Protectionism: pressure's rising but the barriers aren't

Arthur Dunkel, the world's top trade official, sounded just a touch astonished. Protectionist pressures, especially in the United States and Western Europe, have increased, he said. But actual protectionism stands at about "the status quo."

Considering the relatively high unemployment rates and the troubles experienced by such industries as autos and steel in many industrial countries, that's not too bad a situation.

Mr. Dunkel, who was chosen last year to be director general of the General Agreement on Tariffs and Trade (GATT), sees these advantages of healthy international trade for the consumer:

1. "It helps keep prices lower than they would be otherwise."

2. "Trade means consumers have a wide range of products, a wide diversification, offered them."

3. "International trade extends to the world level the advantages of competition which you find at the national level."

That's why, Mr. Dunkel explained in an interview here, such top government figures as British Prime Minister Margaret Thatcher, US Trade Representative Bill Brock, the West German finance minister, Count Otto Lambsdorf, and others have basically continued their strong support for a liberal trade regimen.

The top US trade official here, Deputy Trade Representative Michael B. Smith, agrees with Mr. Dunkel's assessment of the level of world protectionism. "it is not declining," he said. "But it is not rising, either. However, there are pressures -- there is no question about that. If we can get through this year and early next year relatively holding our own, I will consider that a victory. What the world needs is an economic upturn."

Last year world merchandise trade totaled nearly $2 trillion (US) -- an amount close to the total output of goods and services in the United States. The volume of world trade rose only 1 percent in 1980, compared with the usual 6 percent or so. GATT described 1980 as "one of the most difficult years of the entire postwar era, with widespread inflation and unemployment, continuing monetary instability, and large payments imbalances."

This year, Mr. Dunkel noted, early statistics indicate some "slight recovery" in world trade.

Before taking on his GATT job, Mr. Dunkel was the Swiss Federal Council's delegate for trade agreements. In that role he helped negotiate the "Tokyo round" of multilateral trade negotiations under the GATT. That was concluded in 1979, and many thought the pace of action in this GATT headquarters, on the shore of Lake Geneva, would slow. But Mr. Dunkel finds himself plenty busy.

One reason is the nature of the Tokyo agreement, the most comprehensive international trade deal ever. That deal did provide for an automatic one-third cut in tariffs, on average, over eight years. Two such cuts, amounting to a reduction of about 1 percent in the average tariff, took place at the start of 1980 and '81. "There are no signs of resistance to these tariff reductions," Mr. Dunkel said with some relief.

But mostly, the agreement set up rules for the trade game which must be either followed in detail or enforced.

For instance, as of the first year, a government procurement agreement became effective, permitting enterprises in the industrial nations primarily to bid, on equal footing, on the purchases of goods by foreign governments or state entities on contracts valued at roughly $200,000 or more. It should open up billions of dollars of business to international competition.

Both Mr. Dunkel and Mr. Smith said it was too early to tell whether this new code has actually opened up government markets to international bidding. But at least the bids are now being published in English and French as required, though not always as fast as called for in the agreement. the United States, with its many "Buy American" provisions for government contracts, has been a major sinner against free trade in this area.

Other Tokyo round codes are meant to facilitate the international exchange of goods and govern product standards, customs valuation, and import licensing procedures -- all commonly used in the past to block imports.

Mr. Dunkel saw as "signs of the liveliness of the codes" the fact that some nations have raised criticisms of the way notices are being published about product standards and so on. Moreover, Bulgaria, which is not a member of GATT, wants to join the product standards code.

One annoyance for Mr. Dunkel has been some tendency for nations to take trade actions outside the multilateral framework of the GATT institutions. This creates more problems than it solves, he maintains.

One such move was the US pressure on Japan to restrict its automobile exports to the US market. Similarly, France limits Japanese auto exports to 3 percent of the domestic market; Italy allows only 2,300 Japanese cars to be imported; the British keep Japanese imports down to 11 percent; and there are rumors here that the Germans want to hold Japanese auto imports below 10 percent. Canada is also seeking limits on Japanesecars.

"There is not just one sinner here, but many sinners," Mr. Dunkel said.

As a first step, he would like the governments to make "more transparent" such trade restrictions. But he would prefer nations to take any such protectionist measures under the "safeguard" provisions of the GATT, under which the "rule of law" would prevail rathen than "actions or reactions according to political power or strength."

GATT, he adds, offers nations a means of resisting political temptation. Politicians can tell domestic industries or labor groups seeking protection against imports that this is impossible because new barriers would be a violation of the rules of GATT.

First of two articles on the internatio nal trade scene.

You've read  of  free articles. Subscribe to continue.
QR Code to Protectionism: pressure's rising but the barriers aren't
Read this article in
QR Code to Subscription page
Start your subscription today