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. Last Updated: 07/27/2016

G-7 Spoiling for Fight Over U.S. Policy

WASHINGTON -- President Bill Clinton may hope the strong performance of the U.S. economy gives him an edge over other Group of Seven leaders at this week's summit, but disputes over trade policy could prove to be his Achilles heel.


"The level of frustration with U.S. trade policy is really mounting," said Jeffery Garten, a former Clinton administration official who now heads the Yale School of Management. "It's becoming a source of great anxiety."


The United States' allies in the G-7 industrial nations are particularly concerned by what they consider high-handed efforts by the United States to impose its laws on foreign nations through economic and other sanctions.


Canada has already signaled that it intends to raise the issue of America's so-called Helms-Burton law at the three-day G-7 summit that starts Thursday in Lyon, France.


The law, named after its main Republican sponsors in Congress, Senator Jesse Helms from North Carolina and Representative Dan Burton from Indiana, targets foreign companies investing or trading in Cuban properties confiscated from U.S. citizens and firms after Fidel Castro took power in 1959.


"We will be raising it at the G-7," said Canadian International Trade Minister Art Eggleton.


Clinton had been hoping to use the summit -- which brings together the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States -- to showcase his success in creating jobs and promoting economic growth.


"The largest seven economies in the world have created a total of 10 million jobs in the last 3 1/2 years, 9.7 million of them in the United States," Clinton said in a speech last week. "That's something [to] be proud of."


But allies' criticism of U.S. unilateralism is threatening to overshadow those accomplishments and spoil Clinton's efforts to use the summit to trumpet his economic policies in this presidential election year.


Gary Hufbauer, a trade expert at the Institute for International Economics, a think tank, said U.S. officials preparing the summit had tried to quiet down America's critics, but to little avail.


The European Union last week condemned U.S. legislation that would punish companies doing business with Iran and Libya. The legislation, which has been passed by the House of Representatives but not yet by the Senate, is modelled on the Helms-Burton law but is not nearly as draconian.


Perhaps sensing that in this case the best defense might be a good offense, U.S. officials have tried to turn the tables on America's allies by calling on them to take action on their own against such states as Iran and Libya.


"There is an almost universal view that Iran and Libya present enormous problems to the world community with respect to terrorism and other issues," U.S. Treasury Secretary Robert Rubin said last week.


"And yet, while nations will all sit around and agree with that ... we are prepared to act in that respect and many others are not," said Rubin, who will attend the summit.


Yale's Garten said he thinks Clinton could even turn the dispute over U.S. trade policy to his political advantage.


"The image of a president that is standing up for U.S. rights ... will play very well in an election year," he said.


Such considerations could mean that other trade issues -- from the possible launch of a new round of international trade talks to China's entry to the World Trade Organization -- will be given short shrift at the summit.