US shifting its world trade stance from team effort to one-on-one
Washington — Besieged by protectionist pressures at home and abroad, United States trade negotiators are pushing in significant new directions. In the postwar years, the US has usually backed global solutions to trade problems under the General Agreement on Tariffs and Trade (GATT). For instance, when tariffs were reduced to encourage trade, the lower duties applied to imports from nearly all nations. This is called a ''multilateral'' trading system.
Reagan administration trade policymakers, perhaps frustrated by difficulties in the GATT and other trade talks, have launched several new ''bilateral'' initiatives aimed at trade deals with single nations or small groups of countries.
Trade experts see a multilateral system as fairer and more orderly for all nations, encouraging growth of the world economy as a whole. Bilateralism, under some circumstances, could be more haphazard or divide the world into competing economic blocs.
''We shifted the rudder a few degrees to move much more aggressively to a more open liberal trading system,'' said William E. Brock, the US trade representative, in an interview.
Comments Harald B. Malmgren, a former US trade negotiator, ''The Reagan administration seems to have grown weary of the traditional American strategy. . . .''
Whatever the case, the US has moved in a bilateral direction in several trade initiatives:
* Last month the US and Canada launched talks aimed at removing all tariffs on some industries. More trade - perhaps $110 billion this year - crosses the Canadian-American border than between any two other nations in the world. Thus such talks have great economic importance, and especially in Canada, historic political significance.
* Last fall the US agreed with Israel to negotiate a free-trade area. Currently it is seeking the go-ahead from Congress. Considering that this is an election year and many congressmen will be seeking the approval of Jewish voters , Congress is expected to grant the administration negotiating authority quickly.
* Last July Congress approved the Caribbean Basin Initiative, providing economic benefits and modest tariff preferences for imports from some of the island nations of that region.
Ambassador Brock has also spoken about some special deal with the ASEAN countries of the Asian Pacific region. He is expected to explore the idea in April while visiting Seoul, South Korea.
The former chairman of the Republican Party holds that the first goal of his trade office is ''to rebuild the multilateral system and make it work as effectively as we can.'' Then, he says, he wants to expand the rules of GATT to cover areas not now covered, such as international business in services (such as consulting, insurance, and so on) and foreign investment. Third, he said, the US has ''to let those countries who are willing and able to live by a high standard to do more business with each other than they would otherwise do, and to constitute the kind of good example for the trading system that will draw others into a more liberal stance.''
He joked: ''It's not bilateralism; it's good-examplism.''
Mr. Malmgren, now a consultant in Washington, sees it as bilateralism and recalls the basic argument for multilateralism: ''Global nondiscrimination, the heart of the GATT, has suffered many abuses. Nonetheless, until the 1980s, American administrations one after another have strived to remain as close as possible to that approach. They did this not only because of sound economic and political reasons, but also because global nondiscrimination suited far-flung American trade and investment interests.''
Of course, the Reagan administration has not abandoned multilateralism. Indeed, Mr. Brock has been exploring the possibility of a ''Reagan Round'' of multilateral trade negotiations within the GATT involving dozens of nations.
But a Reagan Round (if it ends up with that title), like the Tokyo Round that preceded it, will take years to become a reality.
Said Brock: ''We're not ready for it. We're just beginning to agree on our own (trade) objectives, and we certainly have not had time to elicit from others what their objectives might be. That process will go on throughout 1984. We will do a lot of traveling, a lot of talking in other countries to see what their priorities are, and be sure that within the mixing and blending of these several priorities, we can come up with an agenda that makes sense for everybody.''
Brock expects ''much more serious discussions in 1985'' and ''several years'' before the conclusion of such a round.
Malmgren, who has been much involved in trade negotiations since 1962, says he doesn't expect any results from such a world trade round until well into the 1990s.
In the interim, a US shift to good-examplism ''could mean a decade or more of bilateral improvisation, before world-scale progress began to take hold again,'' he says. ''This, in turn, could mean more economic nationalism combined with more regional discrimination.''
The Reagan administration has carried out a similar shift in emphasis from multilateriam to bilateralism in foreign aid. More aid resources are being doled out on a nation-to-nation basis, rather than through such institutions as the World Bank or the regional multilateral banks.
Asked whether protectionism had increased in the US during the Reagan administration, Brock admitted: ''There's a slight increase on balance, but not by much. The product coverage is larger than it was three years ago. The amount of trade volume affected is probably not changed too much in terms of real negative dollars.''
However, Malmgren figures there is ''much more'' protectionism in the US, largely because of the increase in product areas covered by various types of protection, and also because some of the protectionist measures will not easily ''self-destruct'' after a few years. He notes how Japan's so-called ''voluntary'' agreement to limit automobile exports will enter its fifth year in April, with relatively little growth in the number of cars Japan can send to the US.
Brock maintains that protectionist pressures in the US (as versus actual protectionist actions) ''are larger than I have seen in this town in 20-odd years.''
Malmgren apparently disagrees. He says Congress is less protectionist today than in ''most of the years'' since 1962.
Many congressmen will sign onto protectionist legislative proposals, such as the local-content bill for the automobile industry, for political reasons. But they don't want the measures to become law, and most of them haven't. ''Now you see them, now you don't,'' he noted.
Some Canadian politicians see the US as more protectionist today than at any time since 1930 when the infamous Smoot-Hawley trade bill was passed. That is one reason why they are willing to talk with the US about freer trade - something that has been considered politically dangerous in Canada for many decades.
Canadians have always been concerned about maintaining their economic and cultural independence from their economically massive neighbor - despite a basic economic interdependence that has been growing. Canada has not wanted to become a 51st state.
Brock called the Canadian-US negotiations ''something fundamentally important and very exciting.''