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The European connection.

The European Connection

Politics, author Pat Choate, concludes in Agents of Influence, is the hidden dimension of competition, as crucial to success in the global marketplace of the 1990s as producing first-class goods and services.

Choate's controversial new book uncloaks the powerful lobbying operation Japanese companies have painstakingly assembled to advance Japan's political and economic agenda - in the halls of Congress and in state legislatures across America.

Choate's prescription of containing this sinister new threat is simple and straightforward: Reinvigorate our traditional civic virtues of integrity and patriotism and, equally important, forge closer links between American companies and American political institutions.

This advice, while sound, is curiously incomplete. American business competes in a global - not a national - marketplace. If there is one particular painful lesson the Japanese have taught us during the past decade, it is that no company hoping to prevail in global competition can afford to retreat from any significant segment of the world market.

If a major overseas market is abandoned, foreign competitors can then use it as a high-margin sanctuary from which to launch innovative new products, often at subsidized prices. This basic tenet of global economics applies with full force in the realm of politics as well.

Beyond Capitol Hill

It is not enough for American companies and trade associations to achieve lobbying prowess on Capitol Hill. Tokyo and Brussels - the other great poles of political power - must be dealt with as well. Brussels, in particular, is emerging as a crucial battleground for American companies and their trade associations.

Brussels is the capital of the European Community, a vibrant, fast-growing market of 342 million consumers. By the end of 1992, if all goes well, the EC will become the largest single market in the world, dwarfing both the United States and Japan and transforming the economic landscape of Europe.

Barriers to intra-EC competition will be eliminated. Consumer prices will fall and consumer spending will grow. The rate of growth of the EC economy as a whole will increase dramatically in response to the "supply-side shock" that the removal of trade impediments will create.

Consequences for Exporters

This economic transformation will have important consequences for American exporters. The completion of the single market entails the harmonization of a vast range of environmental rules, procurement regulations, domestic content requirements, and other standards for products and services.

It is already abundantly clear that this harmonization effort will not lead automatically to a lowering of trade barriers between the EC and non-EC countries. Indeed, there are indications that in at least some sectors, such as semiconductor fabrication, for example, the result of EC integration may be the growth of a "Fortress Europe" mentality.

However, the evidence is beginning to mount that intensive European-style lobbying can reduce or eliminate nontariff barriers, independent of such other means as intervention by the U.S. trade representative. The EC's withdrawal of its proposed bank reciprocity rule and of its proposed prohibition on certain franchiser-franchisee contractual provisions are examples of recent lobbying successes by U.S. interests.

What qualities distinguish effective European-style lobbying? "Euro-lobbying" has special characteristics that derive partly from the EC's complex institutional structure and partly from the distinctive culture of legislative advocacy in Europe.

Political action committees, for example, play no role in Brussels - at least so far. Low-key, fact-based presentations that stress the consistency of a particular viewpoint with the larger goals of European integration tend to be well received. On the other hand, swaggering hardball played by foreign interests is doomed to failure.

A High-Stakes Game

Lobbying in the European community is an extraordinarily high-stakes game for the United States. The EC is not only the nation's most important trading partner but also the market that has contributed most significantly to recent reductions in the U.S. trade deficit.

Keeping the European market fully accessible to American exports must be a vital U.S. goal, ultimately as important to the nations as arms control or protecting Mideast oil supplies. Private-sector legislative advocacy in Brussels can be a key component of a concerted national effort to keep the European market open. Indeed, effective Euro-lobbying by American companies and their trade associations can enhance U.S. diplomatic initiatives and accomplish competitive goals unachievable by other means.

Need for Permanent Presence

While many American trade associations have Brussels-based consultants, attorneys, or advisers, very few currently maintain a permanent presence in the capital of the EC. This imposes a distinct handicap on U.S. industry groups - particularly those in electronics, software, biotechnology, and other leading-edge sectors with large numbers of relatively small companies.

Retaining a Brussels-based consultant is simply no substitute for being there. "Eurocrats," who prefer to deal with knowledgeable principals, will listen more intently to presentations from genuine industry experts, foreign or domestic, than to comments from "hired guns."

Eurocrats like to receive input in the form of broadly representative industry views. No single foreign-owned company, except, perhaps, for the very largest European companies of American percentage, can hope to duplicate the clout and influence of a respected foreign trade association.

While broadly focused business organizations like the Chamber of Commerce of the United States and the National Association of Manufacturers, both of Washington, D.C., provide valuable input to the European Community on a range of issues that affect large segments of American business, they cannot be expected to achieve the issue-specific expertise of sectoral associations.

As EC expert Michael Calingaert wrote recently, "In many respects, associations can do the best job of protecting and promoting U.S. business interests in the European Community. This is because the issues are, to a large extent, sector-specific."

Accordingly, a priority for U.S. sectoral trade associations should be to establish permanently staffed lobbying outposts in Brussels. Nothing less than the competitiveness of American industry in the European market is at stake.

James N. Gardner is the author of the new book Effective Lobbying in the European Community, from which the above article is adapted. He chairs the government relations and lobbying department of Lindsay, Hart, Neil & Weigler, a law firm in Portland, Oregon, Reprinted from Leadership, 1991, copyright ASAE.
COPYRIGHT 1991 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Gardner, James N.
Publication:Association Management
Article Type:column
Date:Mar 1, 1991
Words:1017
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