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1 1 INTRODUCTION States’ Struggle between Workers and the World Economy In the spring of 1979 the maiden elections to the European Parliament were soon to be held. During the campaign in France, Premier Jacques Chirac—along with his fellow Gaullist, Michel Debré—both of them ever allegiant to Charles de Gaulle’s tenacious devotion to French national sovereignty, orchestrated an assault from the right on President Valéry Giscard d’Estaing’s pro-European position.1 The charges broke out just as the president was sealing a deal on the European Monetary System (the EMS), one of the key institutions that was to pave the way for the European Union. On the left, François Mitterrand himself favored the European Community. But he was forced to bow to the oppositional, anti-supranationality stance of the several worker-prone parties—the Communists, the left-wing Socialists, and the Parti Socialiste Unifié—in order to forge a winning coalition on the left. Public opinion overall went with the critics. Indeed, as Giscard’s domestic political adviser later claimed, “the EMS was a huge political error that cost Giscard his reelection in 1981.”2 In the same year, Mexican president López Portillo of the Partido Revolucionario Institutional (the Party of the Institutionalized Revolution, or PRI) was urged by multinationals to join the General Agreement on Tariffs and Trade (the GATT), and went so far as to complete the requisite negotiations. But Mexico had lately located huge oil deposits and was enjoying high rates of growth, so many people 1. Debré was then head of the Gaullist party, Rally for the Republic. 2. Quoted in Craig Parsons, A Certain Idea of Europe (Ithaca: Cornell University Press, 2003), 158–60, 147. 2 STATES’ GAINS, LABOR’S LOSSES wondered, what was the point of scrounging for ways to attract foreign funds? Widespread negative political reaction emerged at home against the proposition, and in the end Portillo declined to go on with the bid. Membership would have entailed demolishing trade barriers, and many party politicians, intellectuals, and, significantly for our purposes here, labor officials joined domestic industrialists in lining up against it. As Nora Lustig has explained the choice, “At the time GATT membership was viewed as a sign of weakness; Mexico did not need or wish to subjugate its trade policy to a multilateral body dominated by the Western industrialized countries.”3 Meanwhile, the year 1979 also witnessed some Chinese scruples about participation in the world economy. At the beginning of the year, cautious Communist Party elites used the forum of a Party work conference to inveigh vociferously against what they viewed as an overhasty, overambitious venture into the global marketplace . Suddenly and without warning, China froze a large number of contracts it had already initialed for plant imports and suspended all ongoing trade negotiations with Japan, in favor of a new policy of “readjusting, restructuring, consolidating , and improving”the national economy. A 1981 justification for these decisions included the curious phrase that “we should not indiscriminately import everything or regard everything ‘foreign’ as valuable and good. Our consistent policy is to give priority to self-reliance and regard foreign aid as supplementary.”4 Each of these episodes evinces fidelity toward long-ensconced and profound nationalistic sentiments that had surrounded varying degrees of distance from the markets abroad for decades, feelings that were running particularly strongly at that juncture. Even though France had by that point been participating for several decades in the expanding effort to forge a unified Europe, the moves of some of its leaders in that direction had at every step of the way been matched by ambivalence or indifference—sometimes even negativity—among the populace at large, as well as among other political figures.5 True,China was just then surfacing from a longish stage of spurning the outside world. A major shift in trade which began with the initiation of détente with the United States in 1971 took off in full force after 1978, signaling such a transformation from what had gone before that one observer contrasted it with what he called “China’s almost continuous isolation from the mainstream of the world economy 3. Daniel C. Levy and Kathleen Bruhn, with Emilio Zebadua, Mexico: The Struggle for Democratic Development (Berkeley: University of California Press, 2001), 162, 164; and Nora Lustig, Mexico: The Remaking of an Economy, 2d ed. (Washington, D.C.: Brookings Institution Press, 1998), 130–31. 4. Chae-Jin Lee, China and Japan: New Economic Diplomacy...

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