FEB 4 1999

Superpower 301

THE decision by the United States to revive the Super 301 section of its trade law, which allows it to impose unilateral sanctions on countries which it considers guilty of unfair trade practices, is fraught with dangers in a world that needs more and not less cooperation between the major economic powers to avert a crisis in global capitalism. Of course, the fact that the US is the only superpower is not lost on anybody, but for it to behave like Superpower 301 may have ramifications that go beyond trade and touch on politics. The expiry of the Super 301 measure in 1997 appeared to mark the end of a phase of bitter disputes sharpened by the threat of unilateral action. However, President Bill Clinton has issued an executive order renewing the section, thus authorising US Trade Representative Charlene Barshefsky to impose sanctions for trade practices that affect US exports. Notwithstanding Washington's assurances that the provision is not targeted at any specific country, the stage appears set now for another round of disputatious relationships between America and some of its trading partners.

To be fair, several issues complicate US relations with the major partners. It accuses the European Union of placing Latin American banana producers at a disadvantage by providing preferential access to African, Caribbean and Pacific producers, and it says that Japan prices its steel at unfairly low levels. Korean trade officials fear the application of Super 301 in the context of US pressure on Seoul to open its markets to US goods in sectors ranging from cars and agriculture to steel and semiconductors. US Treasury Secretary Robert Rubin was blunt when he told the Senate finance committee: "Japan and Europe are far less open than the US. Trade should be not only open but fair, and this administration is committed to enforcing our trade laws fully to deal with unlawful practices." There is also the crucial issue of the US trade deficit, whose widening is causing concern in Washington. The Americans acknowledge that Asian countries trying to export their way out of the crisis will look to a US whose healthy economy makes it an even more attractive market in these desperate times. However, they are worried about protectionist sentiments on the ground should imports, made more competitive by lower Asian exchange rates, hurt American industries and jobs seriously.

These are understandable concerns: The problem lies with the US using Super 301 as a means for pushing its interests. The measure's unilateral power goes against the grain of multilateralism embodied in the World Trade Organisation (WTO), whose dispute-resolution mechanism is meant to ensure precisely that countries can seek resolution of their grievances without taking recourse to one-sided measures that invite retaliation from the other side. The decision to revive Super 301 not only detracts potentially from the salience of the WTO regime but also, at a time of economic uncertainty such as this, can raise questions about the direction of the global economic system. The last thing the world needs is growing disagreement between the US, Europe and Japan over the terms of play. At stake is not only the economic balance of power between them but also, ultimately, the political shape of the world emerging in the next century. The three should ensure that nothing disturbs the fundamental ties that bind them. The US, as the sole superpower, should lead the way. Super 301 is less important than exemplary superpowerhood.