US and Japan size up new kid on the block
Western Europe is gearing up to compete economically on a united front with the US and Japan. In the last of a four-part series, John Yemma looks at whether as these 12 nations lower their internal barriers, they will become more open to world trade. ``Fortress Europe.''Skip to next paragraph
Subscribe Today to the Monitor
It's a loaded term, evoking images of Europe's coastlines bristling with cannons and bunkers to hold off the outside world.
``Fortress Europe'' is the catch phrase to describe the worst fears of free traders about what might happen when the 12 nations of the European Community (EC) unite as a single market in a phased-in program running up to 1992.
``When the inside walls fall,'' a United States diplomat in Europe worries, ``the outside walls could rise.''
European political and business leaders say they understand the concern. But they point out that it will do Europeans little good to create a competitive domestic market and then block off their companies from international commerce. Notes Helen Wallace of the Royal Institute for International Affairs in London: ``It would be ridiculous to liberalize internally to get more efficiency and then put a wall around Europe.''
Jean Paul Tranthiet in France's Ministry of European Affairs sees ``legitimate fears outside the Community'' and notes that the actual policies of the Community are not yet determined.
``But at the base of the Community,'' he says, ``the philosophy is not protectionistic. Europe wants an open market, but it must be conditioned on the Japanese opening their market and the US not closing its market.''
Access to the 325-million person European consumer market, with the second highest gross domestic product in the world, could become a powerful tool in the hands of Europeans. On a recent trip to Washington, Lord Francis Cockfield, vice-president of the European Commission, noted ``anxiety in Europe'' about recurring attempts to pass protectionist legislation in the US Congress. His implied message: Congress should consider the consequences in Europe of any new US trade protection.
They are important consequences. The EC is the US's most important trading partner - ahead of Canada and Japan - when two-way sales and sales of subsidiaries are considered. The US Commerce Department estimates this economic relationship at $1 trillion - good reason for US trade officials to keep a weather eye on Europe-1992.
Charles Ludolph, director of the US Commerce Department's office of European Affairs, says most aspects of the 1992 program look positive for US companies. He is concerned, however, that the devising of Euro-standards for products such as electrical equipment, computers, and software could present new problems for US companies if the standards become more restrictive.
Mitsuo Takii of the Japan External Trade Organization's New York office says there is modest but growing concern in Japan that 1992 could make Europe more closed to Japanese exporters. Japan's concern is intensified, he says, by the new US-Canada free-trade agreement, which would create another huge, integrated trading bloc with potential protectionist tendencies.
The worst case for Japan would be to get locked out of both trading zones. Although the Japanese government has talked of the East Asian market as a ``Pacific Economic Community,'' there is currently no push in this direction. For this reason, overall ``liberal world trade is still the most important to Japan,'' Mr. Takii says.
Nevertheless, showing how European you are is a common strategy today, especially with Japanese companies. Sony, for instance, recently marked the 15th anniversary of its factory in Britain. It emphasizes its Queen's awards for exporting from Britain and the Sony brand wine produced in a vineyard it owns in France.