BRUSSELS. Mar 2: A trade war is shaping up to replace the Cold War unless nations can harmonise their trade and exchange rate policies, economists warned here In reaction to a growing clamour for trade protectionism, reports AFP.

The trade accusations are flying everywhere — that the United States is putting up protectionist shutters, the European Community is building Fortress Europe, and Japan remains as impenetrable as ever.

"These arc more than just threats. There is a real danger that there are preparations for mutual protectionism. Economic blocs are replacing the line-up of the Cold War," said. German economist Wilhelm

Harnkcl.

The United States recently went on the offensive by imposing steep anti-dumping duties on steel imports, and is threatening action to protect its aircraft manufactures against EC competition.

The EC is tightening its defences against cheap steel and fish imports from eastern Europe, similar to barriers already In place against beef. Its new single market has braked banana Imports from Latin America.

Washington and Brussels are both knocking harder on Japan's door for action to bring down huge Japanese trade surpluses and allow more foreign imports. *

"It's like a kabuki play — where you have stylised mlnis-

ters engaged in an interplay of sound a fury," says Michael Hodges, senior lecturer in international relations at the London School of Economics.

For David Rohr, a US international trade commissioner, the economic recession has spawned ."an awful lot of rhetoric" about trade protectionism.

"But translating into actual protectionism doesn't happen as much as one would think," he said here today.

Rohr noted that demands for protection from companies in the United States were increasing. but had not yet reached the crescendo of the early )980's.

However Harnkel. former German under-secretary for monetary affairs and now pro-

fessor of development and monetary affairs at Frankfurt University, said he was "very alarmed” at looming protectionism, particularly in the EC.

The only way out. he said, was an agreement by the leader so the Group of Seven leading industrialised countries to agree on world trade reform and harmonised exchange rate policies at their G-7 summit in Tokyo this summer.

Talks to whittle down trade barriers are still stalled after more than six years of tortuous efforts tc, wrap up the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade.

But Harnkel said GATT trade reforms would not work

until exchange rate instability had been cured and leaders no longer reacted to monetary disorder by stopping imports.

French Foreign Minister Roland Dumas spoke this week of a ’protectionist culture” In the United States. Harnkcl responded that the EC was the world’s chief trade culprit and was invi.ing retaliation against "Fortress Europe.”

President Bill Clinton struck a conciliatory note last week in calling for open markets and a GATT deal.

Hodges said: ’this was a good sign indeed, he added that trade quarrels were normal In a recession, but potentially dangerous if allowed lo develop Into "bilateral aggression" and counter-retaliation.

"Political elites have lost

control of their electorates and economics, and arc lookings for scapegoats (In foreign trade partners)," Hodges said.

Tn a way, what we are seeing now Is posturing for (GATT) trade negotiations. The result Is not for-ordained, but if the negotiations fail, we are-in for a very bad time indeed. ” he said.

The United States, the EC, Japan, the South-East Asian nations and other countries have ail been strengthening trade defences by reinforcing regional trading blocs

The economists said this left the world's poorer coun tries, including eastern European nations struggling lo build market economies, as the worst loses In many trade war.