European Unity and US Interests

THE dramatic events of recent years have transformed Europe. Cold-war assumptions no longer apply. The military threat has been dismissed, and economic concerns have become more important. In this context, the 12-member European Community has emerged as a powerful international player.

The EC is a financial and political magnet for the entire continent, especially the new democracies of Central and Eastern Europe. Countries as diverse as Poland, Hungary, Switzerland, Sweden, Austria, Finland, Cyprus, Malta, and Turkey want to join. The question is no longer who wants to join the EC, but who does not.

The Maastricht Treaty, signed by the EC member states in December 1991, provides a blueprint for progress toward European unity. It outlines a plan for monetary union, the creation of a single currency, and closer coordination of EC foreign and defense policies. At the time of the Maastricht summit, prospects for achieving the long-term goal of European union looked bright. Today, signals are mixed. Europeans are hesitating. Doubts about unity

National approval by the 12 EC members of the Maastricht Treaty is off to a rocky start. On June 2, Denmark rejected the treaty by a narrow margin. The result of the Danish referendum sent shock waves through the community. It gave legitimacy to critics of the treaty in every EC state.

A solid "yes" vote in the June 18 Irish referendum bolstered treaty supporters, but the impression remains that Europeans are ambivalent about political and monetary union. Recent elections across Europe show a decrease in support for major pro-European parties and an increase in support for small parties and regional parties with nationalistic and local concerns.

In Germany, there is growing public anxiety over replacing the Deutschemark with a European currency. In Britain, electoral success in April vindicated Prime Minister John Major's policy of exceptions for British adherence to the Maastricht Treaty. In France, the latest EC compromise on farm subsidies has met with strong opposition. President Francois Mitterand's decision after the Danish vote to hold a referendum in September on the treaty indicates the weakness of pro-European forces in France, not the ir strength. Economic issues

The jury may be still out on whether the EC will move toward one currency, foreign policy, and defense policy, but the process of creating a single European market is well advanced. Most of the 282 Directives to create uniform EC industry and trade standards are expected to be completed by January 1993. This development is of considerable overall benefit to the United States business community, but concerns remain.

Certain directives - particularly on standards and testing, government procurement, and broadcasting - present major problems for US exporters. In addition, differences in national interpretations of single-market rules will cause problems for US firms in the EC market for some time to come.

On farm policy, last month's reforms of the EC's Common Agricultural Policy (CAP) were a first step toward bringing EC price supports into line with world prices. Europe has a long way to go: US exporters still complain bitterly that the EC floods third-country markets with subsidized farm products. Contentious US-EC agricultural issues remain the biggest obstacle to a new GATT trade agreement. Military issues

As the US military presence in Europe diminishes, Europeans will need to take more responsibility for their own defense. Whether the Maastricht Treaty is approved or not, this defense role will take time to evolve - perhaps a decade or more. A number of proposals have come from Europe regarding its future security identity.

The Maastricht Treaty gives the EC, for the first time, a role in European defense. It provides for closer cooperation between the Western European Union (WEU) and the EC and outlines a timetable for incorporation of the WEU into EC decisionmaking.

In May, France and Germany took another initiative in the defense area. They announced the creation of a common 35,000-strong military corps, the so-called Euro Corps. The relationship of this Franco-German corps to existing institutions, including the EC, the WEU, and NATO, remains to be determined. Implications for the US

First, strong ties with Europe are essential to US security and prosperity. Without doubt, the US will have problems with a united Europe. But we will surely have greater problems with a Europe that is weaker or divided. It is in the interest of the US that the EC succeed in efforts to create a wider and deeper community.

Second, decisions Europeans make about their future have significant implications for the US and for US-European relations. The US should not sit back and wait to see what emerges from debates in Brussels. We need to play an active role in shaping the EC's decisions.

Our relations with the EC should be as close as our bilateral relations with our European allies. We must develop a better mechanism for consulting on key issues before problems arise, not only afterwards. Policymakers in Washington must pay more careful attention to the implications of events such as the Maastricht Treaty, the European single market, and the European Economic Area for long-term US interests. Lack of information only breeds fear and misunderstanding.

Third, the US will have to work harder than ever to ensure that trade problems do not threaten our broader relationship with Europe. The declining importance of security issues will push contentious economic issues closer to the center of our relationship.

Successful conclusion of the GATT negotiations, including resolutions of agricultural issues, remains a top priority. The Munich G-7 summit did not make enough progress toward a GATT agreement. We need forceful leadership at the top - both in the US and Europe - to break the deadlock. Our trade problems with Europe will only grow worse if there is no GATT agreement.

Fourth, there is a dramatic decline today in American support for a large US troop presence in Europe. A greater share of the defense burden will shift to European members of NATO, and they will have to sort out the future US security role.

American participation in European defense continues to be vital for US interests and European stability. The size of the US troop presence in Europe is a topic for debate, but it should be more than a token force. NATO is still the best guarantor of peace in Europe. As new security arrangements evolve, the US needs to support European efforts that complement NATO.

Fifth, the US must remain a European power. The US and the EC need to cooperate on the major issues of the day. In Eastern Europe and the former Soviet Union, the stakes are high. Yugoslavia provides an ominous example of what failure to cooperate could mean. New and fragile democracies need not just money, but access to our markets.

US-European relations are undergoing fundamental change. Nevertheless, our common interests - peace, stability, and prosperity in Europe - remain. The past 40 years have been characterized by unprecedented US-European cooperation in achieving these three goals. The transatlantic relationship not only survived, but prevailed. Our shared experience should give us confidence that Europe and the US will be able to meet new challenges in the next decade and beyond.