Cheer from Friday Lingers as Trade Fight Heats Up

The WTO moves center stage with disputes involving China, the U.S. and the EU. Meanwhile, Asian markets gain.

Author:: Thomas Lepri
Publish date:: Mar 7, 1999 8:23 PM EST

Lord Thomas Macauley

once said: "Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular." He knew what he was talking about, being a smart guy and having lived through a century caught between the Wild West ethos of early industrial capitalism and a long tradition of trade protectionism.

The more things change, the more financial writers pull out their

Bartlett's

There were clearly many blessings to be counted this weekend. Markets in Asia, Europe and the U.S. closed last week on titanic notes in concert with an employment report by the

Labor Department

that quelled fears, at least for now, that the tight U.S. job market was putting significant upward pressure on wages.

Asian markets were following through on Friday's performance in early Monday action, with Japan's

Nikkei 225

up 179.57, or 1.2%, to 15,073.57 and South Korea's

Seoul Composite

up a whopping 4%. The Nikkei is trading above 15,000 for the first time since November. Australia's

All Ordinaries

index was up 0.9%, while New Zealand's

NZSE 40

was about unchanged.

But headlines in the coming week are likely to be dominated by issues of free trade, or the lack thereof, in the international marketplace. At the request of the

European Union

, the 133-nation

World Trade Organization

holds an emergency meeting Monday to address U.S. plans to levy tariffs on EU products from cashmere sweaters to feta cheese. The U.S. says it won't impose the tariffs -- which are in retaliation for what it sees as illegal EU limits on bananas imported from Central America, the domain of U.S. banana king

Chiquita

(CQB)

-- until it has the support of the WTO.

And that ain't all. Also hanging in the balance is a bill that would bar the supersonic

Concorde

jet from American skies if the EU enacts recently approved rules prohibiting U.S. planes fitted with "hush kit" engine mufflers.

In other international trade issues, the

Senate Appropriations Committee

Friday drafted a $1 billion loan program to subsidize U.S. steel companies unable to compete with low-priced Japanese imports . Meanwhile, China's increasingly earnest negotiations with the U.S. over its bid to join the WTO hit a serious snag on Saturday when

The New York Times

reported that China may have stolen nuclear design secrets from

Los Alamos National Laboratory

back in the mid-1980s. China's foreign minister,

Tang Jiaxuan

, said the report is without basis and "very irresponsible."

At home, the

Federal Trade Commission

is set to begin its antitrust case against

Intel

(INTC) - Get Report

on Tuesday. The FTC charges that Intel is illegally muscling PC manufacturers by threatening to keep vital chip information from companies who won't meet its demands.

In the Papers

There were a few other noteworthy stories in the weekend press besides the Saturday

Times

piece.

Barron's

interviews economist

Joel Prakken

, the man behind the model behind

Federal Reserve

Governor

Laurence Meyer

. Prakken predicts -- surprise! -- decelerating U.S. economic growth in 1999 associated with the relatively stagnant stock market, which he expects to eliminate the "wealth-effect" driving much of the economy's recent expansion.

Barron's

also gets bullish on

Novell

(NOVL)

, reporting rumors that the company is in "deep negotiations" on a product-creation pact with PC giant

Compaq

(CPQ)

. The paper goes on to detail Novell's resurgence in the corporate networking market over the past couple years, noting that certain Novell boosters see the stock quadrupling within five years.

A front-page article in the

Times

joins a bevy of

recent

stories on the role electronic communications networks may play in the future of the

New York Stock Exchange

and the

Nasdaq Stock Market

. In addition to the competitive threat posed by U.S. networks like

Instinet

, the paper notes the increasingly real possibility of a pan-European electronic trading network.