President Bush's tangle with Australian farmers illustrates that the unfettered global exchange of goods and services should be top priority in the post-Cold War world. Why should Americans care about griping farmers Down Under? Because even an advocate of free trade like Bush can be hoisted on his own petard by Aussie critics pointing out that the United States violates its free-trade principles by subsidizing U.S. farmers.
The unfortunate result is that the President's Pacific tour is fast becoming a trade gripe session for both the United States and its allies.
The dialogue should be about greater cooperation to successfully conclude five arduous years of world talks to liberalize trade. A new global agreement would invigorate world trade by creating a more competitive free market. Consumers around the world would benefit from lower prices for goods and services. But the President obscures such bountiful opportunities through his pointed barbs at our trading partners.
About 3,000 farmers staged a demonstration during Bush's visit--the first to Australia by an American President since 1967. They were protesting a U.S. government subsidy on wheat, which they contend costs them as much as $1 billion a year. Bush held firm on the subsidy, explaining it was not aimed at Australians but at protecting U.S. farmers against subsidized European competition.
Pressed to explain the inconsistency of refusing concessions to some while demanding more from others (like Japan), Bush said, "We've never said we're totally pure."
True, but the President went on to say the European Community is to be blamed mostly for the international dispute over agriculture subsidies and that our $40-billion trade deficit with Japan was a factor contributing to U.S. economic woes. Such tough talk raises fears that the world trading community will split into regional trade blocs. That would truly disrupt the world market and lead to protectionist trade measures.
The President and other world leaders should heed the words of Arthur Dunkel, who has been overseeing talks among 108 nations and urging them to ensure the future of the world trading system. The director general of the General Agreement on Tariffs and Trade (GATT) has given them plenty of ideas in a 500-page, bold and comprehensive document that could significantly advance stalled trade talks.
On the divisive issue of farm reform, Dunkel calls for greater concessions from both the United States and the EC. They along with other agricultural producers would have to dramatically reduce their farm subsidies.
Dunkel even goes so far as to recommend the creation of a new Multilateral Trading Organization, a radical departure for GATT.
Trade negotiators will converge in Geneva Jan. 13 to consider and refine Dunkel's document. His proposals provide a solid basis for a possible final agreement later his year that would liberalize trade. That would go a long way toward resolving specific trade grievances. The President should coax the United States' Pacific allies into endorsing the document, which would benefit all nations.