Steel Tariffs and Crafty Diplomacy: Lessons To Be Learned

Last week's showdown between the U.

Last week's showdown between the U.S. and Europe over the Bush Administration's steel tariffs points to a new dynamic in multilateral relations.   When Europe vowed to retaliate against Bush's levies by targeting industries in battleground states for the 2004 Presidential election, it hit the Administration where it hurt.  The move was gutsy, and it worked, prompting Bush to rescind the tariffs despite howls from the steel industry. 

Europe's move-crafty, well-planned and boldly executed-exemplifies the type of clever maneuvering that can allow a country or group to advance its interests in the unpredictable, often uncontrollable arena of multilateral affairs.  Though the Bush Administration may deny having been checkmated, it should take careful note of what Europe pulled off and adopt similar tactics to advance America's interests next time.

When President Bush announced in March, 2002 that he intended to slap a tariff on steel, the move was seen as an election-year ploy, designed to shore up Republican support in the Rust Belt at the expense of European steel-makers.  But Europe did not sit back.  By the time the WTO rendered a final judgment in their favor, more than eighteen months later, trade officials were ready.  Through research and methodical planning over more than a year, they had built a package of retaliatory measures targeted at Florida citrus, Carolina textiles and other industries in key swing states.  The mere threat of such measures elicited a turnabout from the White House, which moved last Friday to withdraw the tariffs. 

Though European Trade Minister Pascal Lamy's gloating over the triumph was unseemly, it was also understandable.  After a long year of failing to rein in the U.S. through international forums and treaties, Europe succeeded.  Moreover, watching steel duties, the Middle East peace process, and the Iraqi election timetable hinge on the U.S. political calendar, Europe had managed to turn the unavoidable influence of American politics on global affairs to its advantage.

Now that Europe has an apparent winning strategy, it won't let go anytime soon.  This weekend, it announced plans to target the very same swing states in a new initiative aimed at ending what it views as another form of unfair trade, American corporations that are technically headquartered in the Bahamas, Cayman Islands and other tax havens.

Rather than ignoring or denouncing Europe's strategy, the U.S. should recognize the move as marking the maturation of multilateral trade relations and consider carefully its implications for America's own diplomacy.  The U.S. rarely plans its multilateral moves a year, or even months, in advance.  We are ambivalent about multilateral bodies and convinced that the unwritten rules of power relations ought to win us the day, whether or not other countries agree.  We therefore, very often, go into multilateral debates without any strategy or plan. 

The ongoing Iraq debate offers many examples.  By the time we sought an initial UN resolution to reinstate inspectors in September 2002, it was obvious to many that we had begun the process too late to allow the cat-and-mouse game of inspections enough time to play out before the warm spring weather made it too late to invade.  Had we started earlier, the Administration might have achieved consensus for military action.  This fall's quest for Security Council support for the postwar operation led to an empty victory:  a consensus resolution that yielded precious little by way of foreign troop or financial commitments.  Better planning and more careful diplomacy might have ensured that, in return for ceding some power to the UN, we actually got the help we needed.

The collapse of the recent rounds of trade negotiations in Cancun and Miami, followed the same pattern of poor preparation and unsatisfactory results.  The American failure to plan or lead culminated in a paralysis that hurts, above all, us.  We lost out both in terms of free trade, and because, as the world's foremost economic as well as military superpower, we are blamed for global initiatives that go awry.

Three steps are needed to shift America's strategy from come-what-may, often blustering ill-preparedness for multilateral negotiations to one calculated to advance America's interests. First, we need to recognize, once and for all, that we are in forums like the WTO and the UN to stay.   As maddening as they may be, we are not about to walk away. Step two, a corollary, is advance planning; thinking through priorities ahead of time and carefully analyzing whose support we will need on key issues and how to get it. 

The third step is marshalling our diplomatic infrastructure for effective retail diplomacy.  If we had spent the last few years quietly building our case against Saddam in capitals around the world, the call for invasion would not have seemed sudden or hasty.  As the steel tariff case illustrates, the rest of the world may sometimes be able to get its way simply by out-flanking the U.S.  We, most often, need to influence multiple, even dozens of countries to win the day.  Fortunately, our network of ambassadors, and economic relationships worldwide positions us better than any other country to orchestrate mass support by figuring out what matters to each key player in the debate, and how the U.S. can influence it.  We have the resources but rarely mobilize them fully on multilateral issues.

The Administration justified its about-face on the steel tariffs by claiming the measure had simply run its course.  While its fine to save face by denying that America was out-maneuvered, the next time we face high stakes in the multilateral arena, the U.S. had best have planned some better maneuvers of its own. 

 

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