THE GATT VOTE: IMPACT ON BUSINESS : GATT Is Looking Good to California : Commerce: It has more global trade than any other state. From toys to rice, the accord will mean more business.
For all the talk about opening foreign markets and leveling the playing field for U.S. trade, the world trade accord will mean one thing to Barbara Willey, an executive with Woodland Hills toy importer Applause Inc.: cold cash.
Because the pact will cut or eliminate U.S. duties on imported toys, “over a period of five or six years we could have a savings of easily $1.3 million,” she said. That’s a substantial sum for a firm with annual sales of about $300 million.
For California almond growers, who represent about 99% of the $800-million U.S. industry, the new accord will cut tariffs on exports to Europe and Asia. Because almond farmers export about 70% of their crop, GATT translates into $40 million to $45 million annually in new business or savings from lower tariffs, said Walt Payne, president of Blue Diamond Growers, the state’s largest producer of the nuts.
All over California, which has more international trade than any other state, makers of everything from Barbie dolls to integrated circuits stand to gain from Congress’ ratification of the new trade accord under GATT, the General Agreement on Tariffs and Trade. Meanwhile, importers of toys, fabrics and others goods will pay lower prices. That means foreign consumers will pay less, for example, for a six-pack of American beer, while Americans will pay less for stuffed animals made in the Far East.
The agreement will benefit some California industries more than others. It will lower tariffs and other trade barriers during the next several years on agricultural products, beer, wine, semiconductors, furniture, drugs, medical instruments and other items going abroad.
But for some businesses, the accord will have only indirect benefits. The agreement for the first time will remove trade barriers to financial services such as banking and insurance. But nothing will happen right away: GATT simply sets in motion a process to open up foreign markets in the future.
Consumer advocates worry that the accord’s creation of a new World Trade Organization, which will rule on trade disputes, will set the stage for attacks on California’s environmental, labor and consumer laws.
“We think . . . laws in California are particular lightning rods for challenges” as impediments to trade, said Andrew Wheat, head of an anti-GATT group founded by consumer advocate Ralph Nader.
But for a host of California firms, GATT will mean business.
State rice farmers can look forward to boosting exports by a third, sending 200,000 metric tons of rice a year to Japan alone as that nation opens its rice markets to imports. South Korea has also agreed to U.S. imports.
New rice exports will translate into $100 million a year for state farmers, and every 1,000 additional tons shipped roughly translates into two new jobs, said Bill Huffman, a spokesman for the Farmers’ Rice Cooperative in Sacramento.
GATT also promises to strengthen protections of intellectual property rights for products such as software.
That’s important for Amgen, the Thousand Oaks biotech company that has genetically engineered a line of drugs for cancer and kidney dialysis patients. Amgen, which sells about 20% of its products overseas, looks forward to the protections GATT promises as it contemplates entering new markets in Latin America and Asia, where copyright laws are weak or not enforced, company spokesman Peter Teeley said.
For exporters such as Douglas Aircraft Co., the Long Beach maker of commercial jets such as the MD-11, the accord will level the playing field against its European rival, Airbus Industrie.
That’s because the World Trade Organization will have more clout than previous groups to resolve trade disputes, and European officials will no longer be able to ignore trade-body rulings if they favor Douglas over Airbus, as they have in the past, spokesman Tom Williams said. But does the new accord automatically mean Douglas will sell more jets?
Not necessarily, Williams acknowledged. “We’re more dependent on the market,” he said. “Exports have been . . . slow due to the worldwide economic downturn . . . in commercial aviation.”
The domestic textile and apparel industry stands to lose under new provisions of GATT that phase out U.S. barriers to imports of products produced in low-wage nations. For Los Angeles, one of the centers of the U.S. garment industry, the concern is that a flood of cheap imports will create competitive pressures.
Still, said George Rudes, owner of Los Angeles women’s sportswear maker Saint Germain, the industry here has faced low-priced imports for years and is surviving because of inherent advantages: quicker delivery times and better design and quality.
And GATT could create some advantages. Manufacturers such as Saint Germain could buy cheaper imported fabric from overseas. And increased international trade could boost the U.S. economy, increasing general demand for clothing.
* INDUSTRY IMPACT: D2
* MAIN STORY: A1
