Trade talks go out with a bang. They succeed in putting new global trade issues on the negotiating table
Punta del Este, Uruguay — After a week of tough negotiations, the world's trading nations have successfully launched a new round of talks to stem the rise of protectionism and expand the realm of trade included under global agreements. The consensus on an agenda for talks to begin early next year under the General Agreement on Tariffs and Trade (GATT) came Saturday, when 74 signatories of the trade treaty agreed to include discussion on agriculture, services, and investment.
In describing the new talks, which will be called ``the Uruguay round,'' United States Trade Representative Clayton Yeutter used the term ``historic'' -- in large part because the talks will take up trade in the service sector. Such trade makes up about 66 percent of all US trade, and its inclusion was a prime objective of US negotiators. The talks will also cover another US concern -- intellectual property, such as copyrights, patents, and trademarks.
The inclusion of services in the new trade round was hailed by those in the private sector. Joan Spero, senior vice-president of American Express Company said: ``At last, we're legit.''
However, Tom Donahue, secretary-treasurer of the AFL-CIO, said that the net effect on US employment would be minimal. ``Any job increase will be mainly professional or technical. It won't affect blue-collar employment.''
In a concession to India, Brazil, and a group of other developing countries, services will be negotiated outside of GATT, but may be included in the treaty after the negotiations end. In addition, language is included that emphasizes each country's national sovereignty over its service sector. In India, for example, banks are required to make 40 percent of their loans to those under the poverty level -- making the banks an instrument of social change.
If trade in services becomes part of GATT, the US will be able to retaliate against services of other nations that restrict the US's vibrant service sector in their own countries.
The compromise reached on the agricultural-subsidies issue ``offers hope'' that farmers will be able to compete against each other, not national treasuries, said David Shires, a spokesman for the Australian Trade Ministry.
US Secretary of Agriculture Richard Lyng said this will be of particular benefit to the poor nations of the world. ``We hope we helped those who can't dig up funds for subsidies,'' Mr. Lyng said.
This will not get the US out of the agricultural support business immediately, nor end the European Common Agricultural Policy, which spends close to $30 billion on subsidizing the European farmer. But, it will begin to diminish the agricultural trade wars. The compromise did not involve explicit language on ending export subsidies, but called for tighter rules and a ``phased reduction'' of the ``negative effects'' of such subsidies.
The new trade negotiations are essential because the fabric holding together the world trading system is badly frayed by protectionist trade barriers and subsidy wars. At the same time, faced with a $200 billion trade deficit, President Reagan is hard pressed to stick to his ``free trade'' philosophy.
Opening a new GATT round will not help the trade deficit in the near future. But it may temper some of the protectionist sentiment in Congress, which views GATT as a very flawed trade treaty. A protectionism-tinged trade bill is now working its way through the Senate, and Ambassador Yeutter is expected to testify in Washington this week.
``If we have a trade war, people will lose jobs,'' said Michael Aho, a senior fellow of the Council on Foreign Relations.
The new round of talks, which will last at least four years, should also help to stem the growing trend towards bilateral trade pacts. Bilateral treaties can fragment the world economy, ultimately costing jobs. For example, when the US recently signed a semiconductor agreement with Japanese producers, European manufacturers feared that the Japanese would then dump their excess production on Europe. ``With bilateral pacts, it's easy to get a cartelization of industry,'' said Mr. Aho.
The delegates also agreed to attempt to give the GATT watchdog more teeth. ``If we used GATT, our clients would starve,'' said Washington lawyer and former US Trade Representative Robert Strauss.
Mr. Yeutter said many other countries feel the same frustrations. ``We hope to address those issues in the new round,'' Yeutter concluded.