Abstract
Throughout the postwar period, the United States was accustomed to being master of its own economic fate. As the world’s predominant economic power, America had the ability to mobilize other industrialized economies in time of crisis and to act unilaterally if necessary to protect its interests. But Washington and New York, once the world’s preeminent political and financial capitals, must now share the spotlight with Tokyo, Bonn, Frankfurt and London. In this new multipolar economic world, the United States is still the first among equals. But it no longer has the economic leverage to dictate the course of events. Leadership has of necessity become a collaborative effort. European and Japanese economic and political concerns now place real limits on U.S. action. The U.S. economy and American economic decision-making must now be adapted to an emerging global economy that no longer revolves around the United States.
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Endnotes
See C. MICHAEL AHO (1990), Critical Issues: U.S. Trade Policy at a Critical Juncture, New York: Council on Foreign Relations, No. 3, for an examination of unilateral, bilateral and multilateral trade initiatives by the United States. Significant portions of this paper are derived from the aforementioned.
Financial Times, March 24, 1990, p. 3. The Italian Trade Minister, Renato Ruggiero, was speaking at a conference sponsored by the Confederation of British Industry and the Royal Institute of International Affairs in London. He went on to accuse the European Commission and fellow ministers of neglect and a lack of leadership on the multilateral talks.
Much of this is drawn from a testimony “On Europe 1992” before the House Foreign Affairs Committee, February 23, 1989. For an excellent overview of U.S. interests in the 1992 integration effort as well as sectoral analyses, see GARY C. HUFBAUER, ed. (1990), Europe 1992: An American Perspective, Washington, DC: The Brookings Institution.
The wide range for estimates for growth in national income depends upon the assumptions made for investment spending. For a review of the estimates, see RICHARD BALDWIN (Fall 1989), The Growth Effects of 1992, Economic Policy.
See RUDIGER DORNBUSCH (September 12, 1989), Is there a Case for Aggressive Bilateralism and How Best to Practice It?, Brookings Trade Conference, for an advocacy of bilateral trade agreements but without an explicit recognition of many of the drawbacks noted below. For a proposal for a U.S.-Japan bilateral, see SENATOR MAX BAUCUS (1989), A New Trade Strategy: The Case for Bilateral Agreements, Cornell International Law Journal, 1.
For an extended analysis see C. MICHAEL AHO (1989), More Bilateral Pacts Would Be a Blunder: What the New President Should Do, Cornell International Law Journal, 1, and JEFFREY J. SCHOTT (1989), More Free Trade Areas?, Washington, D.C.: Institute for International Economics.
See C. MICHAEL AHO (Winter 1987), The Uruguay Round: Will It Revitalize the Trading System?, The Fletcher Forum, Vol. II, No. 1.
In addition to Senator Baucus’ proposal for a bilateral with Japan, Representative Richard Gephardt had proposed a bilateral with the European Community. Address by REPRESENTATIVE RICHARD GEPHARDT (October 12, 1988), United State Trade Policy for the 1990s, George Washington University Law Society. For a discussion of tactical problems of a bilateral with Japan, see Aho (1989), More Bilateral Pacts Would be a Blunder.
See C. MICHAEL AHO and SYLVIA OSTRY (1990), Regional Trading Blocs: Pragmatic or Problematic Policy?, in: William E. Brock and Robert D. Hormats, eds., The Global Economy: America’s Role in the Decade Ahead, New York: W.W. Norton & Co.
See C. MICHEAL AHO and JONATHAN ARONSON (1987), Trade Talks: America Better Listen!, New York: Council on Foreign Relations, for a more complete treatment.
The President’s chief advisory committee, the Advisory Committee for Trade Policy and Negotiations, chaired by James Robinson III, the chief executive officer of American Express, has already voiced its dissatisfaction and impatience by calling for a “results-oriented” trade policy vis-a-vis Japan in its report to U.S. Trade Representative Carla Hills on February 10, 1989.
See SYLVIA OSTRY (1990), Governments and Corporations in a Shrinking World: Trade and Innovation Policies in the United States, Europe & Japan, New York: Council on Foreign Relations Press, p. 89.
See GARY C. HUFBAUER (Winter 1990), Beyond GATT, Foreign Policy, for a proposal for an OECD free trade area.
Much of this section is derived from my testimony before the Joint Economic Committee, June 21, 1990 and from a draft chapter from a forthcoming book on the European Challenge by myself and Bruce Stokes. See also Aho and Stokes (1990/91) The Year the World Economy Turned, Foreign Affairs, Vol. 70, No. 1.
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U.S. Treasury Bulletin (1990). For an analysis of U.S. dependence on foreign capital, see C. MICHAEL AHO and MARC LEVINSON (1988), After Reagan: Confronting the Changed World Economy, New York: Council on Foreign Relations.
J. DELORS (1989), Report on Economic and Monetary Union in the European Community, European Community.
George Alogoskoufis and Richard Portes (June 1990), International Costs and Benefits of EMU, Centre for Economic Policy Research, Discussion Paper Series, No. 424, London.
For a discussion of objective indicators and target zones, see JOHN WILLIAMSON and MARCUS MILLER (1987), Targets and Indicators: A Blueprint for the Intended Coordination of Economic Policy, Washington D.C.: Institute for International Economics.
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Aho, M., Saxonhouse, G.R. (1992). Global Economic Rivalry: New Perspectives on Germany (the EC), Japan and the United States. In: Welfens, P.J.J. (eds) Economic Aspects of German Unification. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-97379-6_13
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