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Wall Street Journal (Europe)

July 25, 2002


American Unilateralism Exists

Europeans level a lot of unpersuasive complaints about U.S. disregard for its allies across the pond. But they are right to complain about new legislation now getting its final touches in Congress that most likely will extend the regulatory reach of U.S. authorities to European companies.

We're not opposed to the U.S. Congress or the Bush administration taking their lumps from the EU in the service of a good cause. Opposing the Kyoto Protocol was one such cause, as we discuss in greater detail above. Tearing up Bill Clinton's signature on the International Criminal Court treaty was another.

And, as Daniel Mitchell and Andrew Quinlan note nearby, the Bush administration is prepared to thumb its nose as well at the EU's Savings Tax Directive, which attempts to make tax collecting a multilateral effort. Mr. Quinlan's Center for Freedom and Prosperity, a Washington, D.C., based advocacy group, cites a highly placed White House official as saying the U.S. will not sign the directive, which is a broad attack on personal financial privacy for the sake of rooting out a few suspected tax evaders. Since the EU made implementation of the directive dependent on six non-EU countries, some of which still value financial privacy, the Bush administration had the power to put it on hold, and it appears that it has.

So sometimes unilateralism, if you want to call it that, protects important interests and thus justifies ignoring the complaints from Brussels. But that's not to say that, just because something annoys the Eurocrats, it's a good thing. Maryland Democrat Paul Sarbanes' legislation on accounting supervision, which flew through the U.S. Senate with a 97-0 vote, is a prime example. This bill, likely to be signed by President George W. Bush this week, would make the accountancy of all companies listed in the U.S. subject to investigation by a new U.S. oversight board, even if the accountants were not U.S. firms and were auditing a company or subsidiary based outside the U.S. European corporate regulators, with some considerable justification, see this as an attempt to expand the reach of U.S. regulators into their territory.

Europeans complaints about American unilateralism often ignore areas where there has been a great deal of U.S.-European cooperation. One area, incidentally, has been securities regulation, where there have been significant harmonization efforts by U.S. and European national authorities. But when the U.S. Congress gets the bit in its teeth, and especially in an election year, it very often displays American parochialism at its worst. The European Commission and the Blair government in London have a point in complaining that in a global economy there needs to be some thought given to the coordination of regulatory efforts. Their complaints will probably fall on deaf ears in Washington, but that doesn't mean there won't be a lot of difficult sorting out to do later.


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