Jan 29, 1993
UNITED STATES: GIVE PRIORITY TO WORLD ECONOMY, EXPERTS SAYWashington, Jan 27 (IPS) -- Now that the cold war has ended the world economy and international trade should be Washington's foreign policy priorities, financial experts told a US Congressional hearing Wednesday. Security matters have lost the importance they had a decade ago, while opening up markets and developing the world economy are becoming high-profile issues, said Maurice Greenberg, President of the American International Group, an insurance consortium. However, Fred Bergsten, who heads the Institute of International Economy, warned that the new situation in the world has caused the influence of the United States to wane. This, he said, has made crucial negotiations like the Uruguay Round of Trade Negotiations at the GATT more difficult to conclude. The experts analysed the economic challenges the United States faces in the post-cold war era at a session of the U.S. House of Representatives' Foreign Affairs Committee. The meeting was part of a series of encounters being held to define Washington's diplomatic agenda for the coming years. Greenberg proposed that, to take advantage of the economic advantages of this era, the role of espionage agencies should be modified. They should be made to seek economic and trade information which would be used to increase the competitiveness of US firms on the international market, he argued. He added that economic intelligence will become just as important for the United States in the coming years as military intelligence used to be in the cold war era. Immediate priorities should include the conclusion of the Uruguay Round, he proposed, warning that the United States could not afford to admit failure in this sphere. The successful conclusion of the Round, begun in 1986, considered crucial to a freer international trade flow, risked running aground because of the divergences on farm subsidies between the United States, on the one hand, and the European Community (EC) and Japan, Bergsten said. While the United States and the EC had, in principle, ironed out their differences in this sphere, with the Community agreeing late last year to gradually reduce its agricultural subsidies, France has not accepted the agreement. And Japan still keeps its rice market closed. The economic analyst said the Uruguay Round would not have faced the same problems during the cold war, when the Western countries avoided exhibiting their trade disagreements in front of the socialist bloc. An additional factor, he said, was that with the disappearance of security priorities, Europe and Japan had ceased depending on Washington for their defence and have become economic powers. As a result, the United States has lost influence and all this is at the bottom of the low level of success of the United States' international economic policy in recent years, Bergsten pointed out. Bergsten feels that a first symptom of this failure is the fact that international markets have not grown, especially Japan's, and that the United States has been powerless to change this trend. And while Washington was able to negotiate the NAFTA successfully, the Uruguay Round continues to totter on the brink of failure. However, the economists gave US President Bill Clinton kudos for basing his diplomatic thrust on economic recovery, while they highlighted the need for the United States to recover its international leadership role.