The U.S. and EU are bitterly divided over hedge fund regulations that the U.S. calls protectionist. (It turns out the EU is bitterly divided over the regulations, too, but let’s set that aside for now, in order to facilitate my argument.) Meanwhile, the EU is bitterly protesting the U.S. Air Force tanker contract debacle, which it says illustrates U.S. hypocrisy on said protectionism. And all this is taking place in the context of longstanding EU complaints that the U.S. has deliberately allowed the dollar to slide, to the detriment of euro-zone exporters. (Again, let’s set aside the euro’s recent tumble for the same reason as above.)
The parallels aren’t perfect, but it does make it clear that the many differences the U.S. has with China in terms of trade practices and monetary policy are hardly unique. What’s noteworthy is how much more comfortable the U.S. and EU are at mixing it up about their differences, compared to the brittle nature of U.S.-China relations. For all the coverage of the emergence of the G-2 (haven’t heard about that one recently), and the shift in U.S. priorities to Asia due to the diminishing importance of Europe, sometimes the closeness of a relationship is revealed as much by the comfort level during times of conflict as it is by the level of agreement.
That said, it also seems as if the global economy these days is characterized by a proliferation of finger-pointing and mistrust. That’s to be expected, I suppose, given the current economic climate. But a global trade order that only succeeds at self-regulation during boom times seems like it’s leaving out a pretty important part of the boom-and-bust cycle. Especially if the boom-time self-regulation amounted to no regulation.