Tackling Tariffs

The call at Punta del Este for an eighth round of multilateral trade negotiations, this one to include for the first time farm products, investments, services and intellectual property, is the most promising development in trade since creation of the General Agreement on Tariffs and Trade in 1947.

President Reagan’s team at the conference, pushing hard for his program against protectionism, played a major role in achieving the “historic agreement.” In many ways, it was international recognition of the President’s confidence in and commitment to free trade.

The singular importance of the agreement is that it creates an opportunity to reverse a dangerous trend towards protectionism in both the industrialized nations and among the developing nations of the Third World. The political illusions of false security behind tariff walls can now be replaced by the economic reality that only through expanding international commerce can there be global economic vitality for all nations.

Unfortunately, the process will be a slow one. No agriculture agreement is likely in less than two years, even though those negotiations will be the first to commence. And a broad new GATT is not likely in much less than the four years that the delegates proposed as a time limit for their efforts. That means that a special effort to restrain further protectionist measures will be all the more important as these negotiations proceed. For Washington, it means that the kind of excesses under consideration in the Senate Finance Committee needs to be set aside to avoid conflicts that would only make the bargaining more difficult. The conference report appeals precisely for that sort of restraint.

For the United States, there is a particular usefulness in the agreement to extend negotiations to agriculture, investments, services and protections of intellectual property, including copyrights and trademarks. These are areas of strength and potential expansion among U.S. exports.

A compromise was required to win agreement from some leading developing nations, including Brazil and India, to the U.S.-sponsored round of negotiations on services, covering such businesses as insurance, banking and telecommunications. As a result, these talks will be separated and will not require automatic and simultaneous application of agreements to all of the 92 GATT member nations. That seems a reasonable plan, respecting, as GATT traditionally has, the extraordinary problems of developing nations.

In the agriculture agreement, the stubbornness of the European Community, especially France, made necessary language that clouds the kind of clear commitment against export subsidies that had been sought by Australia, Argentina, Canada, New Zealand and other free-trade, farm-export nations. But there was at least a commitment to “increasing discipline on the use of all direct and indirect subsidies” with a “phased reduction of their negative effects.”

Among the most important agreements was one to strengthen GATT’s enforcement authority. A weakness of the agreements emerging from the preceding seven rounds has been the difficulty of gaining conformity to the rules, with virtually every member, including the United States, feeling free to apply elastic definitions when it served individual national purposes.

The opportunity created by the agreement for a new round of trade talks needs now to be matched in the United States by a new commitment to a vigorous export strategy.