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It used to be that the way America threw around its military
might was what perturbed our allies. Now, it seems, it's the way we
do business that rankles.
A perfect example surfaced late last month when Washington got
into tiffs with two of the United States' most important trading
partners, and very nearly a third, over what could be called the
corn syrup corollary.
This unwritten tenet of United States economic policy goes
basically as follows: "Do as I say, not as I do."
The corollary refers specifically to the 1993 negotiations that
led to the North American Free Trade Agreement. Worried that sugar
produced in Mexico's ancient refineries would flood the United
States, an inventive Congress decided to count corn syrup as sugar
in determining the level of Mexican sugar exports that would trigger
tariffs.
This verbal alchemy came at a time when President Clinton was
badgering Mexico to drop its own trade barriers. Mexico's economy is
one-twentieth the size of America's, and Mexicans resented what they
saw as pure protectionist posturing. But they felt they had no
choice but to enter Nafta. The United States sugar lobby was happy,
even though as recently as this month it has continued to lobby
against Mexican exports.
The corn-syrup-for-sugar swap set a pattern that has dismayed
allies and trading partners alike. Consider the European Union,
which has been in high dudgeon since late July when the United
States Senate threatened to block Deutsche Telekom's $50.7 billion
acquisition of a rookie American cellular telephone company, the
Voice Stream Wireless Corporation.
The United States Senate is concerned about Deutsche Telekom's
family tree. The German government still owns about 58 percent of
the giant telecommunications company, which was totally state
controlled until 1996. Several key senators worry that any company
even partially owned by a foreign government would have unfair
competitive advantages when it comes to raising capital. They also
have concerns about national security.
But the VoiceStream deal would reduce the German government's
stake in Deutsche Telekom to 45 percent, and the company says that
the government stake will continue to dwindle through subsequent
acquisitions or through government sell-off of its shares.
For their part, the Germans suspect the United States is trying
to shield its domestic telecommunications industry. They are backed
by their cohort in the European Union, who say that restrictions
against Deutsche Telekom violate commitments the United States made
to the World Trade Organization a few years ago to keep its
telecommunications market open to all. The European Union has
threatened to retaliate.
Riordan Roett, a corporate consultant and director of the Western
Hemisphere program at the Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University, said the reason
for the contradictions in United States economic policy was "as
simple as catering to special interests," with little regard to
the effect such zigzags have on the nation's trading partners.
"In their night of nights, in the dark of their dark, they
probably understand what they're doing in Washington,"
Professor Roett said. "On a case-by-case basis, they
rationalize this strategy by saying they are defending U.S.
interests from the dark forces that come from outside. They say they
don't see the contradictions in that position, but they have
to."
To clear things up, those Beltway insiders probably should take a
second look at what happened at the end of the same week sabers were
rattled against Deutsche Telekom. A few days later, Charlene
Barshefsky, the United States trade representative, and President
Clinton's enforcer on international commerce, took the first steps
toward hauling Mexico before the World Trade Organization.
The charge? Well, looky here: Failing to live up to commitments
Mexico made to the W.T.O. to keep its telecommunications sector open
to competition. The same charge, in other words, that the Europeans
are making against the United States.
In this case, it seems clear that Ms. Barshefsky is carrying
water for big American telecommunications companies that are
fighting for market share in Mexico, while key members of Congress
are trying to ward off Deutsche Telekom in the United States market.
AT&T and WorldCom accuse Mexican regulators of being soft on
Teléfonos de Mexico, which, like Deutsche Telekom, is a former
state-owned monopoly. They say that as Mexico's telecommunications
sector has been deregulated -- partly because of Nafta -- Teléfonos
de Mexico continues to dominate the market.
Ms. Barshefsky said there was no doubt Telmex was thwarting
competition by greatly overcharging for connections to the local
grid and refusing to provide the high-speed lines that competing
companies need to offer Internet services.
"The situation is intolerable," she said rather testily
during a conference call with reporters to announce the action
against Mexico.
Mexico now must explain itself before the W.T.O., and if the
problems cannot be resolved, Ms. Barshefsky will file a formal
complaint against Mexico, which is the United States' second-largest
trading partner after Canada.
Mexico insists it has met all its commitments to the W.T.O. Jorge
Nicolin, director of the Federal Telecommunications Commission of
Mexico, said Ms. Barshefsky was protecting the interests of American
companies, not the principles of free trade.
In the same week, the United States offended the Europeans and
angered the Mexicans, the corn syrup corollary was invoked by yet
another United States ally. At a hearing before the subcommittee on
the Western Hemisphere of the House Committee on International
Relations, Brazil's ambassador reminded United States officials that
globalization and free trade were not a one-way street.
"Reciprocity is the name of the game," said Rubens
Antonio Barbosa, the ambassador.
Despite Washington's avowal that free trade is the foundation of
prosperity and peace, Mr. Barbosa told the panel, an arsenal of
trade barriers impedes the entrance of 80 major Brazilian products
-- including sugar, shoes, steel and frozen orange juice -- into the
United States.
The list of American barriers he rattled off is formidable:
"Tariff peaks, retaliatory threats, antidumping and
countervailing measures, quotas, safeguards, voluntary restriction
agreements, restrictive technical norms, sanitary and phytosanitary
measures and increasing domestic subsidies."
The ambassador wondered out loud how the United States could
defend such a battery of trade restrictions while pushing for the
creation of a Free Trade Area of the Americas by the year 2005.
The answer, if anyone were willing to give it, would sound a lot
like the corn syrup corollary.
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