recall that in the 1930s, a world in recession also did this.

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"Trade Wars Next?"

Tracked: March 7, 2003 7:20 PM

Trade War? from EconLog

Excerpt: The WindsofChange blog asks, will the foreign-policy rift over Iraq spark a trade war between the U.S. and other countries?

Comments

#1 from Chrees at 5:52 pm on Mar 07, 2003

If France does indeed try to raise a trade wall, it will be extremely interesting to see whether those "not yet in the family" choose to join or not. I think they have already made it clear whose support they enjoy more...

#2 from Tom Roberts at 7:07 pm on Mar 07, 2003

But it won't be overt "Anti American Trade Policies". It will be incremental regulations which will cause US food products to rot on the docks or machinery or software to "not meet EU specifications". Smoot-Hawley, move on over.

#3 from Tom Holsinger at 7:37 pm on Mar 07, 2003

The French are already on notice that the EU is changing. They backed off from their threat to veto the new members upon being warned that an alternate EU could be formed without them or Germany. They won't be able to get even the current EU to do this.

#4 from Tim Shan at 8:53 pm on Mar 07, 2003

As far as the "fifth-column "peace movement" led by hard-core cadres" comment goes; you might want to check out this research.

*Peace Protests Organized by Socialists*

#5 from J S Allison at 9:16 pm on Mar 07, 2003

Umm didn't Napolean try this 'continental trade embargo' thing once before? Of course the end result was that the French became very quiet for quite a few decades following Waterloo. So perhaps it'd be a feature, and not a bug.

#6 from Philip Chaston at 10:15 pm on Mar 07, 2003

The distinction between 'Old' and 'New' Europe within the European Union is not as clearcut as the blogosphere has tried to describe over the last few weeks.

There is an almost schizophrenic quality to the meetings within the European Union. On issues of military integration or supporting Franco-German proposals for restructuring the EU, Britain, Spain and Italy have all made supportive noises over the last few days.

*Blair and Aznar's statement* is the most important of these, unreported in most of the mainstream media.

US radar needs to pick up on the European integration process. The Bush administration certainly has. The blogosphere hasn't, as yet, because the countries are artificially divorcing tissue of Iraq from the process of integration.

This is a bad move. They are not adapting to strategic changes and are providing france with greater influence than she deserves.

#7 from Tom Holsinger at 11:06 pm on Mar 07, 2003

Phil, the Earth continues to rotate on its axis even if the blogosphere is uncertain as to the mechanics of rotation.

#8 from Philip Chaston at 12:34 am on Mar 08, 2003

Tom,

Not an exact analogy as we are not dealing with reliable knowledge that can be reproduced in experimentation or measured through mathematics.

If commentators are analysing the actions of European nations, they need to take into account all sources of information. Throughout this Iraqi crisis, there has been no radical change in the actions of EU members, whether described as 'Old' Europe or 'New' Europe, in terms of integration.

The European nations are deliberately ringfencing EU integration from the pressures of the Iraqi crisis. This undermines arguments that France and Germany are looking to dominate the EU as a counterweight whilst the other nations are more accommodating to the US. All may hold differing visions about the future of the EU but they are allied in their approach to the European Constitution.

A European Union that perceives its role as a counterweight to the United States, swallows up pro-American nations and is dominated by those who subscribe to an anti-American ideology is still a distinct possibility.

#9 from Joe Katzman at 4:41 am on Mar 08, 2003

See also *Arnold Kling's brief thoughts on this issue*, from an economics perspective.

#10 from <tor at 7:06 pm on Jul 26, 2003

These kinds of priority websites via Google
are blogwash. Blogosphere????

Who are you?

Entertaining war via the unconstitutional
patriot act. God bless America and the men
going to war in Africa. We have all been
here before. VIVA ANC �90 BROTHERS!!!!!!!!