THE news out of Punta del Este, Uruguay, indicates that the global community is not coming unraveled. It also reminds us that the forces for economic cooperation outweigh calls for the type of go-it-alone divisiveness of the late 1920s and early '30s that helped spur global economic chaos. The Punta del Este session involved a good portion of the world's top government trade specialists. Their task was difficult enough: seeking agreement on a new set of guiding principles that could ensure a continually expanding world commerce. The sessions were often acrimonious. But the results were better than almost anyone had expected.
Delegates agreed to launch a new round of global trade talks under the auspices of the General Agreement on Tariffs and Trade. The new round -- the eighth to occur under GATT since its inception back in 1947 -- will take up to four years at Geneva. Most important, the talks will involve areas that are not now covered by GATT trade rules, but which the United States has badly wanted covered: trade in services and investments, plus patents and trademarks. The new round will also seek to reduce agricultural subsidies as well as tighten rules against trade restrictions involving manufactured goods.
Obviously, a four-year-long round of negotiations is not going to lead to an instant solution to many challenges involving world trade -- including the huge trade deficits in the US. The US is expected to have a trade deficit of $175 billion this year, up from $149 billion.
But the current method of seeking to reduce the huge US trade imbalance -- driving down the value of the dollar against foreign currencies to make exports more competitive -- is failing. If the level of US exports is to be significantly boosted, then long-range changes in trading rules are needed.
Many US products continue to be locked out of other nations because of unfair trade restraints. Service trade is not even covered by GATT. Yet, the service economy now constitutes 70 percent of the total American economy, and a quarter of total world trade.
The United States, whose economy is still at the heart of the world economy, would not be the only winner under an updating of GATT. Europe needs to cut back the huge amount of funds going into agricultural subsidies. Third-world nations such as India and Brazil need access to overseas industrial markets. And so on.
The White House is deservedly elated over Punta del Este. But the hard work lies ahead. Trade negotiatiors must vigorously press the case for significant revisions in GATT rules. And the administration must keep up the battle against protectionism. Protectionism is inconsistent with the goal of revising GATT to expand, not restrict, global commerce.