IS the world fated to split into three huge trading blocs -
Europe, North America, and East Asia?
To some, the prospect is a nightmare; to others, an opportunity.
I would have to place myself among those who, like former Federal
Reserve Board Chairman Paul Volcker, are troubled by "this vision of
a tripolar world."
The nightmare school believes that Europe, the United States, and
Japan enjoy affluence today in large measure because of the
progressive lifting of global trade barriers since World War II.
They see further growth endangered by protectionism and by retreat
into "fortress" mentalities.
Those who want the blocs are mostly protectionists who say that
the US should look to its own defenses through free trade agreements
with Canada, Mexico, and perhaps others in the New World. The
European Community is already a trading bloc. Japan, which has
benefited the most from free trade, has been indecisive and slow in
opening its own markets. It has yet to respond to a proposal from
Malaysian Prime Minister Mahathir Mohamad for an East Asian Economic
Group that would include Japan while leaving the US, Canada, and
A Washington think tank last week launched an initiative to
defuse the seemingly inexorable buildup of trade tensions and
competing blocs. The organization, which has the unwieldy title of
"Commission on US-Japan Relations for the Twenty-First Century," is
primarily concerned with US-Japan relations, but looks on the entire
Pacific Basin as a region in which Tokyo and Washington could enjoy
a cooperative rather than a competitive relationship.
The initiative was aired at a conference chaired by Edson
Spencer, former CEO of Minneapolis Honeywell. Mr. Volcker was the
keynote speaker, and economist Lawrence B. Krause gave a provocative
paper entitled "Can the Pacific Save the US-Japan Economic
"The forces of economic regionalism are gathering strength,"
Volcker told the conference. Professor Krause proposed that these
forces be deflected and US-Japan tensions be defused by establishing
a broader framework for trans- Pacific relationships.
The 15 countries of the Pacific Basin, including the US and
Japan, have the most dynamic and growing economies in the world,
Krause said, and already have close economic relations. In 1988,
65.7 percent of Pacific Basin trade was among Basin countries,
whereas intra-EC trade was somewhat less, 58. …