Tempering Trade Tantrums

When the European Union and United States squabble, many global issues just don't get solved. Others nations only sit by and watch the richer nations argue.

That occurred last week when a US-European dispute over counting trees as pollution-eaters collapsed the talks over global warming. The same has been true over creating an international war-crimes court.

But trade disputes are more emotional and closer to home. And the current ones across the Atlantic threaten the decades-long momentum toward fewer trade barriers that has lifted the economies of many nations.

Trade fights between the US and EU aren't new. Recall the "chicken war" of decades ago or the "banana battle" of today. But with the World Trade Organization (WTO) still in its infancy and regions of the world splitting off into minizones of free trade, the big economies like the EU and the US need to set an example of fair play and compromise.

Both sides would be better off if long trade fights could be avoided. The latest one centers on a tax break the US granted its exporters. The EU won a WTO ruling against it, holding that it gave US firms a competitive advantage. The EU now seeks to impose $4 billion in trade sanctions against specific US exports.

Congress just passed a revised tax arrangement that delays the issue at least until June. But the trade dispute isn't simple. The US tax dodge offsets to a degree the ability of EU firms to rebate their value-added taxes on exports. This substantial tax advantage has been approved as legal.

To Europe, many US trade positions seem to simply favor big companies who are political donors. On the face of it, that's often true. But before more transatlantic sanctions are imposed by one side, the EU and US need to show more global leadership and see how specific trade disputes send the wrong signal to other nations.

(c) Copyright 2000. The Christian Science Publishing Society