COMMERCE : Trade Talks Face a World of Problems : Agricultural dispute is just one of many contentious issues that threaten negotiations.
Last November’s agreement on farm trade has exposed a nasty truth about 6-year-old negotiations aimed at liberalizing the terms of world trade: Scores of contentious issues still impede progress, and the talks could fail over any one of them.
For two years, the talks involving 108 countries were deadlocked over the demand by the United States and other agricultural exporters that the European Community slash its governmental subsidies to farmers.
Then U.S. and EC negotiators finally reached agreement, and the logjam appeared to have been broken. President Bush and British Prime Minister John Major, who was then the EC’s president, urged in December that the talks be concluded by mid-January, before Bush left office.
Now Bush has only a few days left as President, and an agreement is nowhere in sight. Agriculture is only one of 15 areas of negotiation, and many of the others are proving no less intractable.
Consider services. Trade in services--everything from banking to shipping, telecommunications to tourism--reached $810 billion in 1990, about 20% of total world trade.
Services fall outside the General Agreement on Tariffs and Trade, which since 1947 has set ground rules for international merchandise trade. Instead, services trade has grown without benefit of any agreement on what is fair or unfair. There is no mechanism for settling disputes when one country accuses another of cheating.
Advocates of bringing services into the world’s trading system believe that internationally accepted rules would vastly increase trade in services, to the benefit of providers everywhere.
But there could be some big losers. U.S. ship operators, European filmmakers, Japanese banks--all these and more could face new international competition in their home markets.
All told, the United States has a lot to gain from anything that would increase world trade in services. It ran a healthy $55-billion surplus in services trade in 1991, offsetting much of its whopping $77-billion merchandise trade deficit.
That explains why U.S. negotiators are aggressively pursuing a services trade agreement in what is known as the Uruguay Round of the negotiations in Geneva. On most issues the United States is on the offensive, trying to pry open foreign markets. For instance:
* Telecommunications. Although local telephone service remains a monopoly, the U.S. market for long-distance, mobile and other kinds of telephone service is much more open than most overseas markets. The United States wants to use the Uruguay Round to change that.
* Movies. Jack Valenti, president of the Motion Picture Assn. of America, is said in Geneva to be “roaring mad” over an EC regulation that 50% of television broadcasts must be produced in Europe. He wants European airwaves opened up to more American movies. The Europeans--particularly the French, who mandate 60% European production--say no.
“French movie makers could not survive without the financing of our television channels,” said Jean Labe, president of the Paris-based International Union of Cinemas. “But without this regulation, it would be very easy for cheap American movies to take up all the European television market.”
* Maritime. The EC and some non-EC nations, prominently Norway, want to open up international shipping to greater foreign competition. The American maritime industry sees a threat to the Jones Act, which requires that merchandise and passengers from one U.S. port to another must travel on U.S. ships with American crews.
* Banking and insurance. The United States and the EC are allies in their effort to open markets in Japan, Korea and Southeast Asia. But India and other Third World countries fear that U.S. and European banks would become instruments of economic imperialism.
Bids to Open Up Markets
In the 6-year-old negotiations aimed at liberalizing the terms of world trade, scores of contentious issues remain. Among them: * Movies: Jack Valenti, right, president of the Motion Picture Assn. of America, is said to be “roaring mad” over a European Community regulation that 50% of television broadcasts must be produced in Europe. He wants that regulation repealed and European airwaves opened up to more American movies. The Europeans--particularly the French, who mandate 60% European production--say nothing doing.
* Maritime: Unlike the issue of movies, this one finds the United States on the defensive. The EC and some non-EC nations, prominently Norway, want to open up international shipping to greater foreign competition. The American maritime industry sees a threat to the Jones Act, which requires that merchandise and passengers from one U.S. port to another must travel on U.S. ships with American crews.
Trade Leaders
10 biggest exporters of services, 1990 (in billions of dollars). United States: $119 France: 82 Britain: 55 Germany: 52 Japan: 42 Italy: 41 Netherlands: 30 Spain: 29 Belgium/Luxembourg: 28 Austria: 23
Sources: Times staff reports, General Agreement on Tariffs and Trade
