Yeutter Warns of Rising Pressure for Protectionism

The United States warned non-Communist trading nations on Monday that President Reagan will not be able to resist rising pressures for protectionist trade restrictions if other countries do not cooperate in reducing the huge U.S. trade deficit.

Clayton K. Yeutter, the U.S. trade representative, said at the opening session of a 92-nation conference on world trade here that the United States, the world’s largest national market, is prepared to act alone to reduce its trade deficit, which this year is approaching $200 billion, if other nations are not willing to hold a new round of multinational talks to remove trade barriers.

Yeutter, picturing the United States as the “major victim of global trade distortions,” said it “will have no choice but to defend its own interests in its own way” if other nations refuse to “move the world back toward economic equilibrium.”

This tough talk from the high-ranking U.S. delegation, which includes Commerce Secretary Malcolm Baldrige and Agriculture Secretary Richard E. Lyng, has been labeled “Rambo diplomacy” by some delegates here. But it is expected to raise fears among many countries over the consequences of a breakdown in these talks on launching a new round of trade negotiations.

The trade and finance ministers meeting at this Atlantic coast resort heard another warning about failure to act on trade problems from President Julio Maria Sanguinetti of Uruguay, who opened the conference.

In an impassioned speech reflecting distress in this small agricultural country over the loss of markets for rice, wheat and beef exports, Sanguinetti linked the restoration of free trade with the ability of Third World debtors to pay back the $850 billion that they owe.

“Unless our countries enjoy favorable trade conditions, which imply fair prices, access to markets and expanded exports, our capacity to meet our debt-servicing commitments will be seriously eroded or even destroyed,” Sanguinetti said.

The meeting is being held under the auspices of the General Agreement on Tarriffs and Trade, which has established rules for trade among its 92 contracting members and a forum for negotiations on trade in the non-Communist world.

7 Rounds of Negotiations

Since it was created in 1947, GATT has sponsored seven rounds of multilateral trade negotiations in which agreements were reached on reducing tariffs and on ways of resolving trade disputes. The last comprehensive negotiations, known as the Tokyo Round, took place in between 1973 and 1979.

Since then, despite formal commitments by the industrialized countries and all GATT members to no added restrictions on trade, a growing trend of protectionism has reduced access to many markets, while export subsidies have undermined prices for many agricultural products.

There was a vigorous expansion of international trade--9% a year--through liberalization agreements in the decade before the oil price crisis of 1973, but since then there has been a sharp decline in trade growth. After 1973, the rate of trade expansion dropped to 2.5% a year, and export-dependent developing countries were hit hardest.

Yeutter said in his statement to the conference that the U.S. proposal for a new round of trade negotiations, concentrating on agriculture, services and investment in trade-related areas, and guarantees for copyrights and patents, would benefit developing countries as much as the United States.

“The main victims of agricultural protectionism are smaller, agrarian economies that cannot compete with massive export subsidies nor penetrate import barriers that the GATT currently permits,” Yeutter said.