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Friday, April 11

Trade may be a casualty of war

By Ana Radelat | GNS

WASHINGTON - The war in Iraq has strained relations with the nation's top overseas trading partners and is causing economic ripples that U.S. and foreign businessmen are hoping won't have long-lasting effects.

French businessmen canceled a trade trip to Louisiana because they're angry at state politicians' French bashing. Organized boycotts of American products are surfacing in a growing number of countries including Germany, Argentina, Thailand, Egypt and Indonesia.

But in Canada, the business community is worried about U.S. wrath at that nation's refusal to back the war. They worry that their largest customers, U.S. businesses, might cancel orders. Earlier this month, Peter Smith, president of the Aerospace Industries Association of Canada, said Prime Minister Jean Chretien's position against the war has hurt his industry.

In a letter, Smith urged Chretien to reconsider his stance and ``put an end to the vitriolic and damaging anti-American rhetoric emanating from some government members.''

Meanwhile, U.S. lawmakers have called for boycotts of French wine and bottled water. One Republican, Washington state's Rep. George Nethercutt, tried to lock out companies in France, Germany, Russian and Syria - all nations that opposed the war - from federal contracts on Iraq's reconstruction. Nethercutt's amendment to a $75 billion spending bill that would pay for the war failed by only eight votes.

The U.S. Chamber of Commerce is a key promoter of U.S. products overseas. The United States is the world's largest exporter, selling more than $700 billion in goods to its top 50 foreign trading partners in 2001.

Yet Thomas Donohue, chamber president, isn't worried about Congress' rash of ally bashing, even though punitive moves like Nethercutt's run against the chamber's free-trade philosophy and may add to problems selling U.S. goods overseas.

``There's been no legislation passed, and there won't be any passed,'' he said. ``My own view is that I was disappointed that some of our trading partners were not more helpful, but we still need to move ahead.''

Damien Regnard, president of the Louisiana chapter of the French-American Chamber of Commerce, is devastated that relations between Paris and Washington are at a low point. Just last October, Regnard took a delegation of 60 Louisianians, including the president of the state Senate, to Paris to meet with top French officials and lunch with French President Jacques Chirac.

``It was absolutely perfect,'' Regnard said.

But now Louisianians, who are steeped in French history and culture, have been among the harshest critics of the French. In addition, Louisiana's Legislature is considering a resolution to withdraw Chirac's invitations to celebrations of the bicentennial of the Louisiana Purchase this year.

``Louisiana has become as Francophobe as it was Francophile three months ago,'' Regnard said.

The deterioration of Louisiana-French relations caused a 20-member delegation of French executives seeking opportunities for trade and investment to cancel a trip to Louisiana. The trip had been planned for late April.

In addition, a scientific exchange scheduled for July in Lyon, France, that could have resulted in joint ventures in cancer research and biotechnology also has been put on hold and is likely to be canceled.

``It now looks like everything has blown up,'' Regnard said. French companies already have invested $1.8 billion in the state and are responsible for 10,000 jobs.

David DeRosa, an economic consultant who also teaches at Yale School of Management, said that trade with the United States' most important allies likely will return to normal soon despite bitterness from the Iraq war and lingering resentments on both sides.

``If the war turns out `picture perfect,' with few people killed and no atrocities, relations will heal a lot faster,'' he said. ``But if it turns out that there's a lot of people killed and the weapons of mass destruction are not there, then there's a big problem.''

Even the best-case scenario may still have ``some nastiness'' about who gets the contracts to rebuild Iraq, DeRosa said. But he cautioned the Bush administration to be careful in how it handles Iraq's vast oil resources.

Bernard Etzinger, spokesman for the Canadian Embassy in Washington, said the history between the United States and its northern neighbor and the vast volume of trade between the two nations - the United States is Canada's main trading partner - should help preserve the relationship.

``We've heard anecdotal stories about individual problems,'' Etzinger said. ``But we haven't seen any disruption of the trade flow.''