COMMISSION COMMUNITY

LONDON
While America has won the war in Iraq in less than four weeks and with astonishingly few casualties, it has been suffering collateral damage in another theater of conflict -- its trade relations. In the Arab world, and more seriously in the rich markets of Europe, American companies and their famous brands have been at the receiving end of a small but highly visible boycott movement. In ordinary times this might be shrugged off; in today's fevered atmosphere it is further tinder on the fire -- and has all the potential, if unchecked, to have ugly economic consequences.

If you're American and think the war ill-advised, at least you have a vote through which to register your protest. Citizens in other countries, of course, have no such leverage. Instead, feeling helpless and reaching for a way to make somebody in Washington listen, a number of them are hitting back the only way they can. Boycotts in Arab countries have little effect; after all, American commercial interests there are not great. But Europe, a larger market even than the United States, is more worrying. Some Europeans are boycotting American goods and refusing to take holidays in the United States. The boycotters say they deplore the impotence of their governments in challenging the emerging course of U.S. foreign policy and that if America's great companies start to worry that their business is being hurt because they are American, they might bring pressure to bear for change. Bush, the thinking goes, might listen to them.

So far the boycotts have tended to be localized and small in scale, but a taboo has been broken. And while individual American companies like Exxon or McDonald's have suffered consumer boycotts before, this is something new. Just being American, rather than having a particular business practice against which consumers are protesting, is now the object of passionate moral condemnation. And it is dangerous: It is not just that individual companies suffer losses of sales and profits to their overseas competitors, it's that the mood music is changing. The rhetoric of boycotts and the inflamed anger behind them -- on both sides of the Atlantic -- makes it harder for political leaders to hold the line on keeping their markets open and trade flows free. Yet it is upon this fabric that American and European prosperity depends. The Iraq war, and the ominous saber rattling against Iran and Syria, could yet be a contagion that poisons America in ways that those who mounted the war refuse to recognize.

The center of the European boycott movement so far is Germany. A doctor in Schleswig-Holstein, one Eberhard Hoffman, refuses to treat British and American patients. A restaurant chain in Hamburg no longer sells Budweiser, Marlboro or Coca-Cola. An antiwar Web site, www.consumers-against-the-war.de, lists 27 American companies, including American Express and Walt Disney, whose products German consumers should avoid. It has received some 100,000 hits since it was launched a month ago. Bicycle maker Riese and Mueller GmbH has stopped taking supplies from its American contractor.

The French are more subdued, but the spread of "Mecca Cola," a Coca-Cola substitute developed by French entrepreneur Tawfik Mathlouthi, is ominous for what it represents: Tagged with the slogan "No more drinking stupid, drink with commitment," it was launched last November and first sold only in Muslim districts of France. Now it is available in the larger supermarkets in Belgium, France and Germany; and Mathlouthi describes advance orders as "phenomenal." And of course, almost ritually, a McDonald's in Paris has been attacked. Given the saturation coverage of the war, American corporations might even be relieved they have come off relatively unscathed and that the movement has peaked now that the war is over. But some are aware that a Rubicon is being crossed. Americanness, long an asset, is becoming a liability.

Advertising agency McCann-Erickson is advising its American multinational clients to play down their country of origin. An internal memo leaked from its London office and quoted in the Daily Telegraph recently says American companies should not "wrap their brands" in the national flag; instead, they should stress their "strong local roots" in the community. The memo continues: "The war risks tarnishing the reputation of American culture and the mythic 'American dream,' which has long drawn consumers around the world to the United States to live, work or visit."

The agency is right. To my surprise, the apolitical parents of one of my daughter's friends have canceled a holiday in America. The United States, for so long emblematic of freedom and what it means to be modern, to many non-Americans suddenly feels menacing and bullying -- a power that can throw its weight around at will. It needs to know that some individuals will fight back with decisions about how and where to spend.

The boycotts and the surrounding avalanche of negative publicity are a storm warning of what may lie ahead. Eight of the world's top 10 global brands -- Coca-Cola, Microsoft, IBM, General Electric, Intel, Disney, McDonald's and Marlboro -- are American, worth an estimated cumulative $337 billion. McCann-Erickson's message may be that they should shed their Americanness, but just like other famous American brands -- Starbucks, Nike, American Express, Levi's, Heinz and Kelloggs -- they are wrapped irrevocably in the American flag. Indeed, many have built their brand on precisely what until now has been the appeal of America, what Joseph Nye, dean of Harvard's Kennedy School of Government, calls American "soft power." As that is dissipated, so the companies concerned are put at a competitive disadvantage.

The companies in the front line are the great consumer brands. Coca-Cola was quoted on the BBC Web site as admitting that the company "has felt some impact" from boycotts in the Arab world and the advent of alternative colas such as Mecca -- and vainly stressed that it is apolitical and not affiliated with any religious or ethnic group. McDonald's was an emblematic target of the anti-globalization movement before George Bush became president, and its recent declining profits are attributable in part to the collapse in its image, now freshly under assault. But most of the great American brands can testify to the climate beyond the United States becoming steadily chillier over the last few years, as reflected in their sales and profits figures. Now it threatens to become positively cold.

Throughout the 1990s, individual multinational companies suffered from a spate of ever more sophisticated boycotts. Shell was shaken severely by the protests in 1995 over its proposed sinking of a North Sea drilling rig, Brent Spar, in the open sea and overhauled its approach to the environment thereafter. Nestle suffered from the drip of bad publicity over the marketing of its powdered breast-milk substitute in the less developed world. But as Meghnad Desai, director of the London School of Economics' Center for the Study of Global Governance, says, while these individual boycotts were painful for the companies concerned, the serious economic damage is done when boycotts are picked up by governments that then impose more general trade sanctions.

Sanctions against South Africa in the 1980s, for example, were the culmination of individual consumer boycotts that started in the same way as the anti-American boycotts today, and there is little doubt that they both damaged the South African economy and helped spur the fall of apartheid. The danger is that what is happening in Europe could be the precursor for eventual similar action against the United States.

It is a fear shared by C. Fred Bergsten, director of Washington's Institute for International Economics. Bergsten said last week that the impact on individual American companies is so far small. He is far more worried that European boycotters are stigmatizing American companies and trade has begun to be politicized.

The World Trade Organization has ruled in favor of the EU, he observed, awarding it the right to impose tariffs on $4 billion of U.S. goods to compensate for America's unfair business practices. (The WTO ruled that a foreign sales tax break enjoyed by U.S. companies is an illegal export subsidy.) If European public opinion were to become radicalized by trade boycotts, it might become politically impossible for the EU Commission not to exercise part, if not all, of that right. The United States would reciprocate, and down that road -- both Bergsten and Desai say -- lies the example of the tit-for-tat protectionism of the 1930s.

The Bush administration is relying on the Europeans to keep their heads and not do something so self-defeating -- even as it taunts them for being "Old Europe" and House Republicans vote to exclude French and German companies from Iraqi reconstruction. The threats against Syria, if they do not mean immediate war, presumably imply either the threat or introduction of trade sanctions -- and more politicization of trade.

If the boycotts show anything, it is that the United States cannot expect the rest of the world mutely to support its war in Iraq or similar adventures; even if most other Western governments do nothing, their citizens will organize boycotts, with all the potential attendant consequences.

It is a sign of the U.S. government's blinkered vision that it is so cavalier about these risks; America's great companies have done well from globalization and in the process helped Wall Street to dizzy heights. Even the mighty United States is part of an interdependent network of trade relationships. It needs other countries' willing consent and compliance in its actions, even if their citizens have no say in American elections. If it ignores the views of those countries and their citizens -- as expressed by the boycotts, whatever their eventual effect -- because it feels it is too strong to care, then it and the rest of the world will pay a heavy price. The boycotts are an important wake-up call.

Will Hutton, a contributing editor and columnist for the Observer in London, is the author of several books, including "A Declaration of Interdependence: Why America Should Join The World," to be published by W.W. Norton next month.

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