Euro Clash

Removing tariffs is easy. Breaking down social barriers to trade is hard.

The GMO Monster Tomato Tour kicked off last November in Brussels, outside the European Council building. During the following month, members of the environmental group Friends of the Earth Europe rolled the giant inflatable fruit around the continent, with stops in Paris, Madrid, and Budapest, among other cities. Problems in Warsaw with the air compressor aside, the tomato’s menacing visage helped the environmentalists send a clear message to the world: Keep genetically modified food out of Europe.

That message resonates over there. Europeans, it seems, are far less sanguine than Americans about eating genetically modified organisms (GMOs) — so much so that the European Union banned GMOs until last month. That squeamishness prompted the United States to file suit against the EU in the World Trade Organization last May.

“This is not a classical 20th century trade dispute,” argues Maria Aranzazu Gonzalez Laya, trade spokesperson for the European Commission. “It’s a 21st century trade issue. It’s about values, it’s about what is risky and what is not risky.”

Indeed, the GMO quarrel may signal a new stage in transatlantic trade relations. As obvious trade barriers such as tariffs, quotas, and subsidies fall, left standing are more complex obstacles — differing regulatory regimes, standards, and values.

Such issues may prove to be much more intractable than tariffs. And that’s troubling. With the ebb of Cold War cooperation and the rise of Iraq War fractiousness, trade has been touted as the glue that holds the United States and Europe together.

Indeed, U.S. and EU trade representatives often downplay such trade disputes as representing only a small fraction of the transatlantic total. The bilateral trading relationship between the United States and the EU, which is about to add 10 more nations to the fold, is by far the largest in the world.

But the GMO spat and other disputes — especially ones that reflect a sense of national identity — are political tinder boxes. And they threaten to ignite during election years, like this one. That means they represent a greater threat to business stability than numbers would otherwise suggest.

Conventional Battles

Even on traditional trade issues, relations between the United States and the EU are at an all-time low. “I’ve been more worried about that relationship [with Europe] than any other one we have,” says William A. Reinsch, president of the National Foreign Trade Council, a Washington, D.C.-based lobbying group for U.S. multinationals. “The EU has been very aggressive about complaining — even in situations where they are hard-pressed to demonstrate they have been hurt.”

Since the WTO was founded in 1995, the United States has initiated more disputes — 75 — than any other country. And it has won most of them, as plaintiffs generally do. Three years ago, its role as free-trade crusader was epitomized when it won a contentious battle over the EU’s banana tariffs. Since then, however, the United States has been uncharacteristically passive about initiating claims. As a result, it has more often been the defendant, and, thus, the loser.

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