Recently articles like "Europe Plans Huge Trade War" and "Costs...Will
Soar in a Trade War" hit the headlines in Britain again. What is their
ultimate significance?
by John Ross Schroeder
For well over 40 years there has been periodic talk of a potential trade
war between Europe and the United States. The latest upsurge of verbal threats
was occasioned by the World Trade Organization's (WTO) recent ruling
that U.S. steel tariffs imposed by the Bush administration were illegal. The
purpose of these tariffs was to render financial assistance to the struggling
American steel industry and its thousands of employees.
Retaliatory thoughts surfaced rather quickly. USA Today reported
from Brussels, "The World Trade Organization cleared the way Monday for
more than 20 foreign countries to hit the U.S. with billions in export taxes
in retaliation" (Nov. 11, 2003).
In Britain The Independent stated, "Europe can now impose duties
on products ranging from T-shirts and lavatory paper to bras, pantyhose, suspenders,
ballpoint pens, ski suits and bowling alley equipment" (Nov. 11, 2003).
These products are most probably only starters. More heavyweight items would
surely follow.
In an article titled "The Trade Trap" in The World in 2004 (published
by The Economist), the author predicted, "The [coming] year
would be hazardous for the world economy." A U.S.-EU trade war would
make this prediction all but a certainty.
Pointing the finger of blame
Naturally the United States has tended to blame Europe for trade war threats
and vice versa. Predictions of serious economic problems go back to the early
1960s. In 1961 one top editor of an American business magazine sounded the
following warning: "In terms of its meaning to every manager and every
worker in the United States, what may well be one of the greater challenges
of our lifetime is now developing in Europe.
"It will affect our standard of living, the competitive position of
our industries and the future safety of our freedom and democracy. It will
have effects second only to those of World War II. I refer, of course, to
the booming strength of the European Common Market" (Advanced Management,
July-August 1961).
