TRADE TALKS: America Better Listen!

by C. Michael and Jonathan David Aronson Aho ‧ RELEASE DATE: Feb. 27, 1986

Toward year-end 1986, the 90 countries that subscribe to the General Agreement on Tariffs and Trade (GATT) are due to start a new round of negotiations--the eighth since the Geneva-based treaty organization was founded in 1947. This briefing from the Council on Foreign Relations, the first in a projected series, provides an accessible, instructive overview of what's at stake and the interests of key participants; the authors also offer a list of ""achievable"" reforms and suggest fallback positions that could partially retrieve any substantive failures in multilateral bargaining. While GATT has helped lower the beggar-thy-neighbor duties that greased the skids for the Great Depression, a resurgence of economic nationalism now undermines its longer-term viability, warn Aho (a senior fellow at CRC) and Aronson (a professor of international relations at USC). Thoroughgoing reform will be necessary to revitalize the accord that underpins a trading system which, in turn, has produced worldwide gains in jobs, standards of living, capital formation, and related forms of economic reward. Owing to the widely variant and parochial concerns of GATT signatories, a mutually acceptable overhaul will prove a difficult task, the authors concede. Although the US is promoting the get-together, to illustrate, there's a decided lack of domestic consensus on the need for talks, notably, among the increasingly protectionist members of Congress. Common Market nations are likewise constrained, albeit by non-tariff barriers (e.g., voluntary quotas) erected by their typically interventionist governments, while Japan has no serious quarrel with a status quo that still affords it virtually unrestricted entree to key outlets. LDC demands are essentially mirror images of what the industrial powers want, Aho and Aronson report; no real bloc exists (due to the fact that such Third World states as Mexico and Saudi Arabia are not parties to GATT), they observe, but comparatively few developing states truly believe in free trade. In the real world, the authors concede, ""pragmatic realism vanquishes elegant theory,"" meaning they see little chance that America can convince its major trading partners to accept free-trade solutions to market problems. As one consequence, they make a case for ""second-best solutions,"" i.e., bilateral or regional bargains that ""might play on Capitol Hill"" and serve. as building blocks for further easing of the curbs now threatening to brake the world's trade growth. At the very least, the authors maintain, the upcoming round of negotiations could be used to buy time and avert a breakdown in GATT, which has been overtaken by events. They do not, however, underestimate the complexity of the problems that must be addressed. Neither services nor energy, for instance, has ever been subject to the original agreement's provisions; in the meantime, agricultural products, textiles, and other high-volume goods have also emerged as exceptions. On balance, Aho and Aronson profess optimism about the prospects for rapprochement. Whatever the odds on success or failure at the next round of GATT negotiations, this evenhanded introduction to the issues and likely agenda items (far from perfect matches by the way) represents a valuable contribution to the public debate that is almost surely in store.

Pub Date: Feb. 27, 1986

ISBN: N/A

Page Count: -

Publisher: Council on Foreign Relations

Review Posted Online: N/A

Kirkus Reviews Issue: Jan. 15, 1986

Categories: NONFICTION