• U.S.

The Breakdown of Trade Talks

3 minute read
J.F.O. Mcallister/Washington

IN A RED TILE VILLA OVERLOOKING Lake Geneva, long-suffering diplomats shuttle in and out of meetings, their faces betraying anxiety that the most ambitious overhaul of international-trade rules since World War II is floundering. In Brussels, European Community officials denounce the hard-nosed obstinacy of their American counterparts. In Washington, George Bush struggles to convey optimism, dropping vague references to “new ideas” that might break the logjam between Washington and the E.C. In Tokyo, ministers try quietly to bridge the gap between Europe and the U.S., lest there be any interruption of the trade machine upon which Japan’s now imperiled prosperity depends.

The six-year-old bargaining session known as the Uruguay Round of GATT, the 107-nation General Agreement on Tariffs and Trade, is in trouble. Washington and the E.C. are locked in a quarrel over how much Europe will be allowed to subsidize its farmers and thus give them an advantage over everyone from American wheat growers to Third World farmers trying to produce cash crops for foreign markets. There are fears that unless something is done to break the stalemate, the world will slip into commercial darkness and political tension. Warns GATT’s director general Arthur Dunkel: “There will be major negative consequences for social stability and even international peace.”

Perhaps so. But it’s hard for citizens in the industrialized U.S. — which is relatively self-sufficient and historically prone to protectionist impulses — to get a grip on GATT, let alone get very alarmed about its potential failure. Successive rounds of negotiations, diligently conducted since 1947, have pushed down tariffs from 40% to 4% in member countries. Still, people find it difficult to connect the statistical aggregates of GATT-speak with their lives and wallets.

But open international commerce is as vital to American prosperity as it is to any other nation’s. Last year the U.S. was the world’s largest exporter, selling a record $422 billion worth of goods and $145 billion in services abroad. Each billion dollars of exported merchandise generates 20,000 jobs, and fully one-third of the country’s economic growth in the past five years has flowed from the surge in foreign sales. For example, more than $20 billion in revenues made by U.S. airplane manufacturers comes from sales abroad, money that then finds its way into the cash registers of grocery and shoe stores and insurance agencies in the communities where the workers live. Corn growers bring more than $6 billion of cash into the country, scientific-instrument makers more than $12 billion. Contrary to the protectionist shibboleths, imports benefit the country as well: from cars to vcrs, the American consumer saves money because of cheaper products shipped from overseas.

Since the U.S. market is fairly open, a GATT accord is expected to spur new exports for American firms while adding little in the way of foreign competition that U.S. products do not already face. Carla Hills, U.S. Trade ! Representative, estimates that a successful Uruguay Round (so named for the talks’ original venue) would generate an additional $5 trillion in world output over the next decade, of which the American share would be a hefty $1.1 trillion. It’s “like writing a check,” explains Hills, “to every American family of four f

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