C. Fred Bergsten

The Dollar and the Euro

The creation of a single European currency will be the most important development in the international monetary system since the adoption of flexible exchange rates in the early 1970s. The dollar will have its first real competitor since it surpassed the pound sterling as the worlds dominant currency during the interwar period. As much as

Reconcilable Differences?: United States-Japan Economic Conflict

1 trillion of international investment may shift from dollars to euros. Volatility between the worlds key currencies will increase substantially, requiring new forms of international cooperation if severe costs for the global economy are to be avoided. The political impact of the euro will be at least as great. A bipolar currency regime dominated by Europe and the United States, with Japan as a junior partner, will replace the dollar-centered system that has prevailed for most of this century. A quantum leap in transatlantic cooperation will be required to handle both the transition to the new regime and its long-term effects. The global economic roles of the European Union and the United States are nearly identical. The eu accounts for about 31 percent of world output and 20 percent of world trade. The United States pro vides about 27 percent of global production and 18 percent of world trade. The dollars 40 to 60 percent share of world finance far exceeds the economic weight of the United States. This total also exceeds the share of 10 to 40 percent for the European national currencies

America and Europe: Clash of the Titans?

United States-Japan economic conflict has four major dimensions: the large global trade imbalances of the two countries, structural differences between them, a large number of sectoral disputes, and their joint responsibility for global prosperity and stability. Two leading experts on United States-Japan economic relations examine the macroeconomic and microeconomic causes of these frictions and assess possible policy responses, including several variants of managed trade. They stress the differences between the American and Japanese models of capitalism and provide detailed examinations of current conflicts over key industries including automobiles, computers and supercomputers, construction contracting, financial services, and semiconductors.The authors conclude that Japan and the United States are on a collision course. They propose a comprehensive new strategy to resolve the conflict that calls for major changes in macroeconomic, structural, trade, and international economic policies in both countries.

America's Two-Front Economic Conflict

The launch of the euro offers the prospect of a new bipolar inter national economic order that could replace America s hegemony since World War II. The global trading system has already been jointly run since the early days of the European Common Market, which enabled Europe to integrate its commerce and exercise power equivalent to that of the United States in that domain. Now Euroland will equal or exceed the United States on every key measure of economic strength and will speak increasingly with a single voice on a wide array of economic issues. The euro is likely to challenge the international financial dominance of the dollar. Moreover, the end of the Cold War has sharply reduced the importance of U.S. military might for Europe and pulled aside the security blanket that often allowed both sides to cover up or resolve their economic disputes for the greater good of preserving the anticommunist alliance. Economic relations between the United States and the European Union will therefore rest increasingly on a foundation of virtual equality. The United States will either have to adjust to this new reality or conduct a series of rear-guard defensive actions that will be increasingly futile and costly?like the British did for many decades as their leadership role declined. The eu will either have to exercise

A Renaissance for U.S. Trade Policy

Since the end of the Cold War, the perceived threats to U.S. security have been mainly from rogue states such as Iraq and North Korea?none of which are superpowers or likely allies of each other in confronting the United States. But the United States now faces the real possibility of economic conflict with both Europe and East Asia?the commercial and financial equiva lent of two-front combat. In this domain, both potential rivals are superpowers. Moreover, they have already demonstrated their ability to coalesce against the United States, as they did to help torpedo the Seattle ministerial meeting of the World Trade Organi zation (wto) in December 1999. Peaceful and effective resolution of these potential conflicts is one of the most important and difficult issues facing the new U.S. administration and the world. The American and global economies are slowing sharply, and their futures may be heavily affected by the outcomes. In a post-Cold War world in which eco nomic issues are central to international relations, those outcomes will also be crucial for U.S. foreign policy and global stability. Compounding the complexity of the situation is the fact European and East Asian nations are not only the United States economic

Foreign Economic Policy for the Next President

U.S. TRADE POLICY has been facing widespread criticism around the world. Under threat of congressional action, the Bush admin istration initiated an investigation of steel imports, imposed tariffs of up to 30 percent on a sizable portion of foreign steel shipments to the United States, and launched an effort to organize global steel production-all within the past year. The administration and Congress have agreed to roll back some apparel imports from the Caribbean and Central America. Sharp new tariffs have been slapped on lumber imports from Canada, a nation with which the United States supposedly has free trade. Both Congress and the president have backed a new farm bill that perpetuates substantial subsidies for U.S. agriculture, even though the United States has railed for years against such practices abroad. All these steps have reinforced the concern that America is pursuing a unilateralist rather than a globally cooperative foreign policy. Moreover, these protectionist initiatives have surfaced at a time when the global trading system is already under severe strain. U.S. trade retaliation against Europe is still in place from a previous dispute over beef. Europe is considering up to

America in the World Economy: A Strategy for the 1990s

4 billion of counter action against U.S. tax subsidies for exports-a practice found

International adjustment and financing : the lessons of 1985-1991

AT A TIME when U.S. foreign policy is dominated by war, terrorism, and weapons of mass destruction, economic concerns are often rele gated to the back burner. But in reality, economic policy must be an integral component of any successful foreign policy. Some of its elements, such as the suppression of terrorist financing and support for reconstruction efforts in Iraq and Afghanistan, bear directly on the most central national security concerns. The linkage, however, is much broader, because most countries, rich or poor, large or small, depend heavily on the global economy for their prosperity and their stability. Hence, economics ranks at the top of their list of concerns. To continue to be relevant to the rest of the world, the United States must engage effectively on these issues. As the sole military superpower, the United States may often be able to undertake unilateral initiatives for the sake of national security. But in economic policy, unilateralism is simply not an option. No government, Washington included, can ignore market forces. The

Crisis in U.S. Trade Policy

In this highly readable book, Bergsten analyzes the critical international economic issues facing the United States, in the domestic and global context, that will persist through the 1990s. He proposes a comprehensive strategy of competitive interdependence to address the macroeconomic, monetary, financial, and trade components of the problems, providing a blueprint for economic growth and new forms of international cooperation in the coming decade.

Taking the Monetary Initiative

This volume reports a conference held at the Institute for International Economics to assess the results of the adjustment process in the major surplus and deficit countries. The work outlines the results of the efforts made by the United States, Japan and Germany to correct their trade imbalances over the last few years. The authors assess the effectiveness of macroeconomic policies and currency changes in promoting adjustment in these major surplus and deficit countries. The final chapter of this book has appeared as a discrete text entitled Has the Adjustment Process Worked? by Paul Krugman and it constitutes Number 33 in the Policy Analyses in International Economics series. The contributors include C. Fred Bergsten; William R. Cline; Richard N. Cooper; Peter Hooper; Peter B. Kenen; Pual R. Krugman; Robert Z. Lawrence; Allen J. Lenz; Stephen Marris; Richard C. Marston; Robert A. Mundell; Peter A. Petri; Horst Schulmann; Herbert Stein; Norbert Walter; John Williamson; Masaru Yoshitomi.