America the Almighty Throws Down Reform Challenge to Europe ; NEWS ANALYSIS the Forum's Message Seems to Be That the American Way Is Best, but the Shadow of Seattle Hangs over the Self- Congratulations

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AMERICANS don't need to be triumphalist about their economic model any more. They know they are on top, and everybody else does too. I've been coming to the World Economic Forum annual meeting in Davos, Switzerland, for five or six years now, and every year the dominance of all things American in business, markets and economic policy becomes that little bit more all-embracing.

With the US model now reincarnated as the dot.com revolution, or the "new economy", final victory was this year made complete. American executives, entrepreneurs and policy makers have been centre stage throughout the sessions at this exclusive business conference, held in the snow-bound Alpine ski resort of Davos.

No one can doubt the supremacy of their economy, their technology and their companies. Even the Europeans have come largely - albeit reluctantly - to agree that the American approach of open markets, flexible labour and free trade seems to produce more innovation, more jobs and more prosperity than any of the alternatives. The American way is the best way, possibly the only way, is the message that echoes along the corridors of the WEF's labyrinthine conference centre.

In the self satisfied environment of this dazzling concentration of business leaders, only the still recent events of Seattle, when riots brought trade talks aimed at further liberalisation of international markets close to collapse, serves as a reminder that not everyone agrees. Among policy makers, real concern was expressed about the alienation over the process of globalisation felt by parts of the developing world, and by some groups within prosperous Western countries. Tony Blair, the Prime Minister, referred to "an enormous job to do to convince the sincere and well-motivated opponents of the World Trade Organisation agenda that the WTO can be, and indeed is, a friend of development, and that far from impoverishing the world's poorer nations, trade liberalisation is the only sure route to the kind of economic growth needed to bring their prosperity closer to that of the major developed countries."

There was a similar message from President Bill Clinton, who urged business leaders to fight the backlash against free trade and open markets with a new inclusive approach to commerce and wealth distribution. Those that fear the process will lead to a deepening of inequalities between richest and poorest must be listened to, the President said. "The consequence of opening up the dialogue and dealing honestly with these issues will show that in the new economy, we can have more growth, and more trade, as well as better treatment of those in work and more sensible environmental policies", Mr Clinton insisted.

Business leaders expressed dismay that they had failed to get the free trade message across with sufficient vigour. Lewis Campbell, chairman of Textron, said; "We have to admit that we have not created a guiding coalition to make global free trade a reality. Too often we use factual dry arguments, but our opponents use emotion - fear of losing jobs, destruction of environment, or dominance by impersonal global machinery in which they have no say."

Mike Moore, the new director-general of the WTO, agreed. "There is enormous anxiety out there and for some reason the WTO is copping the blame for everything that goes wrong. Globalisation has become the "ism" to hate, that's the problem," he said.

However, the problem exercising European business and political leaders most is closer to home - how to catch up with the booming new economy of the US. Europe is growing again, and despite the embarrassing collapse of the euro in the currency markets, there is a renewed sense of confidence and a determination to change. I think for the first time since I've been coming to these meetings, there is an overwhelming consensus around the need for root-and-branch structural reform and - perhaps as significant - for a change in culture and approach among businesses. …