No Pain, No Gain: How to Trade Up : Brussels talks affect every American family
When it comes to enjoying the fruits of world trade, we Americans always feel as if we’re on the losing end. That doesn’t do our psyche or our pocketbooks much good.
But all that could change. If new international trading laws go into effect, they would mean more jobs, better wages and perhaps cheaper clothing and other goods--big, big trade dividends for everyone.
Such improvements in our standard of living depend in no little measure on what happens in Brussels over the next two weeks. If negotiators for 105 nations can hammer out a satisfactory agreement, they will succeed in establishing a new framework for world trade, unfettered by distorting government subsidies and other protective trade practices.
At stake for the United States are billions and billions of trade dollars. A new trade agreement under the GATT (the General Agreement on Tariffs and Trade) umbrella could add $300 billion, or 5%, to the gross output of the U.S. economy by the end of this decade, according to a study by the Stern Group, a trade advisory group. U.S. Trade Representative Carla Hills figures liberalization would result in a $200-billion increase in U.S. exports to Third World countries over the same period. If government farm subsidies--which amount to $250 billion a year worldwide--are eventually phased out, Washington could get some budget relief. U.S. farm subsidy dollars could be diverted to desperately needed domestic programs.
But after four years of trade talks, there’s little--if any--consensus. The United States, the European Community, Japan and others all need to get serious and compromise, especially on farm subsidies. Washington needs to adopt a more realistic approach to cuts in farm subsidies; the European Community must show some flexibility, and Japan and South Korea must be willing to modify their restrictions on rice imports. A new agreement could cover as many as 15 trade categories, including agriculture, investments, intellectual property rights and services.
Trade is an increasingly important segment of the U.S. economy. Indeed, the big and continuing boom in exports has so far helped keep us out of a full-fledged recession. “The best opportunities for American companies and the American economy are going to be outside U.S. borders between now and 1995,” explained Jerry Jasinowski, president of the National Assn. of Manufacturers.
Sadly, the long-term economic benefits of revamping world trade get lost in the political rhetoric and maneuvering of the moment. Angry European farmers showing up by the thousands in their tractors to protest cuts in farm subsidies is powerful stuff.
Liberalizing trade is sure to cause some hardships. Although new rules, if approved, will be phased in over a 10-year period, some industries may nevertheless encounter difficulties adjusting to the new realities. That is to be expected, but that’s a small price to pay for opening up immense new economic opportunities worldwide.
No pact means no trade dividends for anyone.
