A Grand Trade Bargain

CLOSING THE WEALTH GAP

The Clinton administration came to Washington eight years ago with a straightforward plan to reorient American foreign policy. To spur a lagging economy, it put America's commercial interests -- promoting exports and opening markets -- on par with the country's traditional security interests. It was a strategy born of the "it's the economy, stupid" campaign. To its enthusiasts, this was a long-overdue adjustment in the country's foreign policy priorities, a recognition that the Cold War had ended and that Europe and Japan had long put their competitive interests first. To Clinton's critics, it was low diplomacy, a perversion of America's global role.

As Clinton leaves office, this argument over where America's diplomatic priorities should lie seems quaint and hopelessly out-of-date. Eight years of growing economic interdependence around the world have all but ended the debate. Moreover, the political and economic dynamics of America's world role have completely reversed. Today there is no question the American economy reigns supreme -- at least for the moment. Japan has been flat on its back for so long that few in the White House even remember when they were consumed with opening Japan's markets for American cars, apples, and cell phones. At the same time, the concept of how economic forces shape foreign policy and vice versa has become infinitely more complex. If most of the first Clinton term was all about boosting American exports, the past five years have been about stabilizing the rest of the globe, from Mexico to Asia to South America. The new administration comes to power with the far greater challenge of preserving America's place atop the world economy while defusing enormous resentments about U.S. economic, cultural, and military might. Washington must convince other nations -- both poor and rich -- that it is shaping a world economic system for their benefit as well as its own.