BREAKDOWN OF THE TRADE TALKS : How U.S. Industries View the GATT Results
As global trade talks ground to a halt in Brussels on Friday, American business proved once again that there is no such thing as a monolithic “U.S. industry,” no pat position, no standard response to the international breakdown in negotiations.
In agriculture, film and telecommunications circles, there was a collective sigh of relief, one that Jack Valenti, president of the Motion Picture Assn. of America, summed up with a quick: “No agreement is better than a worse agreement.”
For technology, that isn’t necessarily the case. The computer industry had hoped that negotiators at the General Agreement on Tariffs and Trade talks could hammer out critical protections for intellectual property. That didn’t happen.
“One of the big problems if the round fails is that the environment for dealing with trade issues in the U.S. will become much more harsh,” said William Krist, vice president for international affairs at the American Electronics Assn.
If there was a common thread that ran throughout the nation’s trade groups and corporate offices, it was a feeling of disappointment that an ongoing effort could break down so disastrously in its final days, that an opportunity for freer trade could be lost.
“We were disappointed that here we are four years after the initial talks, and we’re still not able to come to an agreement,” said Clay Pederson, spokesman for the National Farmers Union.
An industry by industry look at GATT results:
AGRICULTURE: The Uruguay Round was devoted largely to agriculture, and it was agriculture that caused the trade talks to break down.
U.S. trade representatives went to Brussels asking for a 90% reduction in export subsidies, a 75% reduction in “border protections” such as tariffs and quotas and a 75% reduction in domestic subsidies.
Despite earlier hopes that an accord could be reached, the European Community would not budge from a plan that would reduce all three elements of agricultural subsidy by 30%.
“Unfair trade barriers and subsidies are widespread in agriculture, and reform is not only absolutely essential but inevitable,” said Dean Kleckner, president of the American Farm Bureau Federation. “
California farmers, who account for 10% of all U.S. crop and livestock exports, are especially vulnerable to the breakdown in talks and the potential trade war that many see brewing. The state grows largely specialty crops, which are often the target of other countries’ trade barriers.
“We’ve got to stop this deadly subsidy war of the past five to 10 years. The Europeans have to get away from being so entrenched in their positions,” said Michael J. Stuart, senior vice president of the Western Growers Assn.
BANKING: Liberalizing trade in financial services such as banking and insurance was to be an important part of the agenda of the GATT talks, although it ended up playing a secondary role because of the heated debate over farm subsidies.
While discussion of banking issues is new to GATT, U.S. banks have long argued that rules in other countries need to be fairer so American institutions can be better international competitors. They point to such nations as Brazil and India, which are especially protective of their financial services markets. Those countries argue that their institutions are no match for their mammoth U.S., Japanese and European competitors.
COMPUTERS: The computer industry had hoped that the GATT talks would yield new agreements on intellectual property protection, investment rules and tariff reductions for components. Industry officials Friday were disappointed at the collapse of negotiations, but were optimistic that some sort of agreement would eventually be reached.
Development of intellectual property protection is perhaps most critical for U.S. computer firms. Software companies, which face massive illegal copying of their products in many countries, were looking for an agreement to establish international copyright standards.
“It’s disappointing,” said David Curtis, senior corporate attorney at software vendor Microsoft Corp. The GATT talks “seemed to offer a real opportunity for us to improve our lot around the world.”
The industry was also looking for reductions in tariffs that some countries impose on computer systems and components. The European Community’s 14% duty on computer chip imports was a key target for U.S. semiconductor companies, while computer firms were hoping that high tariffs in such developing countries as Brazil and India could be brought down.
DRUGS: For the U.S. pharmaceutical industry, failure of the GATT talks means that it still has no protection for drug patents in many nations, particularly developing ones.
Lack of such protections in Latin America, India, Thailand, Eastern Europe and elsewhere has enabled competitors to copy and sell, with impunity, cheaper versions of drugs that are protected by patents in the United States and Europe.
Industry officials contend that such “piracy” cost 10 U.S. drug makers $2 billion in 1988. A U.S. drug company may spend hundreds of millions of dollars and years of research in getting a drug to market; a copycat can duplicate the formula for a fraction of that.
FILM: The collapse of the GATT talks is a major disappointment for the U.S. film and television industry, which had hoped that an international trade agreement would have been able to abolish quotas on the sale of U.S. TV programs overseas.
But a collapse also means that rules have not yet been drafted that could hurt the industry, which brings in $3 billion annually in surplus balance of trade, according to the Motion Picture Assn. of America.
Any GATT agreement that provides less protection to copyrights and intellectual property rights than the standards set forth under the Berne Copyright Convention of 1988 would be a blow to the U.S. entertainment and media industries, MPAA said.
Exempting the television and film industries from GATT purview would mean that individual countries would be free to set their own quotas on the importation of U.S. TV programs and films.
MUSIC: Songwriters and record companies were hoping that negotiators would reach agreement on several critical copyright protection issues that could bring the music industry perhaps a billion or more dollars in extra revenue.
In a paper submitted to trade negotiators, the American Society of Composers, Authors & Publishers complained that there is little or no protection against music piracy in Brazil, Egypt and six Asian countries.
The group said that although piracy in Singapore, Indonesia, Malaysia, Korea, Brazil, the Philippines, Thailand and Egypt has declined dramatically in recent years, losses still amount to $50 million a year.
The Recording Industry Assn. of American also wanted an agreement giving individual record companies the exclusive right to authorize or bar rentals--popular in some countries, but banned in the United States. The association says rentals hurt sales. The European Community is considering such a proposal, but in Japan, where renting of music is widespread, officials have balked at the plan.
TELECOMMUNICATIONS: In exchange for opening markets to U.S. companies, foreign negotiators demanded “symmetry,” equal access to U.S. telecommunications markets. They also clamored for continued protection for their government-operated basic telephone services. Unlike their foreign counterparts, U.S. telephone services are provided by privately owned but government-regulated companies.
U.S. telephone companies, led by AT&T;, MCI and U.S. Sprint, argued that the proposal would harm them. They wanted U.S. trade negotiators to remove telecommunications from the industries covered by the new agreement.
TEXTILES: With imports accounting for nearly half of U.S. textile and apparel sales, industry officials had watched the free trade talks to try to ensure that they lose no more ground to foreign competitors.
Imports pose a “tremendous threat,” said Carl Priestland, chief economist of the American Apparel Manufacturers Assn., an industry trade group. “We have lost 400,000 workers since 1973 in the apparel industry, most of it due to imports.”
Most imported textile and apparel is made in underdeveloped nations and is subject to quotas set under multi-fiber agreements. GATT would eliminate multi-fiber agreement quotas and permit the collection of damages from nations that impose import restrictions.
Times staff writers James Bates, Carla Lazzareschi, Patrick Lee, John Lippman, Jesus Sanchez, Jube Shiver and George White in Los Angeles contributed to this report. Jonathan Weber reported from San Francisco, and Donald Woutat contributed from Detroit.
THE STATE OF AGRICULTURE: As California agriculture grows, it becomes increasingly dependent on foreign markets. Global trade talks broke down Friday over agricultural subsidies, tariffs and quotas. The charts below show total California farm revenues and exports.
