WorldCity Business Magazine

Europe's new trade czar preps for battle

by Jeffrey Sparshott

The United States and European Union share the biggest trade and investment partnership in the world. They also engage in some of the nastiest fights.

Fallout from spats over beef hormones, bananas, genetically modified crops, tax breaks, steel tariffs, anti-dumping duties, not to mention Airbus and Boeing subsidies, have damaged plenty of businesses on both sides of the Atlantic and threaten billions of dollars more in trade sanctions. Florida, an electoral swing state, is a favorite target of the Eurocrats—citrus imports from the Sunshine State would have been hit with sanctions had President Bush not lifted steel tariffs.

Thankfully, the spats have not been allowed to develop into full-blown war. Stabilizing the trans-

Atlantic relationship are myriad shared global interests, as well as multilateral institutions such as the World Trade Organization and, for more than three years, the two counterpart trade czars U.S. Trade Representative Robert Zoellick and E.U. Trade Commissioner Pascal Lamy.

The two men have spoken up loudly and clearly on behalf of their respective governments. But the two also have a longstanding relationship that has allowed them to maintain their friendship and work together to overcome some daunting challenges. Now, however, at least one of them, perhaps both, is gone.

Lamy was replaced by Peter Mandelson, who was scheduled to take office on November 1 as part of a regular rotation in Brussels. Zoellick has remained coy about what he would do in a second Bush administration—new political appointments and private opportunities are possibilities. Of course, he won’t have a choice if, by the time you read this, Mr. Bush has lost the election. Either way, the personal bond that helped strengthen the institutional structure will be gone.

Zoellick and Lamy were, in some ways, an odd couple—an Illinois native and proponent of American- style capitalism bonding with a French socialist born in Paris’ suburbs. But the two technocrats shared a passion for long-distance running, trade policy and hard work. They managed to forge a close working relationship.

It was largely through their efforts that the WTO’s latest round of talks, the Doha Development Agenda, was launched in 2001. The two kept talks on track with a joint U.S.-E.U. proposal on agriculture last summer, then watched as a clash with defiant developing nations almost scuttled the multilateral trade round last fall. This summer, the two played an important role reviving the negotiations. In October, they said so long.

Zoellick stopped in Brussels for an exchange of gifts and one last run. The American offered an atlas and a White House running suit, the Frenchman proffered a cartoon of Zoellick wearing a superhero’s cape, riding a bull, a banana in one hand, being buzzed by airplanes – with a field of (biotech?) crops in the background. The humor might not get much of a chuckle outside the insular world of trade policy wonks. But it is such a sense of humor that can help bruising battles from becoming personal.

Those issues will remain for Mandelson, a founder of Britain’s New Labor movement and a friend of Prime Minister Tony Blair, and either Zoellick or his successor. Mandelson’s term will run until 2009. “Further strengthening and developing the EU’s vitally important trade relationship with the United States will be among my high priorities”, Mandelson told the European Parliament at his confirmation hearing in October. “The economic significance of the relationship is huge, to both the E.U. and the US: we have to be both positive and, where necessary, robust.”

Robust indeed. The word has many meanings—from strong and healthy to coarse and boisterous. The Airbus-Boeing fight has recently veered toward course. The Bush administration fired first with a WTO case accusing European governments of doling out obscene subsidies to the planemaker. Europe shot back the same day. The litigation may heat up and spill over into other disputes, or may be settled through negotiations in a calmer time—after the elections.

Zoellick and Lamy were in it for the long run. Businesses in American and Europe should hope they hand off the baton to men equally committed, and equally able to jump some ferocious hurdles.