TCS Daily

French Freeze

By James D. Miller - April 2, 2003 12:00 AM

What if our diplomatic fight intensifies and the U.S. and France go to cold war? Some in France seem to consider President Bush a greater threat than Saddam Hussein. France's diplomatic schemes and pressuring of Turkey to bar U.S. ground troops has probably cost American lives. What would be the consequences if the U.S. and France became enemies? Direct military conflict would surely be avoided, but economic warfare might erupt.

If Americans come to believe that France deliberately made it more difficult for the U.S. to win in Iraq, Congress could come under immense pressure to punish France. Congress would likely go beyond even renaming French fries and impose tariffs on French goods. These tariffs would cause America to be cited for violating international trade agreements, but given the support the U.N. has recently provided us, congressmen wouldn't pay too high a political price for incurring the condemnations of international bureaucrats. Consequently, multilateral trade agreements could become one of the most significant casualties of the Iraqi war. Since free trade benefits the world economy, a collapse of these trade agreements would reduce global economic growth.

France, of course, would retaliate against U.S. tariffs and seek to get her fellow European Union members to join her in imposing restrictions on U.S. exports. America would consequently have an incentive to weaken the E.U. and economically isolate France. The winners of this game would be new Europe.

Many countries in Eastern Europe have been begging to join the European Union. If America wanted to weaken the E.U. we could do no better than offer these new European nations a free trade agreement conditional on their not entering the E.U. The symbolic victory alone to the U.S. from getting Eastern Europe to forsake France and economically ally with the U.S. would be enormous. Therefore, if the U.S. seeks a free trade alliance with Eastern Europe, France and her E.U. allies would fight to include new Europe in the E.U. Recently, after some Eastern European nations voiced support for America's Iraq policy, French President Chirac famously said they were "badly brought up" and missed "an opportunity to keep quiet." Chirac's comments showed that at the time he believed Eastern Europe had no choice but to economically collaborate with France. Chirac will come to regret his arrogant remarks if the U.S. and France become rival suitors for the economic hand of new Europe. Intelligent Eastern European politicians would naturally take advantage of any fight for their affections to negotiate a most favorable dowry.

The U.S. and France would also seek to get nations outside of Europe to join them in a trade war, so the world might divide into rival trade blocks. America's strongest asset in a trade war with France would be our military, not that we would attack or even threaten to attack France. Rather, if forced to choose between the U.S. or France, many nations would pick the U.S. because they rely upon our military protection. The security of Japan, South Korea and Taiwan is so dependent upon the U.S. military that they couldn't afford to anger America too much. Similarly, nations like Singapore and Australia face possible long term security threats for which they would like the continued comfort of being U.S. allies. Consequently, it's almost inconceivable that industrialized Asia would side against the U.S. in a global trade war.

Ironically, a victory over Saddam would weaken our negotiating position with some Arab countries. Saudi Arabia, for example, would no longer need the U.S. to protect them from Iraq and could afford to anger us by siding against America with France.

Geography would play a large part in who would side with what country as transportation costs still greatly influence trade patterns. Mexico and Canada could not possibly afford a trade war with the U.S. and wouldn't even pretend to leave NAFTA. Similarly, European countries' proximity to France would increase the difficulty of them siding with the U.S.

Our fight with France might come to resemble the linguistic battle between English and French. It would be best if everyone spoke the same language. Since the world is divided linguistically, however, each individual has an incentive to learn as his second language the one spoken by the most people. If one language becomes spoken by enough people, a tipping point is reached and every ambitious educated person wants to learn that language. Similarly, most countries should prefer to trade freely with everyone. If forced to choose between trade blocks, however, many would join the block that has the most members. Military necessities and geography will guarantee that there will always be enough countries who need to trade with us to prevent France from outright winning a trade war. More likely, an aggressively expanded U.S. trade zone would quickly reach such a critical mass that even France's European allies would need to side with us. Just as Germans are more likely to take English than French as a second language, so too might economic necessity force Germany to side with America over France in a global trade war.

James D. Miller write The Game Theorist column for TCS and is the author of Game Theory at Work.

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