US-European Trade Relations

Abstract

HE most striking characteristic of what has been a marked deterioration T in transatlantic trade relations in 1982 is the coincidence of a number of serious trade disputes. The issues involved are by no means new. For years East-West trade and credit policy, steel and agricultural trade, as well as international monetary relations, have been issues on which Europe and the United States have exhibited divergent interests. Tensions on all these points at one time, however, have put a major strain on the cohesion of transatlantic trade relations. The causes for these growing tensions are diverse. A major factor has of course been the unfavourable international economic climate, but policies on either side of the Atlantic have also shown a divergent trend on the relevant issues. The Reagan administration, in particular, has shifted US policy on trade with the Soviet Union towards a more restrictive neo-containment approach. On economic policy President Reagan's firm commitment to less government intervention has also had implications for international trade and monetary relations. On the other hand European governments have persisted with their rather passive, low-key approach to the strategic relevance of East-West economic relations. On balance Europe has probably become more interventionist in its industrial policies, especially in its attempts to solve structural crises as typified by the steel industry, and has vainly, and with growing exasperation, called for US intervention to stabilise international monetary markets. The effect of all this has been to expose some underlying differences in transatlantic trade relations. Once exposed, differences on such issues are not easily resolved without raising sensitive questions about who takes the lead on any given issue in the Atlantic Alliance.' When it comes to tests of strength within the Alliance the existing channels of co-operation or consultation are clearly inadequate, as shown by the West's response to Poland, the Versailles summit and to some extent the steel dispute. With little confidence in the institutional means of resolving disputes there is a risk that disputes will escalate as one side or the other resorts to unilateral measures. If not contained