Toward a New Foreign Policy.

The New Transatlantic Agenda spawned a transatlantic business dialogue, but it has failed to produce an effective labor dialogue. Consumer and environmental groups are just beginning to be heard. The U.S. and EU should counter this asymmetrical structure with effective labor, consumer, and environmental dialogues. Existing groups, excluded from the U.S.-EU summit in Bonn in June 1999, found their suggestions soundly ignored, leading them to publicly criticize the summit as "a symbolic show of favoritism toward business interests."

Although sanctions remain the prerogative of national policymakers, U.S.-EU issues surrounding agriculture and technology are increasingly addressed in the WTO's multilateral framework. The EU has taken the initiative in defining an expansive WTO agenda, while the U.S. is more circumspect. America, as host of the Seattle round, seeks to focus on agriculture, the last bastion of EU protectionism and services. The U.S. also wants to discuss labor and environmental issues, a position that developing countries (given their generally weaker standards and structural disadvantages) oppose, worried that they will yield market access without getting new openings to markets in developed countries.

In response to these concerns, the EU has proposed that the WTO's new negotiating agenda not only include social and environmental issues but also duty-free access for goods from the developing world to the developed countries. Also on the EU wish list is the expansion of the WTO for investment and competition policy, though EU social and development proposals challenge the narrow, corporate-friendly globalization embraced by the United States. Yet the very developing countries these proposals are purported to help, such as India and Brazil, continue to oppose the inclusion of social and environmental issues in the new WTO agenda, fearing new forms of protectionism. In an interesting twist, the International Chamber of Commerce and the UN also oppose including such issues in the WTO. They feel it is the wrong setting, stating that "the rule-based multilateral trading system was not designed to address these non-trade issues."

If the U.S. wants to show global leadership, it can strive to ensure that consumer, labor, and environmental groups play a constructive role in setting the agenda. To do this, however, the U.S. position must change considerably toward genetically modified organisms (GMOs) and hormone-injected beef. Overreactions aside, there are genuine concerns both about genetically modified food and about the role of the U.S. government in promoting corporate interests despite potential health risks. Concerns about GMOs range from a recent variety of corn that reportedly kills Monarch butterflies to the potential for cross-pollination of nonmodified crops. The safety of hormone-injected beef has yet to be conclusively determined. Washington places the burden of proof on consumers to show that harm has been done. Despite success with WTO rulings on beef, the U.S. recently suffered a setback when the WTO found valid safety concerns regarding milk produced by cows injected with the growth hormone bovine somatropin (BST), which has been associated with breast and prostate cancer. Thus, Washington had to drop its suit to force the EU to allow importation of this milk.

Although European opposition has been the most vocal, Mexico, South Korea, and Japan have also begun to ban or regulate genetically modified food. Even U.S. baby food manufacturers Gerber and Heinz and pet-food producer lams have refused to use modified food. As more foreign buyers start refusing genetically engineered crops, U.S. farmers are beginning to question current policy. Consumer unease and market realities may oblige the U.S. to rethink the costs of promoting these products.

U.S. foreign policy should emphasize inclusive dialogue and should rein in domestic constituencies whose interests force the government into often indefensible positions, from unqualified support of hormonally and genetically altered food to politically motivated sanctions. The EU should neither be treated as a partner superpower with whom the U.S. can share the spoils of unfettered trade nor should it be underestimated as a subordinate global power. EU concerns about those left behind by globalization should compel U.S. policymakers to be more receptive to critics at home and abroad. And as U.S. negotiators wrangle with the EU over bananas, beef, and biotechnology in the WTO, they should keep in mind that more is at stake than the economic interests of the U.S. or EU. The resolution of these disputes is shaping the future of the global economy, for better or worse.

Key Recommendations

* Washington should actively support effective consumer, environmental, and labor dialogues to complement the successful Transatlantic Business Dialogue.

* The next round of the WTO should be broadened to include social and environmental issues as well as the concerns of developing countries.

* The U.S. should seek to build a working consensus around regulatory procedures governing genetically modified and hormone-treated foods.